Presentation of the Productive Capacity Index

Statement by Rebeca Grynspan, Secretary-General of UNCTAD

Your excellencies,

Ladies and Gentlemen,

Dear Friends,

Welcome!

I am extremely happy to be here with you today, to present UNCTAD’s Holistic Productive Capacities Development Programme for Kenya. Later, you will hear a more technical presentation from our team here in Nairobi, but before I would like to share some introductory thoughts on this important subject.

I will start with the most obvious point – what are productive capacities, and why do they matter. The dictionary answer to the ‘what’ question is a little technocratic: “productive capacities are the productive resources, entrepreneurial capabilities, and production linkages which determine a country’s capacity to produce goods and services”. So, allow me to give you a more direct answer to the question.

Productive capacities, at their core, are about nation building. Concretely, they are about the capacity of each one of us to work together to make our businesses, our families, our countries grow. The capacity of the farmer to get the best harvest possible from its field. The capacity of the artisan to produce and sell her work in wider markets. The capacity of the young student to learn and apply his knowledge to newfound solutions to old problems. The capacity of the infrastructure to move things around at low cost. The capacity of our institutions to set the frameworks that allow investments to go where they are needed, that allow relationships to become synergies, that allow the economy to function undisturbed.

The world has transformed in profound ways. Economies today are no longer built merely on the gold and minerals beneath our feet but on the ideas in our heads, the skills in our hands, and the collaboration of our spirit. Productive capacities therefore encompass not only the physical infrastructure but also human talents, technological capabilities, and the societal networks that foster innovation.

In essence, productive capacities are about potential and the power to realize that potential. Understanding our productive capacities helps us identify where we are strong, where we need improvement, and how we can ensure a brighter future for our nation.

In a world where technological advancements redefine societies at a breakneck pace, where climate change challenges traditional ways of life, and where globalization makes us all interdependent, developing productive capacities is not just a choice but a necessity.

Now, it might seem very complex to add all these factors together, to really measure a country’s productive capacity. But we at UNCTAD love complex things. And after decades of work, we have managed to do exactly that, through our Productive Capacity Index, which are the core of our Holistic Productive Capacities Programmes, whose Kenya edition we are presenting today.

Ladies and gentlemen, dear friends,

Let me now share with you some of the key results from Kenya’s Productive Capacity Index. Let me start with some of the more headline numbers:

First – Kenya’s has developed its Productive Capacities in the last twenty years, since we started recording data for Kenya. Kenya’s PCI improved from 19.7 in 2000 to 30.8 in 2022 (within the standardized range of (0 to 100) *. For reference, the countries with the greatest productive capacities have a score of 63, and the lowest of 16.

Kenya’s performance is higher than the average score for Sub-Saharan Africa (27.9 in 2022).

However, Kenya ranked 149th out of 193 economies in the world, revealing significant gaps in productive capacities.

The country’s score remains below the top performers from the African region (e.g., South Africa (42.7) and Egypt (36.7) in 2022

There are two key areas where Kenya is clearly outperforming the region, both in terms of score and momentum – telecommunications, and private sector development. To people in Nairobi, this should come as no surprise. Kenya also has a very strong agriculture and blue economy sector.

However, there are two areas where Kenya is under performing the sub-Saharan region, which are electricity access and transport. While electricity scores are getting better year after year (in all the region), transport scores are stuck and lagging.

This combination of low and expensive electricity and insufficient transport are the main reasons why, according to our data, Kenya’s manufacturing output is below potential. Indeed, manufacturing’s contribution to Kenya’s GDP has contracted in the last two decades – from 13 per cent in 2006, to less than 8 per cent now.

Now, since Kenya’s GDP has grown very rapidly during those years, this does not mean that Kenya is deindustrializing – what we are saying is that manufacturing has not kept up the pace with growth, and this is a problem for productive capacity development.

The Holistic Productive Capacities Development Programme which we are presenting today seeks to tackle these weaknesses, while making use of Kenya’s unique strengths. The programme is based on five pillars, whose key objectives are:

Harnessing Kenya’s comparative advantages in agriculture (including livestock, fisheries, and the blue economy.

Boosting productivity and value addition in agro-processing to create inter and intra-sectoral linkages.

Building a robust manufacturing sector based on the country’s identified comparative advantages.

Facilitating private sector development through the creation of an enabling business environment.

Accelerating electricity and ICT development as facilitators of sectoral development, as well as integral parts of the national economy.

Strengthening policy coordination and the capacity of Kenya’s institutions to implement the Holistic Productive Capacities Development Programme

It is important to note that this programme is aligned with Kenya Vision 2030 and the Bottom-up Plan (2022-2027)

 

Ladies and gentlemen, dear friends,

In closing, our journey to understanding and improving Kenya's productive capacities is a reflection of our collective vision for a prosperous nation. A nation where our strengths are magnified, and our challenges addressed. Where each individual, irrespective of their background or profession, has the tools, resources, and environment they need to contribute meaningfully to our nation's growth.

As we embark on this ambitious program, let us remember the Swahili proverb, "Haba na haba, hujaza kibaba," which translates to "Little by little, the jar gets filled." Our progress might seem incremental, and the road might be long, but with each step, we come closer to our goal of a prosperous, thriving Kenya. Thank you for being a part of this journey. Together, we will ensure that Kenya's potential is fully realized.

Asante sana.