1
MINISTRY OF INDUSTRIALIZATION
PAPER
BY,
DR
CYRUS
NJIRU,
PhD,
CBS,
PERMANENT
SECRETARY, MINISTRY OF INDUSTRIALIZATION DURING THE
20TH ENGINEERS INTERNATIONAL CONFERENCE, 2013 HELD AT
THE
TOM
MBOYA
LABOUR
COLLEGE,
KISUMU
FROM
WEDNESDAY 8TH TO FRIDAY 10TH MAY 2013.
CHAIRMAN IEK, ENG. RIUNGU,
SECRETARY IEK,
MEMBERS OF THE IEK,
DISTINGUISHED GUESTS,
LADIES AND GENTLEMEN,
May I start by thanking the Institute of Engineers of Kenya (IEK) for inviting
me to present a Paper on the industrialization situation in Kenya at this
Conference. The Conference theme is: “Innovative Engineering Solutions for
Industrialization of Counties.” As you are aware, Kenya now comprises 47
Counties and therefore shifting focus to the industrialization processes in these
devolved units of governance is a good strategy for us to realize the objectives
that are outlined in Vision 2030.
From the onset may I recognize the great and unique role that IEK has
continued to play over the years in support of national industrialization efforts.
Quick industrialization can be achieved through the promotion of innovative
Facilitating and promoting Industrialization
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engineering, scientific and technological interventions as well as providing the
country the vital technical human resource.
Before I share with you my Ministry’s Vision for Kenya’s Industrialization
Process; its Status, Challenges and Strategic Interventions, I wish to
reiterate that our mandate is to facilitate and promote industrialization.
INDUSTRIALIZATION – DEFINITION
The term "industry" refers mainly to manufacturing activity. Agriculture,
mining, and most other services are excluded from it. The term,
"industrialization” literally means the growth of manufacturing industry. It is
thus a part of the much broader process of economic development, which
involves the raising of standard of living, through a steady increase in the
efficiency of factors of production.
Historical Note
Industrialization through innovation in manufacturing processes first started
with the Industrial Revolution in the north-west and Midlands of England in the
18th century. It spread to Europe and North America in the 19th century.
The experience from successful industrialized economies seems to indicate that
having a coherent National Industrialization Policy is a prerequisite for the
advancement of industrial development in any country. The industrial sector is
therefore a key driver for increasing economic growth rates, generation of
sufficient employment opportunities and integrating an economy such as ours
into the global economy.
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STATUS OF KENYA’S INDUSTRIAL SECTOR
Since independence, Kenya has made several initiatives towards the
development and growth of the industrial sector.
According to the
Industrialization Policy, Kenya’s industrial sector is expected to function as the
engine of economic growth and development in years to come.
Industrial policies in Kenya have evolved through three distinct policy
orientations, namely; import substitution, Structural Adjustment Programmes
(SAPs), and export-led policy orientation.
The export-orientation policies have over the years been expounded to respond
to global market structures through various Sessional Papers and Economic
Blueprints that include; Sessional Paper No.1 of 1986 on Renewed Economic
Growth; Sessional Paper No. 2 of 1992 on Small Enterprises and Jua Kali
Development in Kenya; Sessional Paper No.2 of 1996 on Industrial
Transformation to the Year 2020; the Economic Recovery Strategy (ERS) for
Wealth and Employment Creation 2003-2007; Master Plan for Kenya Industrial
Development (Industrial Master Plan); and the Kenya Vision 2030.
The sector has been inward-looking and has had low value addition especially to
the available agricultural and natural resources. Similarly, weak institutional
support for the development and growth of the local Micro, Small and Medium
Enterprises (MSMEs), which have great potential to create employment and
wealth has resulted into slow industrial growth of enterprise.
The sector’s GDP contribution has remained stagnant for the last two decades at
about 10 per cent. Kenya’s exports have also remained predominantly primary
commodities with low value addition with manufactured exports accounting for
only 36 per cent of total exports.
