How to develop light manufacturing in Kenya

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This article first appeared in my weekly column with the Business Daily on June 11, 2017

Last week I attended a meeting organised by the Overseas Development Institute (ODI), the Africa Centre for Economic Transformation (ACET) and the Government of Ethiopia aimed at analysing and sharing lessons on the development of light manufacturing in Africa.

The development of light manufacturing is an important part of Kenya’s plan for industrialisation as articulated in the Kenya Industrial Transformation Programme (KITP) developed by the Ministry of Industry. The Special Advisor to the Prime Minister of Ethiopia, Arkebe Oqubay, made some interesting points about key features of light manufacturing of which countries should be cognisant as they implement industrialisation plans.

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The first is no secret; light manufacturing is labour intensive. This feature makes light manufacturing attractive for African countries as an entry point into industrialisation as it has the ability to absorb large pools of labour. While this is attractive, it seems to me that it can create considerable pressure to rapidly skill up a relatively low skilled labour pool. Human and technical resources have to directed to a young and inexperienced labour pool in order to develop a sector with high labour productivity and high profit-making potential. Clearly it can be done, but has to be well thought out with clear links to education policy.

The second point made was that countries cannot implement a light manufacturing strategy without addressing issues in agriculture. Whether it is textiles and apparel, leather and leather products, or food and beverages (F&B) manufacturing, agricultural inputs are crucial. In this sense Kenya faces a conundrum because certain segments of the agricultural sector such as tea, horticulture and floriculture are highly productive, but the rest of the sector wallows in poor productivity and considerable inefficiencies. It is no secret that textile and apparel firms in the EPZs in Kenya import their fabric from abroad, a factor that dampens the ability of this value chain to be an even bigger employer and income earner for Kenyans. The leather value chain in the country is also sub-par and the production capacity for domestic agricultural input into F&B manufacturing is lacklustre. What is clear is that Kenya cannot make serious forays into light manufacturing until the issues in the agricultural sector and value chains are fundamentally addressed.

The final point Oqubay made was that the sector should be export-oriented if scale is to be achieved in a manner that restructures the economy. Insights from ODI on this issue point to the importance of conducive trade rules and trade facilitation measures that lower trade costs both in terms of accessing inputs and export markets. If manufacturers cannot get the inputs they require and reach target export markets, the sector cannot effectively scale.

Other factors important in industrial policy, as pointed out by ODI, is collaboration and coordination between public and private sector in a manner that creates consensus on the strategic direction of the sector and country at large. When coupled with effective investment facilitation, SEZ creation/industry cluster development, and infrastructure development, it creates an environment where light industry can take off.

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Kenya can build on the successes being registered in infrastructure development and expedite the creation of SEZs, learning from countries like Ethiopia. However, the country needs a sharper focus on improving agricultural productivity, a more coherent skills development strategy, vastly improve investment facilitation and more effectively encourage public-private dialogue on the development of light manufacturing in the country.

Anzetse Were is a development economist;


TV Interview: Panel feature on Labour Day

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On May 1, 2017, I was part of a panel on NTV talking about labour and employment issues in Kenya

Wages, Productivity and Manufacturing in East Africa

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This article first appeared in my weekly column in the Business Daily on July 17, 2016

Africa, East Africa in particular, is gearing up for industrialisation and will continue to position itself as the next and last manufacturing frontier in the world. Wages in Asia continue to rise and in China’s coastal factories noteable increases in wages have occurred over the past 10 years making the country a less attractive manufacturing hub. As a result, factories may relocate and although some may move to inland China, Bangladesh or Cambodia, Africa has appeared on the radar as a viable option.

The World Bank reports that Ethiopian factory wages for unskilled labour are a quarter of Chinese wages. Indeed, East Africa in general is increasingly becoming a focus of attention for the development of manufacturing in Africa; interest in textile and apparel is particularly high. A report by McKinsey makes the point that within sub-Saharan Africa, East African countries, especially Ethiopia and Kenya, are of interest to international apparel buyers. Indeed, for the first time an Africa country, Ethiopia, appeared on the list of countries expected to play more important roles in apparel manufacturing. Kenya and Ethiopia were the top two countries in Africa where global apparel buyers expect to start or increase apparel sourcing. The popular view is that Ethiopia is seen as particularly attractive due to lower labour costs but Kenya is considered to have higher labour productivity. These two factors, namely labour cost and labour productivity, will come under increasing scrutiny if Kenya, and the region, is to effectively position itself as a global manufacturing hub. (source:

If one were to look at these two elements in Kenya an interesting picture emerges. According to the Kenya Country Economic Memorandum 2016 by the World Bank, Kenya has a higher minimum wage than other countries assessed including India, Pakistan, Uganda, Vietnam Bangladesh and Cambodia. The McKinsey report makes the point that manufacturers listed wages as a key challenge of doing business in Kenya where monthly wages for garment workers are in the $120 to $150 range. So selling the cheap labour story in Kenya is a tough sell if sustained interest in manufacturing, especially labour intense manufacturing such as textiles, is to be maintained.

