The government is reviewing its industrialization policy to allow investors to draw cheap, stable power directly from producers, as it moves to curb the exodus of manufacturers to neighboring countries.
The Principal Secretary for Industry Dr Juma Mukhwana said the review follows concerns that dozens of industries had shut down and relocated to countries offering cheaper power and more stable tax regimes.
Dr Mukhwana said the revised policy will also allow investors to generate their own power from renewable sources such as solar and wind to lower the cost of production.
“We have witnessed industries moving to neighboring countries due to high costs of energy and double taxation in the counties, and we are seeking to address this through direct evacuation of power from producers,” said Dr Mukhwana.
Speaking in Naivasha during a stakeholders’ meeting with County heads of trade, the PS said the proposed National Industrialization Policy (NIP) was designed to drive sustainable industrial growth through stronger regulation, coordination and data-driven monitoring of the sector.
Dr Mukhwana said they were also engaging the Energy and Petroleum Regulatory Authority (EPRA) to revise the policy on high energy costs to boost local manufacturing.
He noted that the country’s comparative advantage lay in sectors such as pharmaceuticals, textiles and apparel, leather, automotive and electronics manufacturing, which he said had the potential to transform the economy and create jobs.
He added that emerging areas such as information services and Business Process Outsourcing (BPO) presented further opportunities for employment and innovation.
“This policy is a new contract with Kenyans as it reflects our resolve to stop exporting raw materials and instead create prosperity by adding value to our own resources, expanding local manufacturing and creating more quality jobs,” he said.
On funding, Dr Mukhwana said the national government had constructed County Aggregation and Industrial Parks in 34 Counties, disbursing Sh250 million to each, matched by equal funding from the Counties.
However, he raised concern that only 16 of the parks had been completed due to low uptake of the funds, adding that the government would support their operationalization this financial year.
The PS said 90 per cent of Kenya’s industries were concentrated in six major Counties, challenging other Counties to provide an enabling business and investment environment to attract investments and create opportunities locally.
He noted that the African continent contributed partly to three per cent of the global manufacturing sectors, noting that Kenya must invest in value-added sectors to catch up with the fast-paced global players.
“Counties must utilize their idle land for investment to ensure they become engines of industries and trade, driving local manufacturing to help address the rising import bill, raking in billions of shillings every year,” says Dr Mukhwana.
In her part, the Chair of the Council of County Executive Members Caucus, Leah Mariam, said counties had faced reduced budgetary allocations to operationalize the parks.
In addition, she noted that investors continued to face double taxation and expensive levies and business permits, concerns she said the new policy would address once adopted.
Stakeholders at the meeting reviewed the policy’s proposed priority sectors, selected for their strategic value, Kenya’s competitive advantage and feasibility of implementation.
The new policy is expected to provide a roadmap for accelerating industrialization, promoting value addition and advancing Kenya’s aspiration of becoming an upper-middle-income, industrialized economy.
By Erastus Gichohi and Beatrice Wanjiku
