Kenya's economic growth is being hindered by its reliance on exporting raw materials, according to Governor Irungu Kang'ata of Murang'a County. He cites Adam Smith's "The Wealth of Nations" as a guide, noting that rich nations take high-value products to the global market, while poor nations like Kenya take low-value raw materials. Kang'ata uses the analogy of a cow and a hen at a market to illustrate the point, suggesting that Kenya should focus on adding value to its exports.
The country's import bill is also a significant challenge, with Kenya spending Sh575.5 billion on petroleum products in 2024. This amount is almost equal to the total annual expenditure of the Ministry of Education. Kang'ata argues that this money could be better spent if Kenya shifted towards electric vehicles and reduced its reliance on imported fuel. He suggests that the government should ban the importation of fuel-powered cars and incentivize the assembly of electric vehicles locally.
Kang'ata points out that Ethiopia has already taken steps in this direction, banning the importation of new fuel-powered cars in February 2024. As a result, electric vehicle sales in Ethiopia have jumped from 800 in 2023 to over 100,000, with three assembly plants opening and $3 billion pledged in investments. He argues that Kenya can replicate this success by assembling electric vehicles locally and increasing the value of its exports.
The benefits of such a shift are numerous, according to Kang'ata. Firstly, it would help to conserve foreign exchange, as electric vehicles would be powered by Kenyan electricity rather than imported fuel. Secondly, it would reduce transport costs for Kenyans, as electric vehicles are significantly cheaper to run than fuel-powered cars. Thirdly, it would support industrialization, as Kenya could focus on producing components for electric vehicles rather than relying on imported finished products.
Kang'ata also highlights the need for Kenya to address its high electricity costs, which are currently the highest in the region. He notes that Ethiopia's power is much cheaper, thanks to its hydroelectric power generation, and argues that Kenya should explore similar options. He suggests that the government should prioritize the development of geothermal and hydroelectric power to reduce electricity costs and support industrialization.
The governor's proposal has significant implications for Kenya's economic growth and development. By shifting towards value-added exports and reducing its reliance on imported fuel, Kenya could create new opportunities for economic growth and job creation. Kang'ata argues that this approach is more effective than simply increasing taxes, which he believes would only hinder economic growth.
Kang'ata's call to action is clear: Kenya must stop taking a "hen" to the global market and start taking a "cow". He believes that by focusing on high-value exports and reducing its reliance on imported fuel, Kenya can turn its economy around and create a more prosperous future for its citizens. The government would do well to heed his advice and explore new strategies for economic growth and development.
Key points
- Kenya's economic growth hindered by exporting raw materials
- Shifting towards electric vehicles and value-added exports could support economic growth
- Addressing high electricity costs is crucial for industrialization and economic growth
Reporting sources
- Kenya should not take a hen to a cow market · Daily Nation