The other angle Kenya would have to push to stand out from the East African crowd would have to be productivity. Here the story is mixed; in June this year a World Bank revealed that Kenyan workers are less productive than their counterparts in Uganda and Ethiopia. However, this is informed by the fact that almost 80 percent of Kenyans are employed in the informal sector which suffers from particularly low levels of productivity. Low productivity in the informal sector dragged the productivity average down. Indeed the World Bank reports stated that labour productivity in Kenya is significantly higher in the formal than in the informal sector. In fact a World Bank study released this year found that even when formal micro-enterprises are compared to informal enterprises labour productivity for micro firms is about 8.4 times that of informal firms surveyed Thus Kenya is in a situation where most people in the informal sector have very low levels productivity juxtaposed with pockets of people with formal jobs who have high levels of productivity. So key questions are: If Kenya is position itself as a manufacturing hub, will formal manufacturers be the only attractive option due to high levels of productivity? What does this mean for job creation in a country with high levels of unemployment? Other questions include: What in formal employment makes Kenyans more productive? How can labour in the informal sector (including informal industry) be made more productive? And is formalisation the only answer?


The point remains however that on average, wage and productivity dynamics in Ethiopia and Uganda are better than Kenya’s. Some argue that comparing Kenya with Uganda and Ethiopia is not useful because conditions differ so greatly between the countries. Kenya is a democracy while Ethiopia and Uganda lean more towards autocratic rule. From an investor and business environment perspective each governing model has its pros and cons.

In short, in order to position itself as an attractive manufacturing destination, Kenya will have to address the issues raised by wage and productivity analyses, while continuing to work on structural constraints such as access to finance, electricity, transport infrastructure and ICT networks.

Anzetse Were is a development economist;


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There are pros and cons with regard to Africa’s interaction with China. The discussion here is not exhaustive but is rather aimed at highlighting the salient features that tend to define opinions over Sino-African relations. Let’s look at these arguments.



  • China has forgiven African debt

China cancelled debt owed by heavily indebted African countries. In fact, 156 debts owed by 31 heavily indebted African countries totalling 10.5 billion RMB were forgiven by China. This can be seen as an indication that China is interested in Africa’s positive economic growth and development and is not interested in creating dependency and economic slavery of Africa by China.[1]

  • China is creating employment opportunities for Africans

The entrance of China into Africa has created jobs for many Africans. Indeed China seems so committed to this ideal that in 2012, talks between China and Uganda began to promote the transfer of low-value manufacturing jobs to Africa because, ‘China will likely shed some 85 million manufacturing jobs in the coming years because of fast rising wages for unskilled workers’.[2] The two countries launched work to, ‘help African countries seize the opportunity and facilitate the relocation of labor-intensive manufacturing industries (from China) to countries where wage differentials are large enough to ensure competitiveness in global production networks’.  This is another indication that China is committed to ensure its presence in the continent benefits Africa.

  • Some African countries have a trade surplus

Contrary to popular opinion, some African countries actually have a trade surplus with China. At least ten countries including Zambia, Congo Angola, Gabon, and Sudan have a trade surplus with China. Such countries benefit from China’s activities in their countries.


  • China’s investments are giving Africa the capital and investment the continent needs

It is clear that Africa has been, ‘historically underinvested and underserved by international investors. Chinese capital offers a valuable alternative source of financing to develop the African economy.’[3] China is another valid investment partner that Africa should take seriously. This point is particularly pertinent given that in Africa, ‘most resources-rich states are in dire need of infrastructure development and support’.[4] Why should China refrain from improving the dilapidated infrastructure of so many African states? Because there may be challenges? Note that investment in infrastructure and other projects will arguably serve Africa for decades in the future…whether the Chinese are still active on the continent or not.

  • China invests where no one else is willing to invest

Linked to the point above is the fact that not only does China invest where Africa needs it to invest, it invests in high-risk areas where no one else is willing to go. Indeed there is empirical evidence that Chinese firms are less adverse to political risk compared to Western counterparts.[5] State Owned Enterprises are particularly risk friendly and, ‘may not behave solely as profit maximizers. Thanks to the financial support of Chinese state banks, they might indeed be able to undertake higher risks’.[6] Thus, ‘Through significant investment in a continent known for its political and social risks, China has helped many African countries develop their nascent sectors’.[7] Due to this, ‘China can promote economic projects in areas in Africa deemed too risky or unfeasible by other governments or multinational corporations’.[8] Why would Africa reject much-needed investment into areas that desperately need it? This indicates that China, in some ways, is perhaps the main country on which Africa can rely to develop areas that have been neglected for so long. Such engagement ought to be encouraged.

