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OPINION; Recovery, growth key to creation of jobs in industries

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[Pwani Oil Company Commercial Director Rajul Malde. Photo/Anthony Mutua/April, 7th, 2022].

The election season is in top gear. As expected, promises by politicians on how they will create jobs and re-engineer the economy are now the order of the day. However, there is a need to interrogate such claims carefully given the prevailing economic reality.

The economy is not doing well as shown by the rising cost of living, including escalating prices of basic commodities like foodstuffs. Fuel prices went up significantly in mid-March further pushing up the cost of production.

Given the lingering impact of Covid-19, it is hard to discern how the economy will generate the thousands of jobs politicians on the campaign trail are promising.

To start with, data from the Kenya Association of Manufacturers (KAM) shows the share of manufacturing in employment has been declining. The sector employed about 315,000 people in 2016 but this dropped to 293,000 by 2020.

If the sector had been growing at 15% annually, it would have created 362,000 jobs in 2016, nearly doubling to 633,000 in 2020.

While the onset of Covid-19 two years ago is a major factor behind the depressed manufacturing sector performance, industrial activity jobs have been on a consistent downward trend over the last five years.

Hard question

Then where are the much-promised jobs going to come from if one of the biggest employers (manufacturing) is not generating additional employment?

Despite heavy investment in infrastructures such as roads, railways, ports and energy, the manufacturing sector is still trailing growth projections. From the data above, for the industrial sector to drive a significant increase in jobs, it has to sustain growth rates of over 15%.

KAM has developed a detailed policy called the Manufacturing Manifesto 2022-2027 outlining proposed solutions to the challenges facing the Kenyan industry. On creating jobs in the sector, it proposes several measures, including reducing the tax burden on employers to encourage firms to hire more Kenyans.

Solution

Of singular importance is developing the appropriate human capital. Incentives such as subsidised training in science, technology, engineering and math (STEM) apprenticeships will go a long way in boosting the calibre of local human capital.

The world is on the cusp of the Fourth Industrial Revolution (Industry 4.0) and increasing the uptake of STEM-related industry jobs is critical to boosting productivity and innovation.

The government working with industries and universities should explore collaborations around research and innovation. The State should provide incentives for businesses to invest in innovation incubation hubs where fresh graduates can access internship opportunities in preparation for future careers in the industry.

Such measures, among others, will result in a conducive environment for the sector to recover and start growing as the pandemic subsides, expanding the manufacturing pie. Mere promises are not enough.

Another avenue through which manufacturers can add jobs to the economy is by boosting Kenya’s under-performing export market for locally manufactured goods.

For instance, Kenya being a primarily agricultural economy, we must rapidly develop strong linkages between agriculture and industry with export markets as the main target.

The Asian industrial nations have prioritised STEM courses in building a workforce with strong science and technology. The rise of countries like India and China is attributable to developing a human capital base skewed to STEM.

Manufacturing is not just about producing goods but also marketing them and this requires ‘soft skills’ like good inter-personal relations, critical thinking and problem-solving. Above all, the ability to think from a commercial perspective.

Favorable policies that encourage investment in agro-processing should be accorded priority by the national and devolved authorities. This will generate more jobs and entrepreneurial opportunities in the value chain.

[By Rajul Malde, Commercial Director, Pwani Oil Products Limited].