Listen to This Article Enhance your reading experience by listening to this article.

Kenya has grappled for too long with the challenge of reviving its ailing manufacturing sector, but the time has come to take decisive action in our quest to rejuvenate the nation’s economic prowess.

Gone are the days when eager youths flocked to industrial areas in Nairobi and other major towns, hoping for a chance at the jobs that once thrived there.

Yet, the underlying issues that plague Kenya’s industrial competitiveness remain largely unaddressed, as successive administrations have failed to confront this challenge head-on.

With a new government assuming office, it becomes apparent that one of the engines propelling Kenya’s economic growth is faltering.

Kenya’s economic imbalance is starkly evident, with the nation heavily reliant on imports to meet its needs, the elephant in the room is the dearth of industries in the country.

This vulnerability not only exposes Kenya to both local and international shocks but calls for a sobering up moment on how we can bridge the gap between imports and exports through alternative financial inflows.

While diaspora remittances have provided a steady stream of income, leveraging the manufacturing sector could have offered a more sustainable solution.

Regrettably, Kenya’s manufacturing sector has languished in an inhospitable business environment, characterized by unpredictable taxes and bureaucratic hurdles that have refused to give.

The ease of doing business has deteriorated, prompting many manufacturers to seek greener pastures abroad, thereby stalling the sector’s growth.

Despite being hailed as the cornerstone of thriving frontier economies, Kenya’s industrial potential remains largely untapped.

Industrialization, fuelled by government policies, technological innovations, entrepreneurial drive, and consumer demand, holds immense potential to cure Kenya’s biggest problems which include unemployment.

However, the current economic landscape is such that exports fall short, necessitating alternative financial inflows to sustain the economy.

Inflationary pressures further compound the challenges facing Kenya, eroding the benefits derived from a weaker exchange rate.

Investors, both local and international, wary of Kenya’s high inflation rates, seek refuge in more stable and friendlier economies, further weakening the exchange rate and exacerbating the cost of imports.

This is the vicious cycle that is perpetuating Kenya’s self-destructive pattern where rising food and fuel prices drive inflation, which, in turn, weakens the exchange rate, amplifying the cost of imports, and fuelling further inflation.

In such turbulent times, it is only swift and decisive action that can bring about change. Just as a prudent pilot navigates a storm, Kenya must prioritize stabilising its economy to weather the turbulence first.

That is why the budget must also align to this tune, for example, by reducing taxes and increasing funds meant for development.

Going by the current Budget Policy Statement (BPS) the bulk of the revenue, Sh2.9 trillion, is expected to come from ordinary revenue which means more tax pain for taxpayers.

On the other hand, total expenditure is projected to reach Sh4.2 trillion, or 23.2 per cent of the GDP. Unfortunately, most of the spending or Sh2.9 trillion will take care of recurrent costs, while development expenditure will gobble up Sh887.8 billion, coupled with a transfer to County Governments totalling Sh446 billion.

With a debt exceeding Sh11 trillion, the government must devise strategies to spur growth and alleviate the economic strain.

Repairing and recalibrating the engines of growth while weathering the storm will ensure a safer journey home, albeit with some delays.

Suffice it to say Kenya is in a perfect storm, and by addressing the systemic challenges facing the manufacturing sector and implementing sound economic policies, the country can free synergies that can help investors navigate through the storm.

—The writer is the Business Editor, People Daily