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  • Africa exports a meagre amount of oil and minerals to China when compared to other countries

The standard argument is that 1) China is resource hungry and 2) Africa is exporting huge amounts oils and minerals to China to ‘feed the dragon’ and this is creating dependency. However, the following must be noted: [9]

–       China still produces much of the oil it consumes

–       China imports most of its oil from the Middle East (Saudi Arabia, Iran, and Iraq), Asia (Russia), Latin America (Brazil, Venezuela), and North America (Canada). Indeed for China, the Middle East remains the most important source for oil.

China is not singling out Africa for its resource needs. Africa is merely one of China’s many trading partners and Africa has good reason to meet such resource requirements like any other pragmatic trading partner would do.

  • Growing positive effect of Chinese diplomacy in Africa

Initially China declared a, ‘respect for the sovereignty of other nations and pledged to avoid interfering in the internal affairs of other countries’. This gained heated criticism because ongoing Chinese investments in certain countries were seen as encouraging the continued existence of rogue African states which had (have) dictatorial regimes with poor human rights records. Countries such as Sudan and Zimbabwe were mentioned often during such criticisms. Recently however China’s, ‘actions demonstrate a more proactive involvement on the African continent’.[10] In the case of North and South Sudan for example, in 2011 tensions between the two parties reached a near breaking point until China sent their envoy for African affairs to intervene in the matter. He managed to break the deadlock. In addition to this, ‘China supported the UN resolutions for peacekeeping missions in Darfur, and has sent several hundred troops to the region’.[11] Therefore, there seems to be an evolution towards a more positive proactive role in China’s political interaction with Africa that ought to be noted.


  • Steps by China to protect Africa’s environment

It is generally NOT known that, ‘China is a world leader in renewable energy technologies – a much needed energy technology for both urban and rural communities in Africa’.[12] In addition to this, Chinese energy- efficient products have proven to be more affordable than Western products thereby making them more accessible to the African market. Further, technical assistance from China to Africa exists and is not only addressing environmental issues in Africa, it is also building the ability of Africans to better manage their ecosystems. China in conjunction with UNEP have a joint program to, ‘build the capacity of African countries in the fields of ecosystem management, disaster reduction, climate change adaptation and renewable energy’.[13] Therefore, it can be said that the perception that China is an environmental monster in Africa is not fully accurate…some positive acting in this field continues to happen.

  • China is treating Africa better than EuroAmerica did

It should be borne in mind that Europe and North America, often the harshest critics of China’s activities in Africa, have a very dark history with the continent with imbalances that continue to this day. Slavery and colonialism were crimes against humanity and continued in Africa for eons. Furthermore, the disastrous Structural Adjustment Programs introduced by EuroAmerican institutions in the past are often seen as having had dire consequences on African welfare. Trade imbalances between the two players continue to this day as seen in the failure of the Doha round of talks. In fact, the negative experiences African governments suffered at the hands of EuroAmerica have made Africans tougher negotiators and bargainers when interacting with China. African governments are learning from past mistreatment and mistakes. Further, Africa is no longer what it used to be. For example, opening a mine in Africa today is, ‘not so easy any more, you need to take into account the environment, local employment and benefits to local economy’.[14] Africa has learnt from the past. In fact it can be argued that China is getting a tougher time in Africa because of past injustices suffered at the hands of EuroAmerica. This is why some view China as the better option for Africa. China has a much cleaner record of interaction with the continent and given that Africans are now wiser, Africa stands to benefit a great deal from engagements with China.

These points indicate that China’s interaction with the continent has positive elements that should not be skimmed over or ignored.



 However, there are criticisms to China’s engagement with Africa.

  • Imbalanced trade

Although it is true that some African nations have a trade surplus with China, Africa as a whole does not. By 2008, Africa had a USD10 billion trade deficit with China.[15] This is particularly pertinent when one considers that, China-Africa trade, ‘represents close to 10 percent of the continent‘s exports and imports’.  Further, China continues to import basic raw materials from Africa, ‘Approximately 70 percent of registered African exports to China consist of crude oil and 15 percent of raw materials’.[16]

Chinese imports from Africa


This continues to relegate Africa to being a mere provider of unprocessed goods with little value addition. If China were truly pro-Africa, surely it would seek to address such imbalances.

