Kam Annual Report 2014 by Kenya Association of Manufactures

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Contents Chairmanâ&#x20AC;&#x2122;s Statement Board of Directors Management Policy, Research and Advocacy KAM Consulting Membership Recruitment and Development Communication Finance, Administration and Projects Abridged Accounts

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K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

VISION To be a world class business membership organization effectively delivering services to its members wherever they operate.

REMARKS BY HIS EXCELLENCY UHURU KENYATTA, CGH, PRESIDENT AND COMMANDER -IN -CHIEF OF THE KENYA DEFENCE FORCES, DURING THE OFFICIAL OPENING OF KAM HOUSE, ON TUESDAY, 9TH DECEMBER 2014 Distinguished Guests, Ladies and Gentlemen, Good Morning, It is my distinct pleasure to join you today for the official opening of this new office building, and to congratulate you for this very fine achievement.

MISSION To help build a globally competitive and inclusive Kenyan manufacturing industry that is the best in Africa.

Let me begin by commending the Kenya Association of Manufacturers for the tremendous work you put into meet the needs of your members. Year in, year out, you have been a strong voice for the manufacturing sector; and you have H.E.Hon. Uhuru Kenyatta addresing KAM members and guests been a strong and constructive partner at the official opening of the KAM House of government in finding answers to the problems of manufacturing and industry. It is a pleasure to appreciate this long and constructive engagement, and to look forward to a deepening of it.

GOAL To transform KAM into a sustainable member focused Association delivering relevant, quality, timely and effective services to members.

VALUES • Innovation

We aspire to introduce a paradigm shift in the way that we deliver products and services to our members in a bid to make them do things differently in a profitable manner.

• Effectiveness

We ensure that the extent of all our activities and interventions fulfill the intended purpose of function to our members satisfaction.

Your sector is a central pillar of our economy, and I do not need to tell you that without you, this country cannot achieve the goals of Vision 2030. Let me mention just one of many reasons for that view. Our economy needs a large number of new non-agricultural jobs to diversify, to cut poverty sharply, and to employ our young people. Without a strong manufacturing sector, our chances of finding many more non-agricultural jobs are low. That, then , is one of many reasons why my government will do all it can to hasten the growth of Kenya’s manufacturing. Ladies and Gentlemen, Let us admit that growth of our manufacturing sector has not been smooth; indeed, it has been hindered by a number of persistent problems. My government has heard from you on these matters. And you can see that we have begun to move against the difficulties in the business environment, especially those touching on land transaction, company registration, and clearance of goods at the port of Mombasa. We made progress in these areas; and we expect to continue rise further up the World Bank’s Ease of Doing Business rankings.

• Responsiveness

We aspire to be quick in responding and reacting to our members’ needs within the required time.

• Resilience

We ensure that we have the skills and tenacity required to be successful in a fast-paced, changing and constraining business environment.

But that is far from enough: we must also grapple with infrastructure and power. The high cost of electricity in Kenya makes our goods uncompetitive in regional and global markets. We came into office convinced that we had to expand the availability of power, and we remain on course to have 5,000 MW on the grid in 36 months. Meantime, we commissioned a plant at Ol-Karia a few months ago, and we expect to commission another before the year is out. The cost of power has begun to drop – as you will see if you have looked at your bill in the last two months – and we expect to meet our target of 8 US cents per unit before too long. It is no secret that our manufacturing sector will only truly flourish if we establish and maintain strong demand for locally-produced goods. My government recently announced a number of special preferences to encourage Kenyan entrepreneurs and enterprises. And, of course, we remain committed to working with you to make the “BuyKenya build-Kenya” initiative a complete success. We welcome your suggestions and support in these endeavors. But now, allow me to mention two other points. First, even as government does its part to ease your work, you too must play your part. Your goods now compete in regional and international markets. More: they represent the face of Kenya to many who will never visit us. So there is no room for mediocrity: your wares are our ambassadors, and we expect that they will be nothing short of excellent. Second, let me say a word about our Special Economic Zones and SME parks. Under these initiatives, we will address some of the infrastructure difficulties under which investors in the manufacturing sector have labored. Yet again, we expect you to take full advantage of these new opportunities; and we especially look forward to the established members of KAM helping and mentoring the SMEs operating in these parks, as well as transferring these skills to youth and marginalized groups. In particular, I want to suggest that you make special provision for youth. Government is Kenya’s biggest employer, and, we are making these special arrangements. Perhaps you will want to emulate our example. Ladies and gentlemen: Let me close by reiterating a simple truth: the growth of manufacturing in Kenya has been achieved by an old and strong partnership between government and the private sector. I want to make clear that my government will sustain and strengthen that partnership. It is now my great pleasure to declare this building officially opened. God bless you, and God bless Kenya.

