Kenya: The long route to economic prosperity

I believe that the main reason why vision 2030 is hard to achieve is because the over 8400 dollar millionaires have a sharp bias in favor of property. These people control more than half of the nation’s wealth. When local and foreign politicians (Somali and Sudan) loot, they only buy land or build apartments. By doing that, they deny millions of Kenyans employment that they would have achieved if they invested in manufacturing, technology or service sectors which require a huge workforce. A factory worth 1 billion in Industrial area employs hundreds of youths, but an apartment worth 1 billion needs less than 10 people to manage. I am not saying real estate is bad, but most high networth investors who could actually make an impact in a small ecosystem have a very strong bias towards it. The cumulative effect is a stalled economy. A big market correction in the property sector would be beneficial to the ordinary Kenyan because it would force the rich to stop focussing on property only.

Hiyo ni kweli Bwana scavenger. But the same applies to you.That 1 million you use to speculate on land can be used to create a few jobs in a small manufacturing workshop.

Halo kweli kabisa. What is the plight of the singo matha and how does it fit in all this??

This boils down to ease of doing property business as compared to manufacturing.

In the property market any dick can invest lakini jaribu manufacturing…permits nikama 20plus!:eek::eek::eek:

Government should wake-up…

Why is it hard to have a policy that any start up manufacturing company pays 0 tax if it employs 1000 youth, 5% corporate tax if it employs 500 youths. The govt has nothing to lose but gain because the workers will pay PAYE.
Hebu jaribu kufungua manufacturing company you will realize it’s not worth it. NEMA,county officials, taxes, police, theft, stima charges name it.

On a serious note though, is there any country that does this?

My point is that a lot of capital is tied up in real estate projects and that directly contributes to the high unemployment rates and imbalance in international trade. The government is partly to blame for not providing a conducive environment for manufacturers and processors to thrive. It could use incentives such as subsidies, taxes, infrastructure and the designation of special zones for such activities in EVERY COUNTY. Imagine a Kenya where each county has an industrial area and the government provides the manufacturers in those zones with infrastructure, electricity etc. I believe that for things such as infrastructure and electricity, the government can provide better if those industries are bundled together in special zones to maximize on the small Kenyan budget allocation. In my opinion, the people who should be blamed are the rich who tie up capital in high end real estate, and the government for not providing favorable conditions to set up industries. These two hold the key to vision 2030 because the masses are always ready to provide the labor needed, there are more people than jobs anyway. It is not uncommon to see many vacant apartments (high end), investors wamelalisha tu pesa because they continue to build even when there is no demand in that market segment.

It is simple, we see agriculture and manufucturing as complex sectors to invest in and make profits in so we run away from them to the safe embrace of land speculation and construction, we need to make it easier for Kenyans to invest in these sector by providing technical support to those willing to invest in agriculture, mining, manufucturing, ICT, maybe offer funding because these sectors are capital intensive, basically make it easier for guys to put their money in these sectors and make profits.

NB: Most of the billionaires in this country are beneficiaries of political patronage hence the secrecy with which they carry themselves, their aim is to protect their loot not to grow it because they do not know how to hence they invest such funds in “safe venture”.

You are right. But someone said manufacturing is a capital intensive low returns investment with an uncertain future.

True. Do you know why Wahindis are the richest in Kenya? They own most manufacturing and agricultural processing companies. Not just in Nairobi. Even in my home county of Nyandarua, they are the large scale horticulture farmers there, employing hundreds of residents in flower greenhouses, earning millions in the process. Lakini most of us Africans just think real estate. It is normal to be biased, but our bias is excessive. If an average Kenyan gets 100 million bob, he will use more than 90% of that money in property by default. Probably waste the rest in a party/travel/luxuries and finally start a tiny shop in the CBD to keep him busy.

Even if you had 100 million, I can bet that you wouldn’t spend a dime on manufacturing. People who can actually afford to manufacture do not do that, so capital is not the issue here. I was very specific by citing the wealth bracket so capital is a non-issue. About the returns, I guess it depends.

