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By Joyce Njogu

According to a World Bank 2017 report, the East African region risks missing its long-term economic growth targets due to a widening disconnect between labour market skills needs and the graduates of higher education institutions. This is despite heavy investment by East African countries – in skills development, and public expenditure on education, which absorbs about 15% of total public spending and nearly 5% of gross domestic product. The report paints a grim picture of the availability of employable skills especially for industry such as technical mastery and artisanship.

Businesses in most countries often point to the failure of education and training systems to provide the skills they need. There is often a mismatch between skills supplied and skills demanded in the labor market. Industries that understand their current, immediate and future needs and those able to identify the opportunities presented by the ever-changing market place, will be best placed to capture the best skills in the pool. Today, new technologies, higher quality standards in world markets, flexible production processes, the pressure of global competition, the emergence of e-commerce and Industry 4.0 mean that the skill level for gaining and maintaining a competitive edge in businesses and industries is rising continuously.

Investment in skill development played a very important role in the Asian Tiger economies and the earlier miracles in the development of the Japanese and North American economies. Kenya must create an enabling environment that accelerates our socio-economic development through productivity enhancement. The primary strategy towards this end would be the development of our human resources to achieve a multiplier effect that will expedite economic reforms. Globally, several countries such as Finland Germany, Switzerland, Austria and Netherlands, have taken steps to strengthen policy guidance and regulatory frameworks for technical and vocational education and training. This has also enabled them tackle youth unemployment.

In Kenya, the government has in its budget for 2018/2019 financial year, allocated Sh444.1 billion towards education, with a focus on expansion of TVET infrastructure. This illustrates government’s commitment towards the provision of quality and relevant education and training. Kenya Association of Manufacturers (KAM) has for two years now, partnered with the Germany Technical Cooperation (GIZ) in the Technical and Vocation, Education and Training (TVET) Program. The program seeks to influence the policy direction regarding technical training towards demand-driven technical education in Kenya.

For our nation to realize Vision 2030, there has to be a focused attention towards building the human capital that will drive the industries through skills development. Primarily, the manufacturing sector is the guaranteed provider of productive, sustainable jobs. We cannot solve the unemployment menace in the country with rudimentary skills; we must secure the future of industry through practical cutting-edge skills for job creation.

Research by UNESCO reveals that, sub-Saharan Africa has the highest rates of education exclusion. Over one-fifth of children between the ages of about 6 and 11 are out of school, followed by one-third of youth between the ages of about 12 and 14. There is need therefore for young people in the region to discard the notion, that vocational education is an inferior education option. Vocational training is a sure way for developing nations to industrialize at a faster rate. Developing countries could minimize skills mismatches by placing greater emphasis on TVET.

Human Capital is one of the biggest investments of any industry. It is important that skills development and other investments comprise one of the factors necessary for productivity and growth. Continued improvement of productivity is also a condition for competitiveness and economic growth and therefore poverty reduction. As a country, we indeed face the possibility of a ‘skill divide’, which will be even more threatening to our development prospects than the ‘digital divide’.

The writer is Head of KAM Consulting at Kenya Association of Manufacturers. She can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.. This opininion piece was first published on the KAM website.

Posted On Tuesday, 16 October 2018 08:53

By Sachen Gudka

Money is the bloodline of any economy, and for businesses to thrive, its steady flow and circulation are critical. Cash is king.

However, when this is not the case, the resulting effect is devastating for the entire business ecosystem due to its adverse impact on profitability, productivity and trust. Supply chains cannot be sustained and value chains are decimated.

Increasing cases of delayed payments by both National and County governments to numerous businesses countrywide are alarming. Delayed payments impede the effective circulation of money in the local economy, adding excessive strain to businesses that are already balking under other local and global market factors.

Unfortunately, the hardest hit by this trend are key drivers in bringing the Big 4 plan to fruition. For instance, due to the late harvest last year, the government, in order to continue with the maize flour subsidy programme, had to buy the maize imported by local maize millers. Presently, the Maize Millers are still owed 80% of the total debt, which amounts to an excess of Ksh 2.5 Billion. This has put a huge strain on their cash flows and in turn, they are unable to buy adequate maize and wheat from local farmers. Additionally, reimbursement owed to Maize Millers, for the transport cost incurred in transferring maize from the port to the mills under the maize subsidy programme, has also been delayed forcing them to take maize in lieu of cash payment.

Another conspicuous example is the money owed to media houses regionally and at the national level. Last week, one of the largest employers in the Country, Nation Media Group registered a 35.5% drop in profits from the previous year, owing to provisioning for unpaid revenue of Ksh 856 million by the Government Advertising Agency. Indeed, the entire media sector is owed over KSh 2.5 billion. This tremendously slows down the operations of the media houses and undoubtedly hampers their ability to be effective in the core mandate to inform and educate citizens. It also impacts the companies’ ability to offer quality employment and significant output.

A report done by the European Central Bank in 2015 on Governments’ payment discipline: the macroeconomic impact of public payment delays and arrears, unexpected delays in payment reduce corporate profits significantly since they alter the present discounted value of payment. This is especially so in our case as there are no interests applied on reimbursements or arrears. The report found that, increase in delayed payments reduces profit growth by 1.5 to 3.4 percentage points.

Because delayed payment has a ripple effect, suppliers of affected companies and other businesses in the value chain are also severely affected. Worst of all, SMEs who rely on a much urgent supply of cash to run their day-to-day operations become crippled and, in many cases, bankrupt. Other macroeconomic effects of this could be the increased cost of credit to companies – as it stands already this is a huge impediment to the growth of the manufacturing sector.

A look at a long-standing issue such as the VAT refunds owed to manufacturers paints this picture clearly. The refund process has been very slow because of the required administrative process. This means that a lot of money, which runs into billions of Kenya Shillings, is held up in Government processes causing manufacturers to borrow heavily due to cash flow constraints.

Just last year, our retail sector was at a near-collapse as some of the largest supermarket chains were caught up in arrears amounting to over Ksh 40bn to suppliers all over the country. The inability for supermarkets to absorb locally produced goods translates to lower sales by local manufacturers, who are already owed billions by both County and National Governments.

Following this, the Government through the Ministry of Industry, Trade and Cooperatives together with stakeholders from Industry led by KAM, developed a study on regulations for prompt payment and a code of practice to help ‘stop the bleeding’. Some of the recommendations were; to review the current payment period to a shorter time and the establishment of a legal framework to curb the culture of late payment following international best practice. For example, to discourage late payment, the EU Directive 2011/7/EU provides for statutory interest as a redress procedure for the aggrieved party in the Supplier agreement. According to this law, a Supplier is entitled to interest for late payment from the day following the date or the end of the period for payment fixed in the contract.

At this point, businesses are dealing with the increased cost of operation brought on by various factors including the cost of electricity, fuel and high taxes. Citizens, on the other hand, are dealing with an increasing cost of living. We cannot afford to aggravate this by reducing businesses’ capacity to function productively.

Government must act fast on this matter and salvage our position as a preferred investor-destination in Africa.

The writer is the Chairman of Kenya Association of Manufacturers and can be reached on This email address is being protected from spambots. You need JavaScript enabled to view it..  This was first published as an opinion piece on the KAM website on 23rd August  2018.

There has been advocacy on delayed payments and you can read more about this issue here Retail Trade Sector Regulations and Code of Practice - Retail Trade Association of Kenya (RETRAK).

Posted On Thursday, 11 October 2018 08:41

By Bryan Cuthbert

The global imagination of Rural, is mainly a depiction of low-income communities who rely primarily on agricultural activities for their livelihood.

Agriculture and Industry have long been tied in a symbiotic relationship that sees the former provide raw material such as hides, skins, cotton, fresh fruit, tree barks among others towards the creation of final products. Industry on the other hand, incorporates many agribusinesses into the numerous value and supply chains that drive it, and this catalyzes the growth and productivity of Agriculture. Its, additional generation of foreign earnings through exports also provides an income to many.

According to the 2018 Kenya Economic Survey, our agricultural sector made the highest contribution to GDP with 31.5% in 2017. Just to get a better scope of the contributors to this; the total value of marketed production increased by 8.2% to Kshs. 446.9 Billion from Kshs. 413.3 billion in 2016, with the highest marketed production being livestock and products at Kshs. 135.6 billion, tea at Kshs. 134.8 billion and horticulture at Kshs. 114.3Billion.

These figures are compelling! And to think that as a country we have barely scratched the surface with regards to the potential in this sector. We need to start thinking – Agro-based Manufacturing. Meaning we should renew our commitment towards increased value-addition and our zeal towards realizing prolific backwards and forward linkages along value chains.

In the Food Security and Manufacturing Pillars of the Big 4 Agenda, the government has put in place measures that seek to expand food production and supply in the country, as well as a concerted effort towards the reduction of food prices to ensure affordability to all citizens.

Under the two pillars, the government has prioritized textiles and apparel, leather products, agro-processing and construction materials. To promote agro-processing, the Government is focusing on tea, coffee, meat, sugar, dairy, fruits, and vegetables, in order to obtain more value and create an additional 200,000 jobs in the country.

Why then does value addition matter?

A major contributor to food scarcity in the country has been the massive post-harvest losses that occur due to low-value addition and inadequate cold chain facilities. Food Agriculture Organization’s (FAO 2014) report on Food Loss Assessments, approximates that Kenya losses between 20% – 50% of its agricultural production due to post-harvest losses.

However, if we recalibrate our thinking towards Agro-based manufacturing we can significantly minimize this wastage and increase the quality of products and their shelf life – through value addition. For instance, at present, fresh milk can last 24 hours at most depending on climatic conditions. But, once it is processed into various products it can last months on end. Hence we need to kick start deliberate efforts by county governments and industry to, for instance, set up milk cooling plants along the supply chains towards this endeavor for value addition in the country.

Value addition also promotes the growth of backward and forward linkages, and in the process creates the much-needed productive jobs for the youth, and equally, increases the purchasing power of citizens. Increased purchasing power means increased demand for locally made products and this in turn, will raise the local market share of manufactured products. As demand for locally made products increases, so does the demand for agricultural products to cater for the new market and ultimately, demand for farm inputs such as fertilizers, better machinery that will also lead to the expansion of the agricultural sector.