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K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

Chairman’s Statement

Chairman’s Statement (continued) We remain optimistic of the future of the manufacturing sector in Kenya. As the President reminded us in December, industry is the only path to transformation of our economy and creation of secure non-agricultural jobs.

‘Chombo hakiendi ikiwa kila mtu anapiga makasia yake’: A boat does not go forward if each one rows in his own direction.

Fellow members, my vision as the chairman for my twoyear term is to promote an enabling environment for the manufacturing industry for locally manufactured goods to be globally competitive, protect infant industries and prepare industry for the opportunities that are ahead (PPP). I envision an improvement in the economic growth of the sector and the nation as we work with Government in the journey towards resparking a manufacturing revolution.

official opening. #manufacturing.

Industry remains partners in progress and job creation in the country. There is great potential which needs to be harnessed expeditiously in the sector in order to grow the economy and achieve the dreams of Vision 2030. As we prepare industry for the big opportunities that are coming up globally, I would like to reaffirm KAM’s commitment in working together with stakeholders in ensuring that local industry remains globally competitive. KAM will continue to raise the bar in being the voice of industry, advocating for industrialization in Africa for shared prosperity.

@pradeeppaunrana @KAM_kenya House

Pradeep H Paunrana Chairman Dear fellow members, Welcome to the 2015 Annual General Meeting. It is a pleasure to present the Annual report for the last year. As members will note, the year has been very good for our organisation. We have managed to grow our membership and influence by working together and pursuing a common agenda. The detailed report does not do enough justice to the breadth and depth of our work and contribution. But it is a good start. I encourage members to read through this and other regular reports from the Secretariat. We work together with government to create the environment in which industry may grow and thrive and contribute to job creation and wealth in our country. The manufacturing sector grew by 4.3% in 2014. Industry now contributes 11.3% to the gross domestic product, up from 8.4% and there is an opportunity to contribute much more. Manufacturing constitutes 16% of the global gross domestic product and 72 % of international trade. There is a great potential for the local industries to tap into the global market and expand. The East African market remains key for Kenya and takes in a large proportion our goods. However as partner states industrialise too, we must work to not only retain this, but to also expand into other markets.

Once again, I am proud to present good results for the year. We have seen our asset base grow year on year for the last 10 years and last year was no exception. Our balance sheet has grown from Ksh 497 million to Ksh 636 million as you will note from the accounts. I thank you so much for your continued support to our organisation and may we continue to thrive. Four years ago, we made the bold decision to enhance our sustainability by constructing an office block that would house our headquarters in some floors but be available for rent as well. Thank you for your contribution. The building (now complete) is an iconic symbol of manufacturers’ commitment to doing business in Kenya even as we work on creating an enabling environment for the sector to perform better than it is doing now. This asset will in addition to membership be the vanguard of our sustainability. I take this opportunity to congratulate the team that directed the construction of the building and saw it being completed in time and below budget. We were incredibly proud to move into our own building at the end of the year and were honoured by the presence of H.E Uhuru Kenyatta, President and Commander- in- Chief of the Defence Forces of Kenya at the official inauguration in December last year. The President reaffirmed Government’s commitment to grow the manufacturing industry.