  • China’s political interaction with African nations

As indicated previously, China’s non-interference policy with African nations has been subject to negative criticism. Although there are certain indications that China may be taking a more positive role in Africa, certain actions continue to be negative. For example, ‘In Zimbabwe, China delivered propaganda bearing the insignia of Robert Mugabe’s incumbent political party prior to the 2005 election…The Chinese are reported to have offered Mugabe jamming devices to use against pro-opposition radio stations.’[17] Further China continues sell arms to African nations, even those with regimes the international community consider problematic such as Sudan and Zimbabwe.[18] If China truly had African welfare in mind, it is argued, it would not engage in such delinquent behaviour.

  • Environmental degradation

Chinese investments in environmentally sensitive sectors, including forestry, agriculture, fishing, oil and gas, have spurred anti-Chinese sentiment in many African countries. Chinese mining projects have also caused serious environmental problems, and demand in Asia for rhino horn and ivory has spurred the illegal wildlife trade in Africa.[19] Kenya has been particularly bad hit with the poaching of rhino and elephant horns and tusks this year to the extent that, ‘Tour operators and tourist hotel owners want the Kenya government to impose sanctions against Asian countries where trade in animal trophies is rampant…Increased poaching has been blamed on the demand for ivory in Middle East and China’.[20] In 2012 Kenya lost 384 elephants and 29 rhinos to poachers.[21]

Other examples abound of Chinese companies destroying Africa’s environment, for example a state-owned oily company created lakes of spilled crude in Sudan. In another example, Ghanaians say that not only are the Chinese destroying their environment, they are illegally taking over land. One villager said, ‘The Chinese destroyed our land and our river, they are sitting there with pick-ups and guns, plenty of guns…They operate big machines and it makes it very difficult to reclaim the land for farming when they are done.[22], [23]  Such transgressions make the Chinese look like they have absolutely no regard for African welfare at all.


  • Poor working environment for Africans

Reports of poor labour conditions for African in Chinese activities are also rife, ‘At Chinese-run mines in Zambia’s copper belt they (Africans) must work for two years before they get safety helmets. Ventilation below ground is poor and deadly accidents occur almost daily. To avoid censure, Chinese managers bribe union bosses and take them on “study tours” to massage parlours in China….Workers who assemble in groups are violently dispersed. When cases end up in court, witnesses are intimidated’.[24]  To add insult to injury Chinese on the continent have killed Africans over labour-related disputes, ‘Chinese mine managers shot and wounded 11 of their employees in southern Zambia over a pay dispute, sparking a countrywide outrage’.[25]  Such allowances are simply unacceptable and create just anger in Africans who resent being so poorly treated on their own continent.


  • Bringing in employment from China

There is concern that, ‘Chinese infrastructure projects often import Chinese labour rather than developing local skills’.[26] The reality is that, ‘Chinese migration has followed in the wake of their country’s involvement in the local economies’.[27]  Although, generally speaking, more Africans than Chinese are employed, significant numbers of Chinese come in and there is concern that they are doing jobs that could be done by Africans. Look at these numbers: [28]

–    2011: Rwanda- Huawei is maintaining its project handed over in 2007 with 30 Chinese and 17 local technicians.

–    2010: Angola- China Railway 20 Bureau Group rehabilitation of 540 km of the Benguela Railway between Munhango and Luau, employing 300 Chinese technicians and 300 Angolans.

–    2010: Mozambique stadium- 500 Chinese, 1000 Mozambicans.

–    2010: Luanda stadium, Angola- 700 Chinese, 250 Angolans

Click here for more info. This pattern has disgruntled many Africans, particularly due to the fact that all the low-skill jobs are saddled on Africans while technical and management positions are reserved for the Chinese. This leads to the next point.

  • Even if jobs are created, they are of poor quality

Even in cases when China does create jobs for Africans, they are usual only for cheap, unskilled labour. For example, ‘Algerians are employed on construction sites as cheap local labour. Educated Algerians do not seem to have much access to Chinese companies’.[29] The extent to which this is replicated in Africa is not clear, however a casual look at sites managed by Chinese often have Africans as the cheap labour while the Chinese manage and supervise.

