Kenya risks loosing investors to other investment destinations owing to high cost of doing business in the country, Julius Muia, secretary, National Economic and Social Council (NESC) has said.
Muia says the country should address competitiveness for sound economic growth as the country ranks position 93 in global competitiveness.
The council which is charged with promoting economic growth, social equity and employment creation to reducing poverty and inequality has identified weak institutions, poor infrastructure, corruption, low human resource development, market inefficiency and weak innovation capabilities as major hurdles the country has to overcome.
To overcome this challenges the council adopted cluster strategy in June, 2010 after a study by Kenya Institute for Public Policy Research and Analysis (KIPPRA). KIPPRA says cluster analysis will enhance productivity and competitiveness of the Kenyan economy.
The institution has selected six clusters that can enhance Kenya's competitiveness regionally and globally. The six clusters are transport and logistics at port Mombasa, coast beach tourism, inland fisheries in Kisumu, information communication technology in Nairobi, beef in Garisa, and horticulture in Naivasa and Lamu.
The NESC envisions that competitiveness will be enhanced through this clustering system for the realization of Vision 2030. The approach the council says will institutionalize good governance and management of resources. Indeed, KEPPRA says clusters strategy will generate more employment, higher wages, better productivity, create a more innovative environment and more start ups.
Muia says the poor competitiveness ranking of Kenya and the continent globally calls for an urgent need to put forth sustained effort to catch up with the rest of the world. They have mooted the Pan Africa Competitiveness Forum (PACF) which is a continental wide competence and action centre for innovation and cluster based competitiveness initiatives for national and regional economic development in Africa.
It is projected that through PACF Africa countries will be able to share experiences on how to fortify there competitiveness not only in exploitation of their resources but value addition and being exporters not importers of what can be produced in the continent.
A world Bank report that was released last weak titled "The Africa Competitiveness Report 2011" says African economies have made important strides in improving their economic environments in recent years, but much remains to be achieved to ensure that recent strong growth continues. In particular, African governments must better harness the region’s resources through stronger integration into international trade and finance, improved educational systems, enhanced entrepreneurial opportunities for women and developing their tourism sectors.
Leonard Kimani, Director, Economic Sector at NESC says the need to enhance competitiveness in line with Vision 2030 goals is being met with practical approaches with an overriding goal of enhancing productivity and competitiveness in Kenya for higher standards of living.
Kimani says Kenya's natural resources should be exploited en-masse to scale the country's business, employment, incomes, rural urban migration.
The NESC director says the cluster approach focuses on economic policy on microeconomics constraints to competitiveness without neglecting macro and sectoral policy framework as well as identify geographic concentrations of natural products in the country.
He calls for adoption of direct approach to planning and execution of cluster initiatives as it been a tool of successful economies in Asia, Europe, and Latin America notwithstanding few countries have adopted cluster strategy such as South Africa, Morocco and Ethiopia which has a vibrant skins and leather cluster and World Bank is funding them to develop a national cluster policy.
The council says cluster strategy will create a link, collaboration and strategic partnership between firms, the government and research institutions to exploit complementarity and synergies towards innovative economic policy making to meet competitiveness challenges the country is going through.
Kimani says firms working individually may fail to take advantage of business opportunities arising from the activities of other firms thus sub-optimal – exploit synergies and complementarity.
The council says rampant skill mismatch emanating from wanting industry and research linkages will be addressed thus giving new blood to small and large business in the country to compete globally as it will address lack of credit facilities for businesses ventures.
The strategy will further look into means to scale up value addition at the consumer market level. Energy will be put into serious consideration as its deficit cost has extremely scaled up production costs – scaring away investors.
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