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shall continue to work with them and others in furtherance of our shared goals. I would like to especially thank our long serving CEO, Betty Maina for the hard work and tenacious leadership over the last 11 years. We would not have achieved the great growth and strides experienced during this period without her focus and dedication. During her tenure, our membership has more than doubled and our income has grown ten-fold. Together with the team at the secretariat, Betty has ensured that our voice is heard where it needs to be heard. And clearly too. We wish her all the best in her next endeavours

Pradeep H Paunrana Chairman 21 May 2015

I wish to thank the members, directors and partners for their continued support the year. The impeccable dedication of the team at the Secretariat is well appreciated. I also commend government efforts in opening up new markets for locally manufactured goods as well as keeping the channels of communication open for industry to exchange information with the public sector on creating an enabling environment for businesses to operate. I will continue to rely on your support in my term of office and beyond. In addition to our core constituency and members, I would like to thank all the partners who have supported our organisation over the last year. I am grateful for the support we receive from the Government of Kenya, The Government of Denmark, the British High Commission, Agence France Development (AFD), The Centre for International Private Enterprise, Trade Mark East Africa, GIZ, Business Advocacy Fund, Micro Entreprises Support Trust, UK Department for International Development (DfID), Global Environment Facility, United Nations Development Programme and European Union through the COMESA Regional Indicative Programme. We are grateful for the support of these partners, many of whom have been partners with us for more than 10 years, that enables KAM to represent the interests of members as well as provide firm level services. We applaud these partners for the trust they have in us and confirm that we

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K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

Chief Executive’s remarks

Chief Executive’s remarks (continued) Commission for Revenue Allocation on County Money Bills. Kenya Power was also engaged on power issues and a joint KAM and KRA workshop on valuation and trade facilitation was held.

KAM maintains its purity as a representative organisation for the manufacturing industry in Kenya. @maina_betty @KAM_kenya #manufacturing.

Betty Maina, MBS Chief Executive 2014 was a mixed bag of great milestones and some disappointments for the sector. The Association put in a spirited fight to ensure that manufacturers voices were heard and influenced policies to create an enabling environment for the sector. The key major highlights of the year included the great success on the EAC-EU Economic Partnership agreements which opened way for Kenyan exports to the European Union. The conclusion of the agreements were a big win after over 10 years of negotiations. The East African Community continues to be a major export destination for Kenyan products. However, there has been a steady decrease in exports to the region mainly due to the fact that countries in the region are also industrializing and of late there has been stiff competition from products manufactured in other countries outside the region, mainly China, which are landing in the region at a cheaper cost than locally manufactured goods.

Throughout the year KAM continued to develop, cement and nurture relationships with stakeholders. In addition to engaging the Executive and Parliament, where KAM has long standing relationships, the Association deepened its relationship with the Judiciary. KAM partnered with the Judiciary in the development of the Illicit trade manual to fight illicit trade in the country. The same was launched in Malaba in March 2015.

views on the successes thus far and how the manufacturing sector can also further collaborate with government to create more jobs and grow the economy.

Communication to all our stakeholders was enhanced throughout the year and the Secretariat delivered relevant communication to segmented audiences on members’ issues.

Great strides were made towards promoting global competitiveness of the manufacturing sector. The Secretariat continued to lobby for market expansion and the implementation of the Buy Kenya Build Kenya initiative. To this end, industry applauded H. E the President’s directive at the Presidential Roundtable to all government institutions to buy locally manufactured products. In addition, the Association added its weight in ensuring that the 40% local content agreement in the construction of the Standard Gauge Railway was met.

Business Development Plan

Priority Agenda

Great progress was made in advancing the 10 point manufacturing agenda for 2014. The Association lobbied for energy security, order and reducing the costs of devolution, adequate security, sustenance of existing markets and opening up new markets for Kenyan goods, improvement of trade logistics to keep goods moving swiftly, provision of the necessary education, training and skills, setting aside land for industrial investment, fighting fakes, substandard and illicit goods and policy stability.

