For the past three decades, industrialization has been top on Kenya’s economic development agenda. We are now seven years away from the Vision 2030’s goal to have the manufacturing sector increase its contribution to the Gross Domestic Product by at least 10% per annum.
The significance of a strong manufacturing sector to our economy cannot be underestimated; after all, industrialization is the fastest remedy to the unemployment problem we face. According to the World Bank, 5.7 percent of the labor force was out of work in 2021, a rate which has gone up from 2.8 percent in 2013.
Many investors have showed willingness to support the government towards the industrialization goal, despite the obvious shortcomings they face such as inadequate infrastructure, power inconsistency and difficulties accessing capital.
We are at a point where we can say that Kenya has all the fundamental ingredients that contribute to a conducive environment for industries to thrive; Land, Labor, Capital and Technology. However, there is a fifth fundamental ingredient under threat – Entrepreneurship: crushed under the weight of heavy taxation, corruption, state intimidation and conditions that make willing investors run away.
Economists and policy makers often look at how the Asian Tigers -Hong Kong, Singapore, South Korea, and Taiwan- were able to undergo and maintain rapid industrialization between the 1960s and 1990s. A close study will reveal how these countries formulated flexible laws on taxation, labor and the operating environment to expand their industrial operations and increase output from companies. This led to an increase in goods production for both local and foreign markets. To open access for their manufactured products abroad, they put suitable export promotion policies hence seeing their economies expand massively.
How can we then be aspiring to do the same if our state agencies are keen on doing the opposite? In the past five years, we have seen government increase the tax burden on businesses while state agencies crash home-grown industries, shutting down factories over disputes that would have been settled as operations continued. As a result, the masses lose their source of livelihood. Of the many failures by our state machinery is the breakdown in our justice system and law
enforcement. It is just this week that an illegal 4-year closure and seizure of Thika-based Africa Spirits Limited (ASL) by the Kenya Revenue Authority and the Directorate of Criminal Investigations came to an end. Illegal because while there was use of the criminal justice system as an avenue to resolve disputes, the courts found that the criminal cases were instituted without proper basis or due process. To worsen this already unacceptable scenario, the DCI in complete violation of repeated court orders over the years, refused to hand over the premise back to the investors as directed by the courts. The result has been massive destruction of property and equipment under state watch, paralyzing of the business and loss of hundreds of jobs, not to mention loss in tax revenue to the country.
While investors have been willing to grapple with the challenges of unreliable and expensive electricity, poor roads and such in the hope of transforming the economy, it is surprising that a government that aims to industrialize is first to disregard its laws and still hope to attract investors.This threat of misuse of law and disregarded law looms over all businesses operating in Kenya, especially the small home-grown industries, and has quietly and consistently ensured many businesses close down. Kenyan taxpayers, be it individuals or entities operating in Kenya have to stand up and voice their concerns when institutions that are mandated to protect their welfare turn against them.
Businesses have to speak up against unfair conditions imposed on them without fear of retaliation through raids and closure while doing business legally. This country will only achieve its aspirations if governmental institutions and the people put in-charge are held accountable for their actions.
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