FACTORS CONTRIBUTING TO TRANSFORMATION PROCESS IN KENYA’S MANUFACTURING SECTOR

Abstract

Kenya’s manufacturing sector provides a clear footing in industrialization advancement. However, the sector is faced with challenges in its efforts to build a competitive manufacturing base as well as cultivating business and industrial environs. Therefore, the paper intends to ascertain factors contributing to manufacturing sector transformation process and its position in Kenya’s economic growth. We analyze annual data for the period 1975-2017. The findings of this study using time series regression analysis confirms that new investments by manufacturing sector to credit issuance by financial institutions and commercial banks ratio, labor involvement to output to manufacturing output ratio, value addition output to manufacturing output ratio positively contributes to transformation of Kenya’s manufacturing sector and Economic Growth. The study also reveals that lack of political good will during election period does affect manufacturing sector operations. The study recommends manufacturing sector to embrace innovation concept and technological advancements for betterment of operational efficiency and effectiveness.