They have said it well, government unfavourable policies

An investor will look at at something that returns his investment. Manufacturing is not seen as a sure bet for that. Govt is only part to blame. Workforce for a manufacturing biz is lacking. Not in number, because there are tons of unemployed. But the guys are poorly prepared to work. Unprofessionalism, theft, and other shoody practises. An investor correctly sees this as a liability and chooses a sector less labour intensive. Hataki kudeal na drama 24/7. The labour force needs to step up and get rid of rubbish attitudes, ujanja and thinking one can get rich by cutting corners.

I think if the conditions are favorable most of those with access to capital would not mind going into some form of manufacturing.

I remember when the etr machines were being introduced back 04/05 I did some work ‘programming’ them and linking the invoice printers to the erps, and most guys especially in industrial area did not like that, because they knew wameshikwa, but the biggest issue I got was to do with power and infrastructure which was and is still very poor, you have a company you need to sort yourself with water supply, generator for power and for some you have to tarmac or pave at least the roads leading to your plant, add the fact you need to employ a small militia for your security and one gets the lack of interest investing in the same.

Workforce is not a big issue, otherwise the informal juakali sector would not be as vibrant as it is, the problem is that its such a rudimentary sector and some just refuse to grow knowing very well they will just be throwing away their money.

I couldn’t agree more. That’s why I sometimes love Indians. Wako na so many manufacturing firms here although they pay poorly. This is unlike Kenyan investors wanafikiria plots, apartments n etc

Cc @spear #ifikeuhuru


The biggest challenge we have is that we are very poor at strategy in this country; we currently have a Big 4 agenda that includes manufacturing asa core element. However, the Treasury wants to increase the cost of power and fuel through taxes… it’s as if the different arms of govt work ina silo blocked off from each other!
Speaking of ease of doing business, I was recently checking into a hotel and couldn’t help notice the number of licences that they had displayed hapo kwa ukuta; business licence, sijui signage, health, osha, MCSK, PRISK among others! A quick computation of what I saw indicated wanalipa almost 250k a year just to stay in operation, with probablyzero input from any of those collecting fees/charges. I really do not want to imagine how much you’d be paying to operate a manufacturing concern.

Kitu humaliza manufacturing in kenya ni bureaucracy na corruption. Here is a story.

In 2015 there was an American who wanted to open a factory ya kutengeneza ovacado pulp for shipping to be used to make oil based cosmetics pale Baba dogo. So machines ziliwekwa kwa meli, shamba ali lease , na suppliers were ready since he was buying one healthy ovacado at 30 shillings a piece.

He had done his background na akaona it will take him 2 years to break even to profitability .He was to employ 200 youths from baba dogo. When he was setting up his factory , Nema guys walikuja, mark you he had gotten all paperworks earlier and was approved . They asked for bribe since he didn’t pay for some non-existence assessment cost . At first he was defiant but my cousin helped him out by explaining to him that in africa things are done that way .

Day 2 APs came “ooh we need you to involve community before setting this up”, he parted with another 100k.Then APS went and told police that kuna mzungu anatoboka poa. They also came and another 100k was parted.

Day 3 kenya power came to install 4 phase electricity connections. They asked for 200k bribe after they saw high tech equipments and because those equipments take 110v instead of 240v . Alitoboka tu.

So operations started, 50 youth were employed on 1st month, and 70 second month. Finally the the last nail for coffin came when KRA walisema he doesn’t pay enough tax yet he was paying the required %. He was told he owe kra ksh.4.5 million. On doing calculations of his sales, that was 50% of his cost of sales.

His pleading fell on dead ears. Later a guy from kra came and told him to pay him 1m and no one will bother him for next 3 years. Being American and these people being straight forward, he couldn’t take it. Slowly he fired all the 70 youths, unassembled his equipments and moved to RWANDA. Yes RWANDA.

It’s been 3 years, 300 youth employed. Rwandese govt made him pay 2% manufacturing tax for 1st 2 years, they provided him electricity connections for free, all environmental safety boards approved his work within 2hrs.

Nani mjinga hapa, uhuruto ama kagame? Be your judge

@tenkay : hope you find your answer on what you asked me on this real story. Good day guys.

Well said . Soma hii story yangu hapo juu na utaelewa.