Can you briefly introduce KAM to our readers?
- Kenya Association of Manufacturers (KAM) is the representative organisation for manufacturing value-add industries in Kenya.
- Established in 1959 as a private sector body, KAM has evolved into a dynamic, vibrant, credible and respected business association that unites industrialists and offers a common voice for businesses.
- The Association has been front and centre in driving fact-based policy advocacy towards the formation of industrial policies to strengthen and support the country’s economic development in the last 60 years.
- With its members’ contributing approximately a quarter of the country’s Gross Domestic Product to the economy, KAM continues to promote trade and investment, encourage the formulation, enactment and administration of sound policies that facilitate a competitive business environment and reduced cost of doing business.
What are the benefits of membership?
- The Association advocates for a conducive business environment for its members. We articulate to government and other stakeholders issues such as high cost of doing business, predictable policies and regulations and budgetary proposals and amendments.
- We also provide trade information on local, regional and global markets such as EAC, COMESA, Africa Continental Free Trade Area (AfCFTA) and World Trade Organisation among others.
- KAM continues to advocate for the review of the current payment period to a shorter time and the establishment of a legal framework to curb the culture of late payment.
- We are keen on uplifting Micro, Small and Medium businesses in value addition through our Manufacturing SME
- KAM offers subsidized energy services and provides technical advice on matters energy to members.
- The Association also provides relevant training, seminars and workshops through our Manufacturing Academy and SME Business Growth Services.
Can you briefly introduce yourself to our readers? How did you grow to your position?
- I always knew that I wanted to be a top executive before the age of 35. But rising to this position was not going to be an easy task, so I had to complete my education and get the right skills to propel me to the top.
- I learnt my work ethic at a very young age when I used to work at a bookshop my father owned in Nairobi, Kenya. This really taught me a lot about responsibility and taking pride in whatever role I was given. As the years flew by, I took a keen interest in the dynamics of trade and industry which led me to the Kenya Association of Manufacturers, where I am currently the Chief Executive Officer.
- I have always had the desire to be a change agent, to grow my country, our industries, and to promote youth empowerment which has greatly shaped my career. The vision to see things being done differently has informed my career journey and continues to shape my role even to date.
- I am optimistic about the future, and it remains the reason why we are constantly advocating for better policies for manufacturers. The Government of Kenya seeks to increase the country’s manufacturing sector contribution to GDP to a double-digit.
How do you evaluate the development of Kenyan brands over the last twenty years on the Kenyan market?
- Over the last 20 years, Kenyan brands have grown in leaps and bounds. Despite the challenges, Kenyans appreciate locally made products. The growth of Kenyan brands can be attributed to:
- The Kenyan government has played a critical role in addressing Non-Trade Barriers through its engagements with the EAC partner states.
- The formation of the Multi-Agency Team to fight illicit trade in the country which become successful that some of the sectors are registering an increased market share.
- The formation of the Kenya Trade Remedies Agency whose mandate is to investigate and evaluate allegations of dumping and subsidization of imported products in Kenya.
- The Ratification of the Tripartite Free Trade Area (TFTA) and African Continental Free Trade Areas (AfCFTA), which will increase the market for Kenya products in the continent.
- The development of the National Export Development and Promotion Strategy, which seeks to reduce the balance of trade deficit by growing exports at an annual growth rate of 25%.
- Implementation of the Buy Kenya Build Kenya (BKBK) strategy, to source uniforms for discipline forces from local textile and apparel and leather and footwear firms
- The signing of Retail Trade Code of Practice that encourages self-regulation and harmonizes the retailers’ and suppliers’ ways of engagement. It also applies international best practice applicable to the Kenyan situation.
- The Kenyan government has played a critical role in addressing Non-Trade Barriers through its engagements with the EAC partner states.
- Though the EAC Manufacturers Network, we continue to advocate for a stand-alone law on Counterfeits at the EAC level separate from competition matters; the development of harmonized standards in EAC for all partner states; mainstream local content policy and procurement in the region and the acknowledgement of the local content clause in the Industrialization Bill.
- Enforcement against Intellectual Property Rights infringement is a key milestone in the fight against counterfeiting and illicit trade.
What percentage of the KAM membership constitutes of the manufacturers and producers in the FMCG industry? What can we do to encourage more enrollment of the FMCG to the Association?
- KAM membership constitutes of manufacturing value-add industries in Kenya and comprises of small, medium and large enterprises. Over 80 per cent of these are based in Nairobi, while the rest are located in Coast, Nyanza/Western, South Rift, North Rift, Lower Eastern and Central Kenya regions.
- KAM members are categorised into 14 sectors, 13 of which are in processing and value addition while one offers essential services to enhance formal industry.
- Manufacturers who fall under the FMCG industry are classified under the different sectors in the Association based on their value chain.
- The Food and Beverage sector is the largest sector under KAM membership. We also have the Chemical and Allied Sector which consists of cosmetics and sanitary product manufacturers. We also have pharmaceutical sector, and paper and paperboard where toiletries and paper products fall under.
- KAM promotes competitive and sustainable local manufacturing. A conducive business environment is critical for industry players for them to be competitive. We therefore encourage FMCG players to join the Association as we unite industrialists and offer a common voice for businesses in our advocacy work.
What are some of the challenges you have seen in the manufacturing industry related to the FMCG world and how can they be solved?
- The declaration of manufacturing as a top priority investment area for the country to drive economic growth has seen manufacturers and the government engage more towards this goal.
