Ruto steps up push for local manufacturing as Kenya targets industrial growth

President William Ruto has called for increased local manufacturing and investment in domestic industries, saying Kenya must reduce its reliance on imported goods and produce more of what it consumes.

Speaking at the Industrialisation Summit at the Kenyatta International Convention Centre (KICC) in Nairobi on Wednesday, Ruto said the government is pursuing an industrial policy to increase manufacturing’s contribution to gross domestic product (GDP) to 20% and create one million jobs.

The ambition comes as the sector struggles to expand its share of the economy despite its importance in job creation, exports and value addition.

Data from the Kenya National Bureau of Statistics (KNBS) shows manufacturing accounted for 7.1% of GDP in 2025, down from 7.3% in 2024. Its real value added grew by 2%, compared with overall economic growth of 4.6%.

Formal employment in the sector, however, rose by 5.2% to about 388,600 people in 2025, representing 11.7% of total formal wage employment.

Ruto said the figures reaffirmed the need to accelerate industrial investment, strengthen domestic production and create more opportunities for Kenyan workers.

“The prosperity of a nation is not measured only by what it consumes, but by what its people are able to produce. It is measured by the factories and industries we build, the value we add to our resources, the enterprises we grow, and the jobs we create for Kenyans,” he said.

The President said the government was using import levies, investment incentives and public procurement to encourage local production, particularly in sectors where Kenya has the capacity and resources to manufacture goods.

In the cement industry, the government introduced a 17.5% levy on imported clinker in 2023, a key raw material used in cement production. Ruto said clinker imports subsequently declined from 148,000 metric tonnes in 2023 to 10,000 tonnes in 2024.

He cited investments including Bamburi Cement’s Sh32 billion production line in Matuga, Kwale County; a Sh30 billion cement factory in Kisumu; Devki’s Sh45 billion clinker factory in West Pokot; and a Sh70 billion clinker plant in Kitui.

The projects represent nearly Sh180 billion in investment and are expected to create about 12,000 jobs, the President said.

The strategy is already being reflected in production figures. KNBS reported that cement production increased by 18 in 2025, while Ruto said output reached 7.6 million tonnes in the first eight months of 2026.

The government has adopted a similar approach in the steel industry, introducing a 17.5% levy on imported steel to support domestic manufacturers.

Ruto highlighted a Sh25 billion Manga Steel investment in Taita Taveta and a Sh22 billion Apex Steel facility at Dongokundo, alongside other projects. The investments are expected to create approximately 9,000 jobs.

He added that two steel factories had resumed production, bringing the sector's installed capacity to 4.2 million tonnes.

Furniture manufacturers are also being targeted through higher import duties. The government has raised duty on imported furniture from 35 percent to 45 percent and introduced a 30% excise duty on imported products.

Beyond import protection, the government is seeking to use public investment to create a ready market for locally manufactured goods.

Ruto said 303,910 affordable housing units were at different stages of development, with 97 per cent of the materials used in the programme sourced locally. He added that the initiative had opened a Sh61 billion procurement opportunity for artisans and small businesses in the Jua Kali sector.

The President also announced plans for an industrialization fund that will offer manufacturers loans at single-digit interest rates. Initial financing will include loans of Sh5 million, Sh10 million and Sh20 million, with the fund eventually expected to support larger facilities of up to Sh100 million and Sh200 million.

Access to affordable credit remains important for manufacturers seeking to expand production capacity. KNBS data showed that credit advanced to the manufacturing sector fell by 12 per cent, from Sh639.4 billion in 2023 to Sh562.9 billion in 2024.

The Head of State maintained that industrial growth would also depend on developing a skilled workforce, urging manufacturers to work with technical and vocational education institutions and universities.

The government plans to introduce 50,000 paid one-year internships from January 2027, with the programme potentially expanding to between 100,000 and 150,000 opportunities annually through partnerships with industry.

He said employers participating in the scheme would be allowed to deduct the full stipend paid to interns from their taxes.

Ruto said the measures were intended to build industries that could compete beyond Kenya's borders.

“Our objective is not protection for its own sake. It is to build industries that produce quality goods, create jobs, and compete successfully.”