The EAC adopted the new rules of origin which are product specific and this was a welcome development to the local industry. A number of non tariff barriers were reduced in the EAC region and we will continue to fight for the elimination of the remaining non tariff barriers. The paper sector was however dealt with a heavy blow after duty which was reduced from 25% to 10% in June after over 10 years of lobbying was unceremoniously reinstated at 25% which crippled the local printing and packaging industry.

In 2015 the manufacturing priority agenda will be centred around securing industry for shared prosperity. A seven-point agenda will be pursued by the Association on behalf of the manufacturing sector; securing investment, securing markets-by leveraging on the Buy Kenya, Build Kenya Policy and export competitiveness, securing infrastructure, securing constitutional gains, securing justice for the economy, securing security and; securing the future of industry.

The year ended on a high note with a grandiose ceremony at the official opening of the KAM House by H.E. Uhuru Kenyatta in December. It was an opportune moment to also share industry

At Chapter level, KAM strengthened its voice in the counties and a number of initiatives were undertaken to influence policy. Governor’s Roundtables were held as well as collaborations with

KAM continued to raise its bar on the international scene. Its brand profile was increased through various visibility and engagement initiatives. Notably, the Association provided thought leadership and contributed to high profile debates at international events. Key amongst the events attended include the Public Private Dialogue in Denmark and US Africa Summit.

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Implementation of the three year Business Development Plan (BDP) for the period 2014-2016 began in earnest in 2014 and is on course. KAM adopted a fact based approach to its advocacy initiatives and this has gone a long way in meeting members’ needs. The strategic intent of the Association, according to the BDP, for the next three years is to help build a globally competitive and inclusive Kenyan manufacturing industry. Five core pillars drive the implementation of the plan and these are Policy, Research and Advocacy, KAM Consulting, Membership Development, Communication and Finance, Administration and Core Support.

Partnerships KAM continued to strengthen its partnerships and remained a partner of choice with various institutions, governmental and non-governmental, for various projects that the Association undertakes to augment the service provision to its membership and other stakeholders. We remain grateful to our partners who walk with us on the journey towards creating an enabling environment for business to operate in Kenya. The Association started discussions with some Embassies represented in Kenya on areas of collaboration. There were discussions with the European Commission on Trade and Private Sector Development on possible partnerships in multi-stakeholder alliances and development partnerships in private-public sector collaborations. The engagements are expected to bear

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Sustainability Through the Global Compact, KAM continued to encourage the business community to maintain the 10 principles of the UN Global Compact to ensure sustainability. The Global Compact Kenya Network is currently the largest network in Africa with 102 members. The Association has also ensured its financial sustainability by commissioning the KAM House which is also an income generating asset as well as take on projects to buoy its resources. Environmentally, the Association has joined the global movement on Climate Change to save the environment.

Outlook More growth in the sector will come from the small and medium enterprises and there is need for concerted efforts to be channelled towards growing the sector. A stable policy environment, security and reduced energy costs are key in attracting new investment into the manufacturing sector which has the potential to create more jobs.

Conclusion It gives me great pleasure to have served the Association for the past 11 years and make meaningful contribution to the growth of the economy. My great appreciation goes to the KAM Board which provided the requisite direction that the Association required. The outstanding team at the Secretariat, which has consistently continued to provide top notch service to the KAM members and stakeholders, is highly commendable. As I hand over the leadership mantle to Phyllis Wakiaga, the CEO designate, who takes over as the next Chief Executive with effect from 1 July 2015, I trust that all stakeholders will accord her all the support that she requires to serve industry needs better. The future of manufacturing looks bright and I salute all entrepreneurs, new and old, who have ventured into this exciting sector. Industrialization will remain the key anchor for job creation and growth of the Kenyan and African economies. Long live the manufacturing industry!

