Kenya: State Seeks Private Sector Help for Vision 2030

Thursday, September 27, 2007

High cost of investment poses the biggest threat to private sector’s participation in implementation of Vision 2030 -the Government-driven development strategy whose aim is to turn Kenya into a newly industrialised country, stakeholders said.

Yesterday, it emerged that the government has finalised work on the document, and has embarked on an aggressive campaign to rope in the private sector in its execution.

Wahome Gakuru, the director of the National Economic and Social Council- the committee that is driving the strategy -said involvement of the private sector was critical to the survival of the programme in the event of changes on the political platform.

Vision 2030 is a six-pillar strategy that aims at steering Kenya to realising economic growth rate of 6.7 per cent in 2008, up from the 6.1 per cent recorded last year.

This expansion of the economy is expected to accelerate to 10 per cent by 2012, culminating into the country becoming a middle-income economy by the year 2030.

The development strategy is to be executed through 20 flagship projects including the building of three resort cities, the supply of cheap fertiliser to farmers, and the creation of a Dubai-style free trade port and industrial parks for small businesses.

The six sectors chosen as the blue print’s “economic pillars” are tourism, agriculture, manufacturing, trade, information technology and financial services.

Samuel Mwaura, the Kenya Private Sector Alliance (Kepsa) chief executive said the private sector players were ready to invest in the strategy if the government addressed the various legal obstacles to doing business in Kenya.

The obstacles include poor enforcement of intellectual property rights .

There is also the high cost of investment that is underpinned by poor infrastructure, high cost of energy, telecommunication and high cost of labour.

This week’s closure by Reckitt Benckiser, the global home and personal care giant, brought into focus the path that multinationals are likely to take as the cost of doing business continues to rise.

In closing its manufacturing arm, Reckitt followed in the footsteps of Colgate Palmolive and Proctor & Gamble’s closure of their local manufacturing operations citing high production costs.

Others that have scaled down manufacturing in Kenya include Unilever, Mecer and Johnson & Johnson.

Tourism industry players said the high cost of construction was likely to inhibit their ventures even as they geared towards building hotels and lodges to increase bed capacity to absorb the surging number of tourists.

To spur growth in tourism sector, the Government plans to build three resort citiesin Isiolo and two unidentified coastal towns.

“To build hotels and lodges, we need incentives to help bring down costs,” a tourism player who sough anonymity told the Business Daily.

Plans are also underway to limit the number of tourists visiting “premium parks” like Nakuru and Amboseli.

With the economic rise of India and China, global companies are also starting to pay close attention to the cost structure of their even smaller and far-flung operations around the world, which could spell doom for Kenya which Dr Gakuru says is banking on both foreign and domestic investors to execute the vision 2030 .

Though Kenya continues to be a highly valued investment hub in East and Central Africa for companies like BAT and Unilever, which have restructured their supply chain to support regional operations, reforms in other trading nations is putting the country under pressure.

Global companies are starting to reconfigure their regional operations to take advantage of tariff reforms in multiple countries in various free trade areas, which have seen some lower-cost producing countries become regional manufacturing hubs.

“The cost of investment is further being worsened by the high cases of graft which the Government must address for easier implementation of the strategy”, said Mr Mwaura.

As part of the blueprint, the State also plans to build and fully equip 560 new secondary schools, employ 28,000 teachers and make other changes to the education system to create the workforce for the new economy.

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Source: All Africa (link opens in a new window)