A section of KEPSA leaders met with the International Finance Corporation (IFC) Vice President for Economics and Private Sector, Ms. Susan Lund on April 12, 2022, who was accompanied by other IFC representatives, to discuss post-pandemic recovery efforts, and how IFC can scale up support for the private sector in Kenya. The key agenda was how the IFC can support Kenya as the country strides towards making Kenya a manufacturing hub; as well as the EAC regional integration and opportunities, especially with the recent entry of the Democratic Republic of Congo (DRC) into the EAC.

The KEPSA Leadership was led by KEPSA CEO Ms. Carole Kariuki, KEPSA Chair Ms. Flora Mutahi, KEPSA Vice-Chair Mr. Jas Bedi, KEPSA Director and Chair of Kenya Association of Manufacturers Mr. Mucai Kunyiha, and Chair of KEPSA Industrialisation and Trade Sector Board Ms. Susan Maingi. Ms. Lund was accompanied by Ms. Jumoke Jagun Dokumu – Regional Director IFC, Ms. Amena Arif – Country Manager Eastern Cluster IFC, Mr. Friedman Roy – Advisor to Vice President IFC, and Ms. Sarah Ochieng – Programme Manager at IFC Kenya.

Ms. Kariuki expressed her gratitude for the meeting and congratulated IFC on inking a stake in Equity Bank. She noted that the private sector was keen on market access and how local companies could take advantage of the new markets as presented by the African Continental Free Trade Agreement (AfCFTA) and the new entry of DRC into the EAC. She was keen on how IFC could work together with the private sector in Kenya to ensure that they capitalize on the open markets.

In a rejoinder, Mr. Bedi highlighted the reorganization of global value chains and how the disruption in the same has inspired a paradigm shift. A shift that, he said, has positioned Africa, and especially Kenya, as a strategic destination for companies looking at re-shoring and on-shoring from economies such as China. With these kinds of opportunities, he added, Kenya is unable to cope with the demand for products such as textile products. On this account, the KEPSA Vice-Chair made a call for changing the focus to localization. He also urged IFC to see how financial institutions can adopt digitization in their support of businesses.

Mr. Mucai Kunyiha, highlighted areas that could help transform Kenya into a manufacturing hub. He expressed optimism in the manufacturing sector’s ability to create formal jobs. However, he noted that there are pain points hindering the manufacturing sector including the ballooning national debt that has lumped pressure on manufacturing in terms of taxation. Flashing out the priority areas from the manufacturing economic manifesto, Mr. Kunyiha noted that competitiveness, with a focus on exports and investment, was key. He reiterated that Kenya is not manufacturing at a globally competitive level. Also, he raised concerns about taxation and the lack of a national tax policy. There is a need to address the crowding out of the private sector by the government in access to finance.

Ms. Maingi reiterated the need to nurture the Kenyan SMEs in order for them to scale up and compete for opportunities in the EAC region. In addition, she made a call on enhancing cross-border payment as a springboard to propel trade in the region. Reiterating on enhancing competitiveness, she noted the need to also address the sub-national (county) issues that have introduced an additional layer of challenges for businesses.

Ms. Flora Mutahi, the KEPSA Chair, echoed the importance of enhancing value addition in the agriculture sector. She added that value addition is key to making Kenya products competitive and capturing the markets. She also observed the need to focus on technology as a driver of business to explore the regional markets and the need to invest in measures for mitigating counterfeiting and illicit trade. On the latter, she expressed concern about its deterrence to FDI flows into Kenya.

On her part, Ms. Lund agreed that crowding out of the private is a big issue that has been observed, globally, and needs to be addressed with urgency. She was in support of the County Competitive Index and the idea of paying more attention to the counties. She noted that the USA-China tariff wars had adverse effects on global value chains, and it was good to see that other countries, including Kenya, are benefitting from new markets. She agreed with the leaders that globalization has reached its peak and it is high time to pay more attention to regionalization and localization. Also, she noted that AfCFTA is a good thing for the region and needs a collective approach by all stakeholders. Ms. Dokumu reiterated the fact that AfCFTA is key while observing that Kenya is at a vantage point in the region since it’s endowed with resources and it needs to take a lead in the region and replicate the success it has in the EAC.

The meeting agreed to continue partnering in working on business environment reforms with a priority on the development of the County Competitive Index that would be anchored on GCI and in-depth engagement between IFC and the banking sector to explore workable solutions that would enhance financial access by the private sector.

The IFC Vice President was in Kenya for a scanning mission where she met stakeholders from the private sector and government.