Economic fortunes often drive politics in Mt Kenya. Here is why.
The Central Region Economic Bloc is 10 counties, with a combined gross county product (GCP) of $28 billion. The two largest sectors in the region in terms of employment are agriculture and trade.
Agriculture employs 2.7 million people, while wholesale and retail trade has 690,000. Agricultural returns are generally low, in part because historical marketing and value chain arrangements have disadvantaged the farmer.
Earnings are also quite varied among counties. For example, agricultural labour productivity varies quite a bit across the region. Gross value added (GVA) per worker in agriculture is highest in Nakuru county at Sh605,000 and lowest in Embu at Sh104,000. GVA is Sh151,000 in Kirinyaga, Sh154,000 in Muranga and Sh246,000 in Laikipia.
And you can see why. Quite a bit of agricultural production in Nakuru county is mechanised and technology based. Flower and vegetable farming around Naivasha is technology intensive, compared to small holder farming in Kirinyaga, Laikipia, Muranga or Embu.
Successive governments, both national and county, have been considering increasing productivity of our farmers, with mixed results. One sure way is to raise the use of machinery and other technologies.
The current and past two administrations have pursued irrigated agriculture in Mwea, Galana, and Bura. Laikipia county has been promoting irrigated small holder agriculture, as well as micro and small feedlots.
Sadly though, the most basic machines and tools – chaff cutters, grain dryers, pumps, and basic irrigation equipment - used by our farmers, are all imported.
Kenya’s monthly import bill for machinery and capital equipment is Sh24 billion! We import mainly from China, India, and UAE, the latter being a reseller.
This unhelpful state of affairs is reinforced by some laws, such as the EPZ Act which gives preferences to imported over Kenyan made machines. By promoting domestic production of machines and tools for use by our farmers, we will be growing our manufacturing sector.
The sector is underperforming in the central region, and employs only about 200,000 people. They work in 27,000 manufacturing enterprises, classified as small, medium and large size workshops; and small, medium and large industrial plants.
Distribution of manufacturing enterprises mirrors the respective size of the county economies. Nakuru has the highest number at 8,100, followed by Kiambu at 6,040.
Meru has 5,700, while Muranga has 985, and Laikipia 589. These do not include agricultural processors. The opportunity is for the 27,000 manufacturers to produce what the 265,000 retailers in the region are selling to farmers.
More technology use in agriculture and small business, enables them to produce more, create jobs and increase labor productivity. High labour productivity will increase real wages, which have been declining since 2019.
Mechanising the small business enables it to significantly increase output, because output per worker increases. What the current debate about our economic woes lacks is how to mechanise the small business. How can business access affordable, Kenyan made machinery?
The Jubilee administration took the view that in order to improve access to long-term capital to finance machinery, we required a bigger, better financial institution, with necessary scale.
It, therefore, merged the ICDC, IDB Capital and the Tourism Finance Corporation, to form the Kenya Development Corporation (KDC). Some skeptics argued that no one bank has been able to be good at both corporate to SME finance.
However, it was a step forward. With the institution hosting the Next Frontier Africa 2025 this week, there is an opportunity to assess progress so far.
There are other models of supporting our small businesses. Laikipia had an elaborate programme covering 3,600 small business with everything from planning to market access and finance.
It was coupled with a Sh3.3 billion economic stimulus, an energy cost rebate for qualifying manufacturing small businesses, and county government procurement preferences.
But efforts by Central Region and Economic Bloc (CEREB) governors to eliminate multiple business permits, creating one market remains elusive.
The region is restive, but the discourse about the economic issues shallow. Most of the slogans being thrown around are devoid of any ideas on how to improve the economic outcomes, no doubt because they have none.
As various formations cobble together their thoughts, we should assess them on one principle criteria. Will their strategies industrialise the region and Kenya with it, for no country has become rich without industry and services.
Ndiritu Muriithi is an economist and partner at Ecocapp Capital. He is also the chairman of KRA and former governor of Laikipia County.
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