  • Racial tensions

Africans should not deceive themselves into thinking that merely due to the fact that both Africa and China have a history of struggle against Western imperialism and racism, this confers some immunity against racism to the Chinese. It does not. All signs seem to point to the fact that anti-black racism amongst Chinese is rife. For example, ‘Liberian student David Johnson moved to China just two months ago. He said he has already been subjected to several racist remarks. “One time I was walking down the street and someone called me a stupid black c***,” he reported’.[30] In fact when Chinese men were asked, ‘what they think about black women, many smiled and said they prefer white women, but black women with whiter skin are OK. They can “try one for fun.”’.[31] The reality is that, ‘Non-white foreigners, especially black people, are likely to face more obstacles in China as many Chinese see them as inferior’.[32] And this is not a recent phenomenon, ‘this kind of racism dates back to when Africans were first welcomed into China to study at Chinese universities in the 1960s. And in 1988, a violent, 300-strong mob broke into an African students’ dormitory at Nanjing University and destroyed their possessions while chanting “down with the black devils”.’[33] Some Africans need to get their blinders off for this one. Anti-black racism is a reality to contend with in Sino-African relations.


 So what should Africa do to take control of and manage this growing relationship in a manner that is favourable to Africa? The next post will be on recommendations for Africa. At the core of these recommendation is the thought that, ‘Africa must not be too Westwards or Eastwards minded- but rather Inwards minded. It is within Africa that all the answers lie’.[34]

[1] Wenping, He, ‘China’s Diplomacy in Africa’,

[2] Tentena, Paul (2012), ‘Africa: China to Create 85 Million Jobs for Africa’, All Africa,

[3] Cheung, Yin- Wong, Jakob De Haan, Xingwang Qian And Shu Yu(2011), China’s Outward Direct Investment In Africa, Hong Kong Institute For Monetary Research.

[4] Cheung, Yin- Wong, Jakob De Haan, Xingwang Qian And Shu Yu(2011), China’s Outward Direct Investment In Africa, Hong Kong Institute For Monetary Research.

[5] Belligoli, Serena (2011), ‘ Chinese Investments on the African Continent and Political Risk: the Ongoing Debate in China’, Journal of Cambridge Studies,

[6] Belligoli, Serena (2011), ‘ Chinese Investments on the African Continent and Political Risk: the Ongoing Debate in China’, Journal of Cambridge Studies,

[7] Alessi, Christopher, and Stephanie Hanson (2012), ‘Expanding China-Africa Oil Ties’, Council on Foreign Relations,

[8] Zhao, Shelly (2011), ‘The Geopolitics of China-African Oil’, China Briefing

[9] Zhao, Shelly (2011), ‘The Geopolitics of China-African Oil’, China Briefing

[10] Parenti, Jennifer (2012), ‘China-Africa Relations in the 21st Century’,

[11] Green, James (2012), ‘China in Sudan and South Sudan: an Unlikely Mediator?’, Think Africa Press,

[13] UNEP, ‘UNEP – China – Africa Cooperation On The Environment’,

[14] Becker, Antoaneta (2011), ‘China’s changing tone on African investment’, Al Jazeera,

[15] The African Development Bank Group (2010), ‘Chinese Trade and Investment Activities in Africa’, Policy Brief ,

[16]The African Development Bank Group (2010), ‘Chinese Trade and Investment Activities in Africa’, Policy Brief ,

[17] Parenti, Jennifer (2012), ‘China-Africa Relations in the 21st Century’,

[18] Zhao, Shelly (2011), ‘The Geopolitics of China-African Oil’, China Briefing

[19] Van Sant, Shannon (2012), ‘Africans Urge China to Help Create Sustainable Development’, VOA,

[20] Kitimo, Anthony (2013), ‘Tour operators want Asian states sanctioned over wildlife trade’,

[21] Opiyo, Dave (2012), ‘Wildlife count on way as poaching rises’,

[22] The Economist (2011), ‘Trying to pull together’,

[23] Bax, Pauline (2012), ‘Ghana’s Gold Sparks Conflict With Illegal Chinese Miners’, Bloomberg,

[24] The Economist (2011), ‘Trying to pull together’,

[26] Grammaticas, David, ‘Chinese colonialism?’,  BBC,

[27] The African Development Bank Group (2010), ‘Chinese Trade and Investment Activities in Africa’, Policy Brief ,

[28] Brautigam, Deborah (2011) ‘ Chinese Workers in Africa’,

[29] The African Development Bank Group (2010), ‘Chinese Trade and Investment Activities in Africa’, Policy Brief ,

[30] Jaffe, Gabrielle ‘Tinted prejudice in China’, CNN,

[31] Global Times Community (2012), ‘Racism still obstacle for blacks in China’,

[32] Global Times Community (2012), ‘Racism still obstacle for blacks in China’,

[33] Jaffe, Gabrielle ‘Tinted prejudice in China’, CNN,

[34] Obadias Ndaba (2012), ‘Why China Will Not Solve Africa’s Problems’, The African Executive,