Beyond BBI, Uhuru’s legacy should be job creation

Judging by the vigour and tone of the debate before Thursday’s passing of the BBI Bill by the National Assembly, the victory will not necessarily guarantee a smooth ride for the referendum that will now follow, meaning President Uhuru Kenyatta really needs to pause and evaluate where to anchor his signature legacy pillar.

BBI has already split his own government and he now has a deputy leading a significant breakaway group as he prepares his own bid for President next year. Within the BBI Bill itself, the proposal to create 70 new constituencies and the sharing formula has created palpitations, with leading figures within the other key party sponsoring BBI (the Orange Democratic Party – ODM) raising serious concerns about its fairness.

Even if the referendum was to somehow endorse the proposals in the BBI Bill, the fiction that in its expanded Executive (with a president, deputy president, a prime minister and two deputy prime ministers) resides the elixir for Kenya’s recurrent bouts of electoral violence is too wispy for anyone other than its credulous promoters to believe. 

A heritage that tries to entrench the cannibalistic system where the tribal (political party) elites share privileged positions and roles for the foreseeable future is an epic betrayal.

Surely the President can and must do better. The manufacturing aspect of his Big Four Agenda legacy items provides him with an opportunity to breathe fresh life into a sector that can actually create jobs. He needs to urgently push along the process of institutionalising the Local Content Mechanism (LCM), which has been wobbling through the bureaucratic corridors and should now be sitting very near his desk.

Comprehensive legislation

The LCM will require that specific parts of a product being made to be sold in a foreign country contain a percentage of components made in the host country. In some countries, a minimum amount of local content to be made in the host country is legislated. 

As an example, South Africa requires 40 per cent, Brazil 65 per cent, India 30 per cent, and Germany 60 per cent. The impact of this is dramatic. In South Africa, this has directly created more than 60,000 jobs in the car manufacturing sector alone.

Right here at home, even without a comprehensive legislation, there is evidence of its enormous potential. Dr Isaac Kalua of the Green Africa Foundation, last year wrote about the effect of gazetting the Tax Procedures (Unassembled Motorcycles) Regulations 2020. The gazettement done by Treasury Cabinet Secretary Ukur Yatani, with the support of his Industrialisation counterpart, paved the way for the local manufacture of some motorcycle parts.

The legislation allowed that within three months of gazetting, authorised assemblers through local parts manufacturers could manufacture seven motorcycle parts locally. A further seven parts could start being manufactured within the subsequent 12 months. The included metal parts and battery fluid.

The fabrication of the initial seven parts was to create at least 4,000 jobs, transforming the motorcycle assembly sector into one of the biggest private sector employers. It will be even bigger once the other seven parts are manufactured here, and more are added in the coming years to reach anything up to 30 per cent of the parts. 

Enforcement mechanism

Given that the annual market for motorcycles in Kenya last year was about 180,000, and growing exponentially, the potential is extraordinary.

The local content component could make the units assembled here readily acceptable in the East African region and in the bigger African market created by the African Continental Free Trade Agreement.

Perhaps intuitively, the President has recognised the potential of the LCM. He has on many occasions directed that big projects like the houses being built under the Housing Agenda Pillar should source up to 30 per cent of the materials they are using locally.

The SGR was supposed to use more than 10 per cent local content. Such edicts, or even contracts like the SGR one, are generally ignored or barely effected because there is no enforcement mechanism. This is what the President needs to put in place.

Luckily, the framework for executing this has already been done and presented to the relevant ministry under a model called the Local Content Mechanism Policy Project. The project has also reportedly been well received by a funding agency. Ensuring the project is quickly signed off should be the President’s enduring legacy.

The writer is a former Editor-in-Chief of Nation Media Group and is now consulting. [email protected], @tmshindi