October 23, 2018

Increased Uptake of Locally Manufactured Goods will Create More Jobs

MF Battery

By Phyllis Wakiaga

Whenever we celebrate Labour Day on May 1st, we think about workers, their welfare and how we can promote it. We are all workers after all. A ceremonial wage increase has been part of the celebration package for years, but which often times has worked to their and our disfavour. A strategy that would really incentivise workers would be to create more local jobs by buying home made products and as the President recently reiterated, there is no reason why we should not be buying Kenyan made goods. This however, has not been the case and a lot of purchasing of foreign goods has been going on.

Unemployment is currently estimated at 40 percent and many labour intensive industries are at threat if the cost of doing business is not reduced and more so if there is not enough patronage of locally manufactured goods.

A three pronged strategy is required to promote local production through market development. The expansion of the local market, the EAC market and other external markets. To achieve the first goal, two things can be done; a local content policy can be developed supported by public procurement policies favourable to local manufacturers and the fight against illicit trade, sub-standard goods and counterfeits.

A country’s standard of living depends on its ability to produce goods and services. It is no secret that Kenya has been flying on only one engine for a long time; that of domestic consumption. While we need to push for more exports to promote the second engine, local consumers can still boost more local production through increased domestic consumption, as a way to make up for weak global uptake.

According to the latest economic update from the World Bank, Kenya’s major export crops underperformed in 2014 while for some time now, we have been losing our export market share in the EAC.

The country is currently drawing up the ‘Buy Kenya, build Kenya’ policy as an overarching framework to address first and foremost, the gap in public procurement particularly by the government and its agencies and secondly to promote the uptake of local goods by the private sector and the ordinary citizens. One of the things that we need to do is to review the Public Procurement Act to ensure that the definition of ‘local manufacturers’ encapsulates correctly the fact that it’s the ‘citizenship’ of the product and not of the person producing that matters. This misinterpretation has led to certain locally produced goods being sidelined during procurement.

It would also be a good idea to hold an annual expo to showcase locally manufactured goods to procurement entities in the government. If this is implemented jointly with a monitoring mechanism to ensure compliance with the preference for locally goods clause in our legislation, we will be on track to increase the uptake of our local goods, expand demand and harness local buying power.
It is a misconception to think that foreign products are better than the locally made ones. Export standards are usually very high, meaning that the goods we export meet the high standards entry standards of other nations. A strong marketing campaign can help quash this misconception and raise consumer confidence. Besides, when we buy foreign made goods, we export our jobs.

The upcoming policy is not a panacea for our flailing exports and we should aim at ameliorating trade on a regional and global level so that we can export more. Sometimes, international markets get complicated like the currently depressed European Union which means that our exports will continue to perform poorly. But if we up our game work on domestic consumption we can help the industrial sector thrive in difficult times.
The writer is the CEO designate of the Kenya Association of Manufacturers.

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