On Friday last week, the government released the draft 2018 budget policy statement revealing how it was going to prioritize spending for the fiscal year. For tenderprenuers, there is a wealth of information to be uncovered from the draft, but for those who are not up to the task of going through the 110-page document, here is a little bit of what you should know.
One main thing that sets this draft apart from the other budget statements, is that for the first time, the president spelled out four key areas which he would focus on for the remainder of his term in office.
In this first part of our deep dive into the 2018 budget draft, we’ll be looking at the opportunities available for tenderprenuers in the manufacturing sector.
As part of the ‘big four’ economic plan, the government has stated that it intends to increase the contribution of the manufacturing sector from 9.2 percent of GDP in 2016 to 15 percent of GDP by 2020.
In order to achieve this growth, specific targets have been set for eight sub-sectors in the manufacturing sector revealing opportunities for the discerning tenderprenuer. For instance, the government plans to grow the value of textiles produced from the current $350 million to $2 billion by 2022.
In its list of top priorities for the current year, the government plans to construct 5 million square feet of industrial sheds and cultivate approximately 200,000 ha of Bacillus Thuringiensis (BT) cotton which have 3 times production yield compared to present conventional varieties. By the end of the year, the plan is to have created at least 10,000 apparel jobs and another 50,000 cotton jobs.
Another important sub-sector that is set to benefit from this plan involves construction materials where 2000 jobs will be created this year alone. The government aims to increase the value of construction materials from $470 million to around $1 billion in the next four years while putting major emphasis on the ‘Buy Kenya policy’ which will require 70 percent of these materials to be locally sourced.
The main agenda for this year will be to identify key housing components so any manufacturers involved in developing particularly innovative and/or low-cost housing solutions are likely to benefit from this opportunity.
Another important sub-sector that will receive much needed attention from the government is agro-processing. In fact, this could be one of the most ambitious undertakings considering that the government aims to more than triple the amount of processed agricultural exports from the current annual growth of 16 percent to 50 percent by 2022.
Some of the key steps that the government will take to ensure that its agro-processing targets are attained will include mapping tea, dairy, meat and crop value chains as well as developing warehousing and cold chain sites.