Advantage Forum, Milan: Italy By Carole Kariuki CEO Kenya Private Sector Alliance (KEPSA)

Transcription

1 Overview of the Industrial and Corporate System and Identification of the Sectors where it is possible to achieve a major growth and possibility to establish international partnership Advantage Forum, Milan: Italy By Carole Kariuki CEO Kenya Private Sector Alliance (KEPSA)

2 Outline Introduction About KEPSA -Background information of the paper Overview of the industrial and corporate system Identification of the sectors where it is possible to achieve a major growth and possibility to establish international partnerships Conclusion

3 Introduction About KEPSA " KEPSA is the umbrella body of the private sector in Kenya " Its mandate is to work with other stakeholders to create a conducive investment climate and make Kenya the most competitive economy in Africa and beyond " KEPSA is formed by the sector associations and corporates that come together to speak in one voice on investment climate in Kenya " KEPSA has more than 80 associations and over 200 companies. This gives KEPSA a reach of more than 100,000 corporates in Kenya operating beyond the boundaries of Kenya. " The sectoral associations pursue agendas that affect the business environment for their sector members and join hands with each other and through KEPSA to pursue a conducive business environment at both National and County levels.

4 Introduction Background information of the paper q The private sector is the driving force behind economic growth and essential to achieving meaningful development outcomes that raise people out of poverty and put them on the road to prosperity. q It is also the primary source of economic growth, job creation, government revenue used to finance essential public services, and the goods and services required to improve people's quality of life. q Therefore, a vibrant, strong and active private sector is a prerequisite in contributing to the creation of jobs, mobilizing private investment, unlocking innovative solutions to intractable development challenges, and delivering products and services that improve the lives of people for sustainable economic growth. q The government of Kenya has strengthened its engagement with private sector actors as partners through public-private partnerships in creating the conditions for strong and sustainable

5 Overview of the industrial and corporate system The tone and content of Kenya s government policies and statements recognizes the need for economic recovery based on high-value, high technology manufacturing and corporate governance. Manufacturing as a key source of wealth creation, evolve as the industrial system develops. Kenyan industrial system is constantly evolving, in manufacturing goods (and latterly services) with the purpose of capturing value from the work done and the processes involved. Businesses exist within a complex, global industrial system, as there are no national boundaries to business. Rather, decisions on where and how to do business are based on the cost of business, economic stability and robustness of legal and policy frameworks.

6 Overview of the industrial and corporate system Cont d The manufacturing sector accounts for 13% of the Gross Domestic Product (GDP) growth with limestone, soda ash, gemstones, salt, and fluorspar being the chief minerals produced. Industries include food processing, flour milling, horticulture, and the manufacture of consumer goods such as plastic, furniture, batteries, clothing, and cigarettes. There are potential and emerging sectors in oil and Gas, renewable energy, mining and extraction following recent discovery of coal, titanium and oil in the country. Agriculture remains the main contributor of GDP growth at 24% and efforts are being put to diversify the exports and to create value addition to the major exports such as cut flowers, tea, coffee, leguminous vegetables and palm. In addition to the exports, about 75% of Kenyans are engaged in farming, largely of the subsistence type.

7 Kenya s industrial system focuses on innovation and creativity to drive wealth creation. Further, value for industrial systems is captured through manufacturing sector where indigenous skills Overview of the industrial and corporate system Cont d Efforts are being made towards providing cheap energy including approval of new wind farms capable of generating a combined 630 Megawatts (MW), and power generation from renewable sources such as wind, solar, geothermal, liquefied natural gas and coal rather than the current expensive diesel-driven thermal power generation. The corporate system in Kenya targets achieving a competitive manufacturing industry with the potential of creating jobs, expanding the country s export basket, and accelerating the growth of other industries.

8 Overview of the industrial and corporate system Cont d Towards making Kenya a globally, competitive country, the skills base is critical, both on a national level and for the sustainability of a locationspecific and/or highly specialized industrial system. Kenya prides itself in its large pool of highly educated, skilled and sought after work force in Africa, trained from within the country and in reputable institutions around the world. Both the government and the private sector are committed to providing education which links the industry needs with skills acquisition, including responsibility in acquiring the right perception of manufacturing, its value, and the attractiveness of working in the modern industrial environment. Kenya also has high quality social amenities such as restaurants, hospitals and Entertainment spots, wildlife and natural resources which

9 Overview of the industrial and corporate system Cont d Over the last five years, FDI into Kenya has been growing indicating growing investor confidence. Outward FDI has also been growing as a result of the country s participation in regional integration through EAC, COMESA etc. UK, USA & India remain the largest top investors in Kenya with Coal, Oil and Natural Gas being the highest capital investments while communications remains the sector with most new projects. As the leading economy in East Africa, Kenya is strategically placed and has well-developed business infrastructure making it a natural choice for investors hence, a regional hub. This grants investor s access to the larger East African Community, regional markets and global markets.