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Manufacturing Sector
Manufacturing of goods include the conversion of the raw materials to usable
products. Manufacturing is therefore integral to industrialization. The role of the
manufacturing sector in Kenya’s Vision 2030 is to contribute to the socioeconomic development of the country by creating jobs, generating wealth and
encouraging both local and foreign investors. Indeed most developed countries
and emerging economies have recorded rapid economic development through
embracing industrialization. It is for this reason that the Vision 2030 aims at
making Kenya a newly industrializing, “middle- income country providing high
quality life for all citizens by the year 2030”.
Target: 30,000 Engineers by 2030!
In order to enable the country to effectively achieve the Vision 2030 goals,
human resource development, especially scientific and industrial skills, need to
be enhanced. It is envisaged that by year 2030, approximately 30,000
engineers will be required. Best practices, based on lessons learnt from
newly industrialized countries, indicate that for every engineer, 3
technologists are required and for every technologist, 4 technicians are
required. For every technician, 5 craftsmen are required. This translates to
a ratio of 1:75 for every engineer vis-à-vis support staff.
In this regard considerable efforts should be made to upgrade existing technical
and technology training institutions and develop others to ensure the availability
of requisite human resource. It should be noted that since independence Kenya
has produced about 10,000 engineers.
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CHALLENGES
The challenges and weaknesses affecting Kenya’s Industrial sector include:
1. Low value addition;
2. Inadequate market information resulting to limited market access and
narrow export base;
3. High cost of infrastructural services leading to high cost of doing
business;
4. Inadequate skilled industrial human resource;
5. Limited access to affordable long-term finance;
6. High cost of industrial land;
7. Limited industrial sub-contracting linkages;
8. Influx of counterfeit, dumping and substandard goods thereby reducing
production capacities;
9. Limited technology transfer; and
10.Low attaction of local and foreign direct investment.
The other major challenge is youth unemployment! The Kenyan labour market
is estimated at 21.7 million, whereby 10.8 million are employed. Of those
employed, only 2 million are in the formal sector whereas 8.8 million are in the
informal sector. Of the 10.9 million Kenyans who are unemployed the majority
are the youth.
The problem of unemployment can be addressed by implementing policies that
are geared towards job creation. Knowledge-enabled business processes are
therefore key to empowering the youth to start or improve their businesses and
above all to be innovative.
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STRATEGIC INTERVENTIONS
Policy Priorities
The main function of the Ministry of Industrialization is to develop elaborate
policies on industrialization and provide a supportive environment under which
a private sector-led economy can flourish.
The National Industrialization Policy (NIP)
This policy framework has identified twenty one (21) industrial development
sub-sectors, which can be relied upon to spur and invigorate the national
industrialization process to contribute to national industrial growth and overall
economic development. These include:(i) Iron and Steel
(ii) Machine tools and spares
(iii) Biotechnology and Nanotechnology Industries
As earlier stated a coherent National Industrialization Policy is a prerequisite for
the advancement of industrial development.
The implementation of the Sessional Paper No. 9 of 2012 on Industrialization is
premised on the guiding principles namely;
(i)
Productivity and competitiveness;
(ii)
Market development;
(iii)
High value addition and diversification;
(iv)
Regional dispersion;
(v)
Technology and innovation;
(vi)
Fair trade practices;
(vii) Growth and graduation of MSMIs;
(viii) Employment creation;
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(ix)
Environmental sustainability;
(x)
Compliance with the current Constitution; and
(xi)
Education and human resource development.
Policy Interventions
The broad policy intervention areas are focused on addressing the factors
affecting the industrial sector, exploiting the strengths and opportunities arising
from the regional integration and globalization. The interventions will therefore
be centred on ten (10) broad areas namely;
(i)
Creating an enabling environment;
(ii)
High value addition to harness the agricultural, mineral, natural and
foresty resources;
(iii)
Development of priority industrial sub-sectors;
(iv)
Enhancing human resource skills through development of technical,
entreprenuerial, production and managerial skills for industrial
development;
(v)
Measures for atrracting local and foreign direct investment;
(vi)
Local and export market expansion and diversification for
manufactured products;
(vii) Enhancing standards, quality infrastructure and intellectual property
rights regime;
(viii) Strengthening industrial research, development and innovation;
(ix)
Facilitating the growth and graduation of the MSMIs for industrial
expansion; and
(x)
Provision of access to affordable and appropriate financial services
for industrial growth and expansion.
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National Industrial Development Commission.
To facilitate effective coordination, policy implementation, monitoring and
evaluation, the Sessional Paper proposes the establishment of a National
Industrial Development Commission. The Commission will provide a broad
engagement framework within which all stakeholders, including the public and
private sector and development partners’ participation in industrial development
process.
Public Private Partnerships (PPPs).
Due to the huge financial requirements for implementation of industrial
enterprises, public and private sector funding both at respective sector levels
and through Public -Private -Partnerships (PPPs) financing will be embraced.
PPPs are expected to support industrial and infrastructure development and will
be through a combination of various approaches that include; Build-Operate
Transfer (BOT); Corporatization; lease and/or management contracts and
concessions. PPPs arrangements are also expected to support the development
of strategic industries and other initiatives such as: incubation, venture capital,
technology development and transfer and sub-contracting. The Policy
framework proposes the establishment of an Industrial Development Fund
(IDF).
Other Policy Frameworks
The Ministry is in the process of finalizing three other equally important
national policy frameworks namely: National Sub-contracting Policy
 National Business and Technology Incubation Policy and
 The National Intellectual Property Rights Policy.
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Training of Engineers and Technicians as a Flagship Project
The Ministry is in the process of developing a Marshal Plan for the training of
engineers, technologists and technicians with the aim of improving the skills
and competencies, increasing the number of engineers in the country.
The other projects are: Development of five (5) Small and Medium Enterprises (SME) Parks and
the
 Development of Mini- and Integrated Iron and Steel Mills;
Already two strategy papers on the training of Engineers and Technicians and
the development of Iron and Steel mills have been developed and validated.
Industrial Research, Development and Innovation
Industrial Research and Development (R&D) as well as innovation play an
important role in a modern economy where new knowledge is central on
boosting wealth creation, enhancing social welfare, and ensuring product and
labour competitiveness. These activities are essential in building innovative
capacity for enterprises to increase efficiency and productivity. The limited
linkages between industries, research institutions and training institutions; low
funding and weak institutional mechanisms for promoting collaborative
research have constrained the commercialization of research findings in Kenya.
Policy Statements to enhance Industrial Research, Development, and
Innovation
In order to enhance industrial research and development as well as innovation,
the Ministry is spearheading the;
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 Development of a policy framework to support commercialization of
research findings;
 Strengthening of the linkages between Universities, polytechnics and
other training institutions in pursuit of a curriculum that supports the
national industrialization process;
 Formulation of mechanisms to facilitate collaboration with the private
sector in research, technology transfer and development;
 Establishment a funding mechanism for Research and Development that
will facilitate innovation as well as the acquisition of strategic and
relevant technology for industrial development;
High quality Engineering Education
Concern has been expressed by some employers over the quality of education
and training of engineers in Kenyan universities. Measures to mitigate these
concerns include;
 Adoption and continuous updating of high quality engineering syllabus to
produce highly qualified graduate engineers;
 Establishment of
standing mechanisms for continuous dialogue on
curriculum development between trainers, alumni and employers;
 Explore ways of getting intellectual and technological contributions from
industry practitioners to engineering education;
 Development of strategies for funding of academic programmes and
research;
 Review of pre- and post- graduation on-job training of Engineers in
industry
CONCLUSION
For the first time since independence, Kenya has the best opportunity to address
the challenges facing the industrial sector and the entire industrialization
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process. The approval and implementation of the Sessional Paper on
Industrialization is expected to provide multiple benefits to the country that
include:
 Contributing to the envisaged annual GDP growth rate of 10 per cent per
annum;
 Reduction of the current estimated unemployment levels from 53.5 per
cent to single digit levels by 2030;
 Transforming the country into a middle-income nation offering high
quality of life through increased incomes and quality service from
industrialization;
 Maximization of natural resources exploitation through high value
addition, increased competitiveness and productivity;
 Growth of the other sectors of the economy because the sector has
forward and backward linkages with many other sectors of the economy,
such as agriculture, service industry, ICT, education, and tourism; and
 Considerable development of Science, Technology and Innovation
leading to significant increase in registered patents and commercialization
of research findings.
Dr Cyrus Njiru, PhD, CBS
PERMANENT SECRETARY
MINISTRY OF INDUSTRIALIZATION
Facilitating and promoting Industrialization