Betty Maina on the hits and misses in manufacturing and export growth plans – Business Daily
Industrialization CS Betty Maina. FILE PHOTO | NMG
Betty Maina was in 2015 plucked from the private sector, where she was the voice of the manufacturing industry, by President Uhuru Kenyatta and made Principal Secretary for the East African Affairs.
Her subsequent appointment as Trade and Industrialisation Cabinet Secretary in March 2020 was celebrated by manufacturers.
But she will exit with mixed feelings about her performance, given that during her time, the contribution of the manufacturing industry to the gross domestic product (GDP) declined for the fifth year in a row last year, sliding below 7.6 percent, just half of the 15 percent target.
She recently sat down with the Business Daily for her exit interview.
How does it feel to be a policy maker having previously worked as a trade policy activist as CEO of the Kenya Association of Manufacturers?
Working for the Kenya Association of Manufacturers [KAM], I had a distinct audience, constituents and issues to pursue. We had very good relations and interactions with the government. KAM significantly got a lot of requests it made because of those interactions.
Being a policymaker means you are looking beyond the needs of one sector. You are balancing the needs of consumers, retailers and manufacturers. It gives you a much broader perspective.
Coming to this position of policymaking with experience from the industry has been extremely beneficial and enriching for me. I have insights that people who might not have that experience don’t.
It is widely believed that the Jubilee administration abandoned the Big Four Agenda of which manufacturing was a key pillar. What are your views on this?
Manufacturing under the Big Four has never been abandoned. Broadly, there was a target of expanding it to 15 percent of the GDP, increasing investments five-fold and improving on cost of doing business indicators.
From where I sit, the GDP contribution target of 15 percent was going to be a very tall order because services are growing much faster. In terms of output, which is the metric we chose to focus on, we have seen growth.
What are the key achievements?
We have expanded industrial infrastructure like the special economic zones [SEZs] and EPZs [Export Processing Zones]. We have gazetted all public SEZs and we are in the process of gazetting private SEZs that will support greater production.
These things take time. I know I sound like it is a work in progress, but it depends on budget availability. The incoming government will want to expand the industrial infrastructure.
Leather, textiles and agro-processing sub-sectors had been identified as priority areas under the Big Four agenda. How did we perform?
The metric to look at is the number of enterprises and the quantum output. We have seen new investors coming to Kenya in this period. For example, Mars Wrigley set up just before Covid and is now employing more than 3,000 people.
For the expansion of leather and apparel, we have Kenanie Leather Park [in Machakos] and even set up some go-downs within it, and that’s an area we will continue to see more growth. We have completed the revitalisation of Rivatex.
The only challenge is that we don’t have the consumption of local cotton because we don’t produce much and a lot of what we process is imported. On pharmaceuticals, we have new firms both at EPZ, for instance, Square Pharmaceuticals [of Bangladesh], and outside the EPZ.
What progress has been realised since the launch of the Integrated National Exports Development and Promotion Strategy in July 2018, which targeted diversifying markets and products?
Traditionally, we have sold fairly limited export baskets to only a few countries, mostly in Europe, Britain and the US through Agoa [African Growth and Opportunity Act]. In addition, we have also used our traditional markets of the East African Community and African Continental Free Trade Area.
It was important to begin to look at how we can diversify our markets. That export promotion strategy identified different products for different regions and how to access them. It was twin-pronged on how to access new markets and diversify products.
One of the areas we have really focused on is expanding our reach in the Far East, including China, Japan, the Middle East and other places that we don’t traditionally sell a lot to.
Accessing the Chinese market was a priority under that export strategy…
In the context of China, we were very keen on expanding the sales of avocado. Our first entry into that market was with frozen avocados. But the capacity to freeze is not available to many players. So it was very important that we address the entry of fresh avocadoes.
To do that we needed to overcome the hurdles of technical barriers as well as sanitary and phytosanitary (SPS) conditions. This is important because the export of food is rigidly regulated. So one of the exciting things is that Kenya has managed to persuade Chinese authorities to allow entry of fresh avocadoes.
Do you believe you have laid a foundation for avocado to become a top export crop for Kenya?
Ten years ago, Kenya was not on the map in terms of avocado production. Right now, we are the fifth largest producer globally. Quite a bit of fresh avocadoes were going to Europe, mainly to Germany, the UK, and the Netherlands.
I am excited by the progress in avocado and the numbers will keep on increasing. What we need to make sure we do as a country is to ensure we are selling quality products. Because of the growing demand for Kenyan avocadoes, we have had instances where people are selling unripe crops which is very harmful to the markets.
This is produce that has a lot of promise. We also have possibilities of value addition. For example, some people are already extracting oil out of avocado, processing it and exporting it.
Talking of value addition, Kenya has struggled and a lot of exports are raw…
There are many challenges around value addition. But I am glad we have made a bit of progress. The biggest challenge is tariff escalation where when you sell a product raw, you may do that at zero duty in many markets.
But when you sell it processed, then additional duties emerge. For example, if it is vegetables, you sell it fresh, the duty may be around five percent, but it goes to 18 percent if you sell it processed and packaged. That attracts people to export raw rather than value-added products.
The second challenge is capacity where a lot of our farmers cannot do the processing. There are only a few processors that have put in a plant either at the EPZ or outside.
Given the opportunity, would you like to continue serving under the incoming administration?
Public service is a great honour. I don’t know anybody who would not want to continue in public service. But it is a great dream and honour and I have been greatly privileged. It is a decision that is made by others besides ourselves.