2. Supporting manufacturing in Kenya Scoping new activities
Nairobi, 29 August 2016
Dirk Willem te Velde, Overseas Development Institute

3. Introduction: SET and Kenya
SET is a DFID funded programme to support economic transformation mainly in DFID partner countries. We work with DFID offices, national governments, private sector, and international organisations and think tanks
We are working in Tanzania, Rwanda and Nigeria amongst others
A major focus is on manufacturing, because this is a key sector driving economic transformation and employment, and Governments demand this type of work
Is there an opportunity in Kenya now?
What can government do?
Are current policies and strategies sufficient
Has it allocated sufficient capacities for the task
What might donors (eg DFID do)?
How can a programme such as SET using analytical inputs help?

4. SET approach to economic transformation
What is happening?
Economic Transformation diagnostics
Why is this happening ?
Political economy analysis
What should be done?
Economic policy analysis
How to make it happen?
Practical policy advice 4

5. Previous set work on Role of Services in economic transformation (Khanna et al, 2016)
Share of services in value added
Share of services in employment (pre/post 2005)
High growth services least employment intensive (Kenya)
Level of income
Source: World Development Indicators, Kenya Statistical Abstract 2014
Note: Change in GDP share ( ), percentage point, and employment intensity (2009) as wage employment divided by value added.

6. Decomposition of labour productivity change, Tanzania, Kenya and Uganda

7. Share of manufacturing in GDP (%)
Source: World Development Indicators (2015)

8. Three questions for Kenyan manufacturing
Why is productivity so low in manufacturing ?
Why is informality not decreasing with economic growth ?
Why is there a lack of linkages between services and manufacturing / agriculture ?

9. Supporting manufacturing in kenya
Background papers:
John Page – Kenya’s industrialisation and its drivers in a comparative context
Anzetse Were - Mapping actors and constraints in manufacturing
Phyllis Papadavid – finance and manufacturing
Views :
Government of Kenya
Kenyan Private Sector
Donors
Think tanks / academia

10. Supporting manufacturing in kenya
Background papers:
John Page – Kenya’s industrialisation and its drivers in a comparative context
Anzetse Were - Mapping actors and constraints in manufacturing
Phyllis Papadavid – finance and manufacturing
Views :
Government of Kenya
Kenyan Private Sector
Donors

11. 111 Blackfriars Road, London, SE1 8NJ T: +44 207 9220 300
The Supporting Economic Transformation (SET) is an ODI programme funded by UK DFID to support countries in their quest for economic transformation through data and policy analysis and convening. The views expressed are those of the researchers and do not necessarily represent the views of ODI or DFID. For further information: Sonia Hoque

12. The Role of Finance in Kenyan Manufacturing (Papadavid, 201^)
Key messages
The objective of this scoping paper is to facilitate a discussion to scope out work to enhance Kenya’s manufacturing performance. Two potential areas of focus should be on:
Small and medium enterprises (SMEs) obstacles to obtaining finance
Improving the availability of financial products
Lowering manufacturers’ borrowing costs
Reducing informalisation and informational asymmetries about SME borrowers
Kenya’s relationship with global financial markets
Export promotion and inward FDI promotion not matching economic liberalisation
Accessibility of debt and equity finance limited to Kenya’s larger SMEs
Reduce exchange rate and interest rate volatility

13. The Role of Finance in Kenyan Manufacturing
I. Key financing statistics: Bank lending

14. The Role of Finance in Kenyan Manufacturing
II. Key financing statistics: Foreign direct investment (FDI)

15. 111 Blackfriars Road, London, SE1 8NJ T: +44 207 9220 300
The Supporting Economic Transformation (SET) is an ODI programme funded by UK DFID to support countries in their quest for economic transformation through data and policy analysis and convening. The views expressed are those of the researchers and do not necessarily represent the views of ODI or DFID. For further information: Sonia Hoque