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Kenya Adopts Business Cluster Strategy to Boost Private Sector

President of Kenya, Mwai Kibaki
Kenya's President Mwai Kibaki keenly watches a demonstration by students after officially launching the e-learning laboratory at the Kenya Institute of Education(KIE).Looking on in spectacles is Louis Otieno,General Manager, Microsoft East & Southern Africa. The country is aiming to boost ICT.

The Kenyan Government has adopted a cluster strategy to improve the country’s competitiveness and help actualize the goal of rapid and accelerated economic growth articulated in Vision 2030, the Permanent Secretary at the Ministry of Trade, Eng (Engineer) Abdulrazak Ali has said.

The Government has adopted the cluster framework, Eng Ali said since it offers firms the opportunity to access knowledge, reduce research and development costs, achieve economies of scale, build skills and a qualified labour force, solve common problems and reduce costs due to geographical proximity and increased interaction between firms.

The Permanent Secretary was speaking during a facilitators’ workshop at Kenya Commercial Bank (KCB) Leadership Centre. He said that the Cluster Initiative (CI) calls for focus and structured action by the public sector, business, researchers and development partners to leverage CI in order to step up productivity and competitiveness.

The CI strategy is also linked to the Kenya Private Sector Development Strategy (KPSDS) being coordinated by the Ministry of Trade. The PSDS has five goals, among which, goal four aims at improving the productivity and competitiveness of enterprises.

“The cluster strategy is an innovative framework for coordinated efforts between public sector, cluster businesses, research and academic community and relevant non-state actors to improve growth and competitiveness,” Ali said, adding that “it is a paradigm shift in organizing economic policy as a collaborative effort between, not only business community and government, but the ‘triple helix,’ that also includes the academic community.”

He explained that the framework provides businesses with benefits they would not have, if they operated in isolation. “Clusters have also been identified as drivers for innovation, because companies co-operating and competing at close geographic proximity can learn from one another and from knowledge institutions and thus create positive externalities,” he said.

The Government support for clusters is aimed at addressing market failures especially in the provision of public goods such as training, education, infrastructure, research and information. Governments also seek to overcome coordination failures within clusters by supporting such activities as university – industry linkages, establishment of supplier associations, and ensuring effective technical support.

By virtue of its design, the cluster approach is therefore mid-way between free markets and strong government intervention. “The Government of Kenya, specifically the Ministry of Trade will support and facilitate the clusters already identified to develop and grow,” he pointed out.

It is noteworthy that the Ministry of Trade commissioned the Kenya Institute for Public Policy Research and Analysis (KIPPRA) to carry out a study on cluster analysis for Kenya. This study was presented to and adopted by National Economic and Social Council (NESC).

From the study, priority sectors were identified and six clusters selected for development. The selected clusters are: Transport and logistics at Port of Mombasa, Coast Beach Tourism, Inland Fisheries in Kisumu, ICT in Nairobi, Beef in Garissa, and Horticulture in Naivasha – Limuru.

The facilitator training workshop is part of the government initiative to equip key stakeholders from the prioritized sectors with the knowledge and best practice that will enable them to facilitate the development of the selected sectors.

The NESC is charged with the responsibility to spearhead the cluster process as it blends various government ministries in collaboration with the Swedish International Development Agency (SIDA) and the Pan African Competitiveness Forum Kenyan chapter.

The NESC, secretary, Julius Muia said the CI brings together government (ministries and state agencies), business firms, research organizations, development partners and other institutions to work together in a formal framework, called the Triple Helix to enhance competitiveness and growth.

The strategy involves the development and upgrading of related businesses that have a close geographic proximity or have virtual location through the collaboration of key actors, Muia said, adding that “the major benefits of business clusters are innovation, a reduced cost of doing business, an increased volume of business and an increase in employment.”

NESC secretary said a number of Government ministries have taken up the cluster agenda seriously and are mainstreaming some clusters into their work plans.

The University of Nairobi, Director Board of Common Undergraduate Courses, Prof Jacob Midiwo said the CI will enhance the utilization of various experts in the universities involved in research and teaching in their areas of competency.

Prof Midiwo who was one of the trainee facilitators in the workshop said experts in the universities have access to vast sources of knowledge which the CI will harness to further the quality of products into the market.

He said the CI will scale the confidence of society, the private sector and government in universities as they will collaborate to respond to persistent and dynamic challenges facing the country through training, research and sharing of expertise to spur innovations in the context of a knowledge driven economy.

About Robert Okemwa Onsare

Robert Okemwa Onsare
Robert Onsare is pursuing Electronics Technology at the University of Eastern Africa, Baraton. He is a Cluster Strategy trained facilitator by Kenya's National Economic and Social Council (NESC). Mr Onsare has been an incubation student at the University of Nairobi, School of Engineering, FabLab, a venture project of the university and Massachusetts Institute of Technology (MIT). He is a member of the African Technology Policy Studies Network (ATPS) and a published poet. Mr Onsare is based in Kenya.

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