10 Overview of the industrial and corporate system Cont d On corporate systems, Kenya is making efforts to lower the cost of doing business by conducting extensive business regulatory reforms intended to substantially reduce the number of licensing requirements and to make the licensing regimes more simple and transparent and focused on legitimate regulatory purposes. Kenya is a fully liberalized economy with no obstacles hampering the free flow of trade and private investment. These include exchange controls, import and export licensing, as well as restrictions on remittances of profits and dividends. Kenya has a substantial private sector, including a significant number of foreign investors with the Kenya Private Sector Alliance (KEPSA) voicing private-sector concerns The government frequently conducts regular policy dialogue with

11 Identification of the sectors where it is possible to achieve major growth and to establish partnerships The Government of Kenya encourages multi-stakeholder partnerships with local and international private sector partners to deploy the most appropriate resources, approaches and expertise towards the realization of its development objectives as outlined in the vision Three main sectors are key to making Kenya a Globally Competitive and Prosperous country. These are: Transport and Infrastructure; Energy and Agriculture. Specifically, under the vision 2030, the long-term development blueprint for the country, bankable projects/opportunities have been identified as areas of partnerships.

12 Nairobi commuter Rail to provide for expanded, safe, affordable and efficient rail commuter services in Nairobi; Railway cities (Nairobi, Kisumu & Mombasa) to be 85% financed privately including redevelopment of existing rail stations into mini cities which include business parks for light manufacturing, hotels, shopping arcades, restaurants and parking garages; Dry Port at to operate as a center for transshipment of sea cargo to inland destinations; and Special Economic Zones (SEZs), Airport City, Specialized Cargo terminal, Airport hotel, Terminal building area, Duplicate greenfield & Identification of the sectors where it is possible to achieve major growth and to establish partnerships Transport and Infrastructure Sector: The sub-sectors in the infrastructure segment of the economy include roads, rail, air, maritime and inland water transportation systems, telecommunications as well as energy. Investment and partnership areas include: oil exploration, pipeline rehabilitation, generation of geothermal, hydropower, oil based thermal, wind and solar renewable energy sources. The bankable projects are:

13 Other areas of partnership include processing and marketing of agricultural products including tea, coffee, flowers, fruits and vegetables; cotton, pyrethrum, sugar and oil crops; camel farming, production and marketing of canned and fermented meats, provision of superior breeding stock, leather tanning, rearing of wild animal and game meat production, e.g. ostrich and crocodile farming, production of chicken stock birds, milk and butter production, honey refining and production of allied inputs. Identification of the sectors where it is possible to achieve major growth and to establish partnerships Agriculture Sector: The agricultural sector generates the highest foreign exchange earnings for the country from products such as tea, horticulture, coffee, pyrethrum, etc. The sector employs about 75% of the population and contributes 24% of the GDP The bankable project is Modern & State of the Art Abattoir in Mandera Town- The development of a modern state of the art abattoir with capacity to slaughter over 200 heads of livestock, under Islamic tradition.

14 Identification of the sectors where it is possible to achieve major growth and to establish partnerships Energy Sector: Access to reliable and affordable electricity is vital for economic growth. The projects of partnership includea2 * 70MW Olkaria V; 50MW Wind Power by 2016 in Isiolo ; 2 * 140MW Olkaria VI & VIII; Mombasa Petroleum Trading Hub-Single Buoy Mooring (SBM) comprising two offshore petroleum jetties with one dedicated to loading/offloading of crude oil and black fuels, and the other dedicated to refined products; Magwagwa multipurpose dam development project comprising the construction of a 95m high and 450m long concrete faced rock fill dam with a design total plant output of 120 MW and an annual energy production of 510 gigawatt hours per year (GWh/y); establishment of a large-scale Multipurpose Water Reservoir catering for Public/ Industrial Water Supply, Irrigation, River Regulations, Flood Control and Power Production (20MW); and construction of a 54m-earth embankment dam located at 2.5 km upstream of Webuye falls.

15 Identification of the sectors where it is possible to achieve major growth and to establish partnerships Tourism: Kenya has a total of 59 national parks, reserves and sanctuaries including wildlife, sports, scenic, culture, beach, adventure, specialist and business including conference tourism. A wide range of potential tourist attractions which can be exploited through partnerships include establishment of cruise ship, amusement parks in major cities, airport hotels, health spa projects, and lodges in several game parks. Trade and Industry: The sector encompasses manufacturing and trade in goods especially exports and accounts for 20% of the national GDP with high employments both in the formal and informal sector. Strategic partnership and investment opportunities exist in the areas of agroprocessing, sugar refining, paper products, metal and engineering, vehicle parts and assembly, electrical and electronic equipment, plastics, chemicals and pharmaceutical sub-sectors.

16 Identification of the sectors where it is possible to achieve major growth and to establish partnerships Housing: Provision of decent affordable housing for the population is not only one of the major government priorities, but also vital for growth. The specific partnership and investment opportunities in the sector include: slum upgrading and urban renewal, construction of middle and low cost housing, low cost technologies and materials production.

17 Conclusion Partnerships under the right conditions yield better and more sustainable economic growth. For the private sector, sustainable development with focus on long term business interests will only be achieved in alliances which are strategic. Strategic alliances are those alliances that are critical to the success of a core business goal; the development of a core competency; blocks a competitive threat; creates strategic choices; and mitigates a significant risk to the business

18 Thank you Kenya Private Sector Alliance (KEPSA) 5 th Floor, Shelter Afrique Building, Mamlaka Rd Nairobi, Kenya. info@kepsa.or.ke / Tel: