Kenyan Manufacturers are targeting to increase the sector’s contribution to the GDP to 20 percent by 2030 as they seek to maximize on opportunities available to spur local industry’s growth.
At a launch of the initiative, Kenya Manufacturing 20by30, the summit was held amidst concerns on the declining contribution of the sector to the GDP, which has decreased from 9.3 percent in 2016 to 7.2 percent in 2021 (KNBS, 2022). Despite this, manufacturing contributes about 17.30 percent of total tax revenue, implying that tax revenue from the sector can triple if 20 percent GDP contribution is achieved by 2030.
Gracing the event, H.E President William Samoei Ruto noted that it is possible for the sector to create a million jobs from the manufacturing sector. “Additionally, we have the potential to move the contribution of GDP from seven percent to 20 percent in eight years. We shall achieve this through continuous engagement, consultation, sharing of ideas and moving together as a nation.”
The President added that there are huge opportunities in value addition. “We have the biggest competitive advantage in the tea sector. By processing our tea, we can increase revenues through export. Additionally, we can increase our revenues and the contribution of leather to our GDP from the current Ksh15 billion to Ksh75 billion annually,” explained the President.
Out of 19 million people under the Kenya workforce, only about 3 million people (15 percent) are employed in formal jobs in both public and private sectors. The other 16 million (85 percent) work in both formal and informal micro, small and medium enterprises (MSMEs).
In line with this, KAM Chairman Rajan Shah reiterated that, “Herein lies the golden opportunity for the country to grow SMEs to the next level. Your commitment towards growing this sector of the economy is indeed timely and promises to unlock the potential for small businesses if implemented in the short and medium term.”
He added that with the manufacturing sector estimated to increase its contribution to the GDP by 1.6 percent annually, this will translate to a rise in jobs created by manufacturing from the current 338,000 to nearly 1 million. He said that they will also increase employee compensation in manufacturing from Ksh232 billion to Ksh644 billion and increase real value-added growth from Ksh876 billion to Ksh5.2 trillion.
Mr. Shah highlighted four key areas, which have the potential to enable the realization of Vision 20by30, saying, “These include global competitiveness, whereby locally manufactured goods are able to compete favourably with those produced externally. Second is, export-led growth which calls for increasing the export-intensity of locally manufactured goods. Third, is industrialization of agriculture which shall create the linkage between agriculture and industry. Finally, SME Development as SMEs are the backbone of the country’s economy.”
The event was held during the SME Innovation Awards. The Awards sought to celebrate Manufacturing SMEs who have put in place business innovation and growth strategies, following a 10-month capacity-building programme conducted in partnership with GIZ Promotion of Self-Employment and Entrepreneurship in Kenya.