Protect local industry now

Christmas Kisumu

Hundreds of Kisumu residents marvel at a fireworks display on Oginga Odinga Street during Christmas Day celebrations.

Photo credit: Tonny Omondi | Nation Media Group

It is quite disheartening to enter any supermarket and discover that a majority of the items on sale have been sourced from other countries. Indeed, Kenya must be the only country in the world whose traders actually import toothpicks in bulk and blatantly sell them to happy consumers at exorbitant prices.

One would wonder: what exactly is it that we lack in this country to allow such a thing? Trees we have plenty of, and if need be, more can be grown for the purpose, there are no chemicals involved, and yet if you venture into any store, you will discover plenty of sticks made in China. How can this be?

It is a good thing that this government is saying all the right things about supporting the manufacturing sector, a recognition that the country cannot really industrialise if it imports everything instead of making the basic stuff in its own factories. 

Importation is a low-hanging fruit which, unfortunately, only benefits the importer while impoverishing the country and shedding jobs. This is not rocket science; to manufacture you must create jobs. Where you create those jobs is what matters, and in our case, it happens to be anywhere else but home.

Last week, President William Ruto and his Industrialisation minister Moses Kuria had important things to say about protecting Kenya’s still under-developed manufacturing sector by banning the importation of goods that can be made in Kenya. While commissioning a Devki Steel Mills plant in Kwale County – a Sh30 billion investment which is expected to create 1,500 jobs – the President pledged to protect the iron and steel manufacturing industry, which has been badly affected by competition from imports that are a lot cheaper but of dubious quality.

He is aware, of course, that the drivers of such imports are individuals who connive with foreigners to dump products here and thus deny local manufacturers a chance to market their goods.

The way to curb dumping is to slap heavy duties on imports, although of course, such a move will inevitably invite retaliatory measures that could be painful. This is a delicate issue that must be handled with great care but if the country’s industry is to ever take off, the government doesn’t have any choice. No country has ever developed by allowing foreigners to call all the shots while denying locals any say on matters trade.

However, the government must go beyond protecting big concerns like Devki. It must allow and help startups to grow through deliberate policy. 

Great travails 

Small farmers have been going through great travails when they cannot sell their produce because a deluge of similar produce from neighbouring countries has flooded the market. Everywhere in the world, governments have a duty to protect farmers but this is not happening here probably because trade within the expanded East African Community discourages any form of protectionism.

However, the free-for-all importation of commodities like sugar, fruits, tomatoes, onions, vegetables, eggs, rice and even tasteless fish from abroad when the stuff is available locally is hurting the poor farmer badly and hampering the growth and survival of micro-, small and medium-sized enterprises (MSMEs).

It is time the Cabinet Secretaries concerned—Trade and Industrialisation, EAC, Blue Economy and Foreign — went beyond formulating policy papers on the subject of equitable trade practices.

It is not enough for them to claim that our primary produce is not competitive in the world market unless farmers found ways to add value to it. These farmers need to know how to extract juice from the fruits and tomatoes they grow, preserve it and can it for the market. They need to know how to make crisps from their potatoes, bananas, cassava and yam. The fisherfolk need to preserve their daily catch, and without cold rooms, they can’t do it. Telling people to improve their primary produce to make them more competitive and then sitting on your hands is not exactly policy. It is carelessness.

The manufacturing sector has been in the doldrums for a quite a while now, stuck at an anaemic 12 per cent of the Gross Domestic Product and below. In the 1980s, it used to be much healthier, contributing 21 per cent to the GDP. One can surmise what happened. People who may have had the ambitions of starting their own factories became jittery when the floodgates of imports and counterfeits were opened and overwhelmed the market. These problems, coupled with costly energy sources and poor transport, led to divestment when many industries shifted base to other countries.

To make matters worse, most of these big firms are mere subsidiaries of multinationals that repatriate substantial portions of their profits. In a capitalistic dispensation, there is nothing wrong with this, but it is not the pathway to a country’s growth. Kenya has more than 1,000 companies in the manufacturing sector but only a few indigenous ones survive the onslaught of cheap imports. These are the firms that require urgent government help so that they can compete with the multinationals. Smothering local manufacturers to benefit a few established foreign-owned enterprises is absolutely wrong.

Mr Ngwiri is a consultant editor; [email protected]