Moreover, value addition provides additional foreign exchange earnings through export of agro-processed products. The world chocolate market, for instance, is worth USD 100 Billion annually, however, the two largest cocoa growing countries, Cote D’Ivoire and Ghana, only earn USD 5 Billion since all the value addition is done outside those countries.

The same applies to products such as tea, coffee, hides and skins amongst others. If we are to add value to these products, we would realize five times the earnings we currently have (at the very least), and in the process, create more direct and indirect jobs along the value chains.

97.3% of our tea is exported in bulk form meaning that only 2.7% is valued added. This means that if we are to add value to our tea, we would earn at least 500% of the value of the raw exports. On the other hand, value addition of cotton from farm to fashion increases value by about 600%, a factor that is lost when the raw material is exported. This can be expanded exponentially in other agricultural commodities, and ultimately enhance wealth creation and erode poverty.

To achieve the above, it is critical that we have policies in place that encourage the competitiveness and growth of local industries. Additionally, it is important that we challenge land policies that are continually reducing the amount of land available for agriculture, and enforce cooperative society laws to curb the rampant mismanagement of farmers’ resources to encourage farming in the counties. This is one of the surest ways to attain the Big 4 Agenda.

The writer is the Chapter Chairman of Kenya Association of Manufacturers (KAM) North Rift Chapter. He can be reached on This email address is being protected from spambots. You need JavaScript enabled to view it.. This was first published as an opinion piece on the KAM website on 25th September 2018.

Posted On Tuesday, 02 October 2018 13:10

By Kuchio Asonga,

On the evening of Sunday 28th January 2018 broadcasters and social media platforms were a buzz with news of a fire that was raging in the Langata area. As more information trickled in, it was revealed that the Kijiji Slum in Langata Constituency was ablaze.

In the hours that followed Twitter was awash with Kenyans venting their frustration and disappointment on how the situation was unfolding with many using the hashtag   #Langatafire for this.

One of the more popular tweets that drew numerous reactions on the platform was from Dr Mercy Korir, a medical doctor and health/media correspondent with the Standard Media Group. The tweet seemed to capture frustrations Kenyans’ have with how fire and rescue services are run in Nairobi County and Kenya in general.

 

Over the years’ numerous disasters such as the Nakumatt supermarket fire in 2009, Sinai (pipeline) slum fire in 2011 and Jomo Kenyatta International Airport fire in 2013 that razed the arrivals terminal have brought disaster management to the fore as a national issue.  At the county level a series of school fires following unrest among students in secondary schools across the country highlighted county governments inadequacy in providing Fire and Rescue services.

Kenyan citizens would be forgiven for giving in to hopelessness and despair. However, out of the public eye there have been efforts towards developing public policy that could eventually improve Kenya’s disaster preparedness and more specifically strengthen fire and rescue services.

In 2009, the Ministry of State for Special Programmes presented a National Policy for Disaster Management in Kenya. The document covers Kenya’s disaster profile that includes droughts, fires, floods, terrorism, technological accidents, diseases and epidemics. The policy provided an overarching framework for decision-making and coordination across disaster management sectors and actors that include government, ministries, civil society organisations, international organisations and the private sector.

The promulgation of the Constitution of Kenya 2010 highlighted the need to cascade the Policy to the county level. In 2013 the Kenya Law Reform Commission (KLRC) with input for various stakeholders in the sector developed two model laws for county governments to adapt in their county jurisdictions; the County Disaster Management Model Bill and the County Fire and Rescue Service Model Bill.

In addition, two senate Bills were drafted and published; these were the County Disaster Management (CDM) Bill 2013 and the County Fire and Rescue Service (CFRS) Bill 2013.

These Bills were viewed as essential towards helping counties build capacity and implement the national policy on disaster management within a legal framework. However, in 2014, both Bills were merged into the County Disaster Management Bill 2014 with more focus on disaster management than on fire and rescue services. According to the Association of Fire Protection Industry Stakeholders (AFPIS) their members were not consulted on the merged Bill.

AFPIS has argued for separate Fire and Rescue legislation a part from disaster management legislation like in the United States of America, the United Kingdom, Tanzania and South Africa which have specific Fire and Rescue Acts.

According to data from Kenya’s National Disaster Operations Centre, since 2008 more than eight million people have either died or been affected by fire related incidents across the country with the financial cost being losses of over KShs. 68 million. Without any real attempts to mitigate this situation the loss of life and property is bound to keep rising.

Kenya, a nation of estimated population of 49 million, has only 600 firefighters that are mainly based in the urban areas of Nairobi, Kisumu and Mombasa counties. Majority of the counties in Kenya have no Fire and Rescue service in place.

Kijiji Slum fire in Langata Constituency could be added to the litany of fire incidents that have occurred across the country or could be a catalyst to action through private-public dialogue on policy interventions that could mitigate death and losses through fire.

Posted On Wednesday, 21 February 2018 14:50