Kenya’s manufacturing base has been shrinking over the years in relation to its share of the GDP, declining from 9.4 percent five years ago to 7.5 percent last year.
Several factors are to blame for the decline, largely high operating costs.
Manufacturing is one of the four pillars in the Big 4 agenda, with officials expecting a reversal of the slide through various interventions and lift its share of the GDP to 15 percent.
Its expansion would, then, spur economic growth due to its strong forward and backward linkages with other sectors and create jobs.
Among other strategies, fuelling industrial growth would require embedding green practices in factories such as installation of resource efficient equipment. This will return cost savings – lowering operating costs and strengthening factories’ adaptive capacity and resilience to climate change.
Going green would also cut carbon footprint, given that manufacturing sector emits about seven percent of Kenya’s total greenhouse gas emissions – the culprit behind global warming and climate change.
Kenya’s National Climate Change Action Plan (NCCAP), which was recently approved by President Uhuru Kenyatta, commits to moving Kenya to a low-carbon and sustainable economy by greening its transport, energy, buildings and manufacturing sectors.
To this end, greening local industries and enabling an industrial takeoff would require four strategic approaches.
To begin with, factories will need to embed resource efficiency mechanisms in their operations, which will enable water and energy use conservation alongside waste recovery and reuse.
Efficient resource use promises huge savings for investors while minimising pressure on available resources and environmental imprint.
Next, human capacity building is needed to equip local technicians with necessary skills to undertake resource use audits in industries and install efficient technologies.
Thirdly, a green financing wave needs to sweep across the country to boost uptake and development of clean industrial technologies on a wider scale. Financial catalyst is needed to fan a green growth while protecting industries against shocks from an increasingly mercurial nature.
Green financing has almost been lacking in the local money market. Most commercial banks in Kenya offer plain vanilla financing, approaching projects in the same generic way, without distinguishing the sustainability angle to green businesses. Green financial products should be designed differently, tailored to fit the unique nature of eco-friendly projects – a potentially high-growth area despite being relatively new.
Lastly, there is need for awards where best performing factories would be recognised and feted, triggering healthy competition among industrialists in green practices.
Kenya’s climate change action plan should be implemented with speed in line with its goal of climate-proofing manufacturing sector and creating new market opportunities.
Also, the proposed climate change fund should be set up to unleash a green wave around strategic projects.
Manufacturing is a key pillar of the economy, putting 353,300 Kenyans in formal jobs, and accounting for 12 percent of the total number of people in the formal sector in Kenya.
But climate change effects threaten the survival of the sector.
Manufacturing is capital intensive, with long supply chains and significant water requirements, all of which are vulnerable to floods, droughts and extreme weather events triggered by climate change.
Erratic weather is feared to lead to resource scarcity such as water and raw materials, potentially starving factories of inputs to keep their production lines running. The ensuing shortages would, in turn, send consumer prices rocketing towards record highs, diminishing households’ purchasing power and worsening poverty levels.
Reduced crop production may, for instance, dent the agro-manufacturing sector, hurting earnings and putting jobs on the line.
To forestall such an eventuality, local factories should adopt climate-smart production lines as well as proper waste management.
As a first step, factories are encouraged to conduct audits to determine leakages through which resources are wasted. This could then lead to, for instance, installation of energy and water-efficient technologies while promoting conservation practices.
To lower energy bills, and besides installing a captive solar power station, a factory can install a voltage optimiser to regulate incoming power supply and reduce the voltage just to the optimal level for powering the factory equipment. This has been proven to return huge cost savings.
Additionally, installing LED lighting system alongside motion sensors, and supplemented by use of natural light is yet another big cost-saver, as is a hot water recovery system.
As demonstrated, green manufacturing will not only future-proof industrial operations but also return huge savings.
The writer is the CEO, Kenya Climate Innovation Centre (KCIC)
The article first appeared in the Business Daily