Lack of market data delays State plan to industrialise counties

Delay by county governments to map out value chains has slowed down efforts to set up County Aggregation and Industrial Parks (CAIPs) across the country.

The national and county governments are partnering to build industrial parks in each county in a bid to grow manufacturing and investments through agro-industries.

At a breakfast meeting in Nairobi this week, stakeholders from western Kenya counties called for the postponement of a planned conference on CAIPs to give them more time to map out their value chains.

The conference had been scheduled for May 21 up to 23 in Kakamega.

Kakamega Governor Ferdinand Barasa announced the resolution to postpone the event, saying the move aims to give the counties more time to profile themselves for investment opportunities in the top three value chains, which will be launched at the conference.

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“The conference will now take place in the first quarter of the next financial year, between July and September 2025, at a date to be communicated,” Barasa said.

For smooth operations, the host county boss also pointed out the need to set up supportive infrastructure.

Barasa said there are plans to ensure constant power supply, good roads leading to the parks, enough parking space as well as water and sanitation services.

To achieve this, the stakeholders proposed the formation of a technical team to oversee and plan for the operations of the industrial parks.

The team, Barasa explained, will be made up of representatives from both the national and county governments as well as the Kenya Development Corporation and other relevant state agencies.

Trade, Investment and Industry Cabinet Secretary Lee Kinyanjui said there will be an integration of CAIPs with a warehouse receipt system to ensure better pricing and global competitiveness through value chain mapping.

“This is a clear indicator of missed opportunities in local manufacturing. We have a lot of wastage that, if only tapped, will bridge the huge poverty gap and unemployment that we cry about,” he said.

While highlighting the wastage of resources and over-reliance on imports, the CS said Kenya spends Sh130 billion every year to import palm oil used in manufacturing edible oils.

He also revealed plans to meet with the edible oil processors as he plans to regulate and cap the import of palm oil that is currently underway.

To attract more investors, the government plans to reduce the risk of financing by offering concessionary loans and supporting value-adding enterprises.

Industry Principal Secretary Juma Mukhwana said the government aims to complete the construction of the industrial parks by the end of the 2024-25 financial year.

He said the government invests Sh4.5 billion annually for the building of industrial parks in counties.

The CAIP project aims to cut the cost of setting up or running an industry by building as many sheds as possible, equipping them with all machinery then renting them to interested businesses.

Ken Manyala, a former consultant at the United Nations Industrial Development Organisation who was part of the team that worked on the CAIPs business plan, explained that for counties to successfully set up and run an industrial park, they must know how to map their value chain.

“Based on my observation, the majority of the counties have a challenge of identifying their value chain,” Manyala told The Standard.

He said counties must first identify the product, understand the density and quantity of production in the county, and establish the number of farmers and technology used in the production.

“The product should be competitive and with a focus on quality, not quantity. The firm size does not matter. In other countries, small firms produce quality products.

"Therefore, counties will be able to compete with other counties and ensure the CAIP facility becomes marketable."

Manyala also pointed out the need to train county staff to boost their expertise.

Busia Governor Paul Otuoma emphasised the Western region's untapped agricultural potential, noting that it was time for locals to exploit other crops beyond the traditional sugarcane crop.

The Trade Ministry noted that the growth of the manufacturing sector has remained stagnant at around 11 per cent of the GDP for over a decade.

This has resulted in a reduction in jobs and stagnation in exports while imports have been growing.

In addressing some of these challenges, the Ministry of Investment, Trade and Industry through the State Department for Industry targets to raise manufacturing contribution to GDP from the current seven per cent to 15 per cent by 2027 and to 20 per cent by 2030.