- Whilst there are achievements made thus far such as fight against illicit trade, more support to SMEs, development of the National Export Development and Promotion Strategy, there still remain challenges that hinder the growth of the sector. These include;
- Delayed payments: Late payments have been a huge problem for manufacturers. As KAM, our fears are based on the structural weaknesses existing in Kenya which affects our efficiencies to make payments. It has an impact on manufacturers, especially MSMEs, as it leads to cash flow constraints. The Department of Trade developed a National Trade Policy which sought to support the growth of the wholesale and retail sector. The policy was developed to address late payments, building synergies that facilitate ease of trade and developing a shared vision for all stakeholders.
- Preference of imported goods over local goods cheap imports: This limits local manufacturers’ access to local markets. Local manufacturers are ‘crowded out’ hampering their access to domestic and regional markets.
- Delays in VAT refunds: The large accumulation of VAT refunds with KRA arising from VAT on zero-rated supplies has had a negative impact equally on liquidity and cash flow for manufacturers across the country. We appreciate the constitution of a team at the National Treasury to quickly validate the outstanding refunds with a view to clear them.
- Illicit trade: Illicit trade undermines national and regional security, destabilised economies, increases the cost of public health, sabotages tourism, stunts innovation, and offers a haven to organised crime and trafficking. Organized crime has a close correlation to illicit trade.
- The infrastructural gaps (dilapidated roads): Good roads allow for manufacturers to transport goods easily via road. There is need to urgently maintain and repair roads across the country for ease in the transportation of raw materials and finished goods. We are seeing efforts towards the repair of roads in Industrial Area, Nairobi, however, this should be done in all industrial areas in the country.
- Trading in Counties: Manufacturers together with other traders continue to experience challenges as counties introduce very high taxes that are acting as a barrier to the distribution of goods across the country. There is need for proper county laws to regulate business and guide County Governments on trade and industrial matters. KAM has been engaging the National Treasury, Council of Governors and Commission on Revenue Allocation (CRA) in addressing trade-related challenges within and across counties. Through these engagements, we have seen the development of draft County Source Revenue Policy and County Revenue Regulating Bill, 2017. If implemented, this will harmonize taxes across the counties and address inter-country trade challenges.
- EAC market: Despite harmonization of trade agreements and policies within the EAC, accessing these markets is still a challenge. Some partner states, for instance, refer to their standards thus locking out local manufacturers who in turn have to either find other export markets or go through the rigorous process to access those markets.
Are you connected with similar associations in other countries?
- To enhance our advocacy work, KAM is a member of other like-minded Association in the region as follows;
- EAC Manufacturers Network which aims to realize the potential of the manufacturing sector in the EAC region through a systematic approach to regional issues affecting the sector and to serve the interests of manufacturers in the region. The EAC Manufacturers Network comprises of Kenya Association of Manufacturers, Confederation of Tanzania Industries, Uganda Manufacturers Association, Rwanda Manufacturers Association and Industrial Association of Burundi.
- COMESA Business Council (CBC), which is the voice of the Private Sector within COMESA (Common Market for Eastern and Southern Africa) region. CBC was established as a private sector institution of COMESA. It represents the interests of businesses sectors at a regional level by facilitating the growth of strong business synergies, the development of business opportunities, business alliances, legislative and strategic advocacy.
- KAM also hosts the UN Global Compact’s local Network in Kenya.The Global Compact Network Kenya brings together 700 signatories to the UN Global Compact and the Code of Ethics for Business in Kenya, including a number of Kenya’s leading companies, small and medium-sized enterprises and nonprofit organizations to advance corporate sustainability and the private sector’s contribution to sustainable development. We promote and enhance ethical business practices in the country, in line with the 10 principles of the UN Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption. I am the country representative for the Global Compact Local Network in Kenya.
Where do you see Kenyan FMCG manufacturers and producers in the next 5 years in the African market?
- We are optimistic about the future of the FMCG industry. With continued investment, it will be central to Kenya’s ability to meet its development goals, specifically if a predictable and stable business environment can be guaranteed in policy formulation and implementation.
- Additionally, we’ll continue to engage the government on the main cross-cutting challenges affecting the growth of the FMCG sector and manufacturing sector in general, possible solutions and sector-specific interventions to unlock growth potential.
Tell us more about your partnership with TVET and what impact will it have in the manufacturing sector?
- KAM is committed to driving the skills agenda for Kenya by providing young graduates with opportunities for practical learning through the Technical Vocational and Education Training (TVET) Program.
- The TVET program is aimed at improving access to jobs and economic opportunities for youth in Kenya. This is in line with strategic pillar of the KAM Business Development Plan (2017-2019) which supports skills-based job creation agenda and increased manufacturing sector jobs.
- Through the Manufacturing Priority Agenda 2019, the Association propagates for the development and implementation of industry-led skills policies, to be drawn proactively in conjunction with training institutions, since the future prosperity of the manufacturing sector will depend ultimately on the number of persons in employment and how productive they are.
- The first phase of the project entailed working with industries and TVET training institutions (TTIs) to link TVET graduates to industries and subsequently jobs. Since its inception, 922 TVET graduates have undergone work readiness training to enhance their employability in industries and make them more adaptable to the work environment. Through the Work Readiness program, 695 graduates have linked with industries for internships across the country. Furthermore, 350 graduates have already gotten jobs upon completion of their internships in the industries they have been linked to.
- The second and the extended phase of our TVET programme is the implementation of Competence Based Education and Training (CBET) curriculum and pioneer placement of CBET graduates in the industry. CBET is a training model that involves industries playing an active role in the training process in providing industrial experience and mentorship as well as assessment of the trainees before their award.
- The program is designed to equip the trainees, using the latest technology, to meet the demands of industry and business and do so in accordance to international standards.
How do you like Instore Kenya project?
- Instore Project is a good initiative for the Kenyan market. It is informative, it keeps sector players informed on current trends in the FMCG market.