Betty Maina, MBS Chief Executive

K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

Board of Directors

Board of Directors (continued)

Pradeep Paunrana Chairman

Flora Mutahi Vice Chairlady

Polycarp Igathe (Immediate Past Chairman)

Helen Kimani

Mahul Shah

Muhoho Kenyatta

Bharat Shah

Rajan Shah

Sachen Gudka

Mucai Kunyiha

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Kaushik Shah

Palu Dhanani

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Marc Engel

Bimal Kantaria

Joe Lithimbi

Stephen Brooks

Lutaff Kassam

Joe Muganda

K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

Organisational Structure

Management

Annual General Meeting Annual General (AGM) Meeting (AGM)

Executive Executive Committee Committee

Industrial 1414 Industrial Sectors Sectors

7 Regional 7 Regional Chapters Chapters

8 Working 8 Working Committees Committees

Secretariat Secretariat

Phyllis Wakiaga CEO Designate/ Head of PRAU

Betty Maina Outgoing CEO

CEO

Policy Research Research Policy andAdvocacy Advocacy and

Paida Nyamakanga Head of Corporate Communication

Dalmas Okendo Operations Manager

Trade Trade

Communication

Membership

Finance Finance && Admin Admin

Chapter Chapter Secretariats Secretariats

Energy Energy services services

Tax Tax

Ethical Ethical Business Business

Manufacturing Manufacturing Academy Academy

Business Facilitation Facilitation Business Services

SME SME

Infrastructure Infrastructure Tobias Alando Head of Membership

Projects Projects

Legal Legal and and Regulatory Regulatory

Standards Standards

Zipporah Maina Head of Finance

KAM Consulting Consulting KAM

Operations Operations

Business InformaBusiness Infortion Services mation Services

Joyce Njogu Head of KAM Consulting

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O P E R AT I O N S R E P O R T

K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

Policy, Research and Advocacy

2. Ensuring order and managing the cost of devolution

Industrialization is the lynchpin for Africa’s economic growth @wakiaga_phyllis @KAM_kenya #manufacturing

Devolution is a welcome development from the constitution implementation process. However as Counties settled in their respective offices there was multiple taxations, increases in the rates, fees and charges and inter-county trade became expensive. KAM had foreseen this challenge and had started engaging counties in 2012. In 2014 KAM partnered with Commission for Revenue Allocation in reviewing County Money Bills in order to ensure that the Revenue Laws do not increase the cost of doing business in Counties. A model county handbook was launched by the Commission for Revenue Allocation (CRA) to assist in guiding Counties on how to draft Finance Legislation and the initiative was lauded by the manufacturing industry. KAM has, in partnership, with CRA developed Policy documents to give economic, constitutional and legal guidance in the development of County Revenue Laws and approximately 6 Revenue Laws have been drafted in the 47 Counties. The Secretariat also participated in a workshop organised by CRA to review the revenue generating formula. The Association implored upon Government to equitably distribute the resources

1. Ensuring Energy security- with a focus on sufficiency, reliability, quality and cost

Phyllis Wakiaga CEO Designate/ Head of PRAU

Global Strategic Objective: Fact based Advocacy for creation and sustenance of an enabling market and environment at regional, national and county level to support competitive manufacturing in Kenya. Kenya Association of Manufacturers remained steadfast in representing manufacturers . In 2014 there were a lot of gains for industry on the advocacy front. KAM strengthened its work by employing game changing strategies in its efforts to champion the manufacturing priority agenda.

The Association lobbied Government on energy issues. Manufacturers currently consume 60% of the energy produced in the country and reliability, quality and cost of electricity were still a big issue for industry. Major gains were realised in the reduction of the cost of electricity although at some point costs went up, industry was in agreement with the approach that was taken by Government in reducing the costs on a staggered basis as projects under the 5000+MW projects were commissioned. KAM will continue to lobby for a reduction in the cost of power to promote global competitiveness of locally manufactured goods. The Association engaged Kenya Power to address the issue of power supply and reliability. As a result of the engagements, Kenya Power rolled out a programme to have 200 dedicated power lines to large power consumers throughout the country under the “Boresha Stima Viwandani” initiative. Under the programme, large power consumers were assigned account managers who would be contact persons responsible for addressing clients’ concerns.

and to financially resource the Counties well so that they do not end up imposing exorbitant revenues which deter businesses. Roundtables were also held with Governors in various Counties in order to keep the engagements with counties on going. Manufacturers were also incorporated into various county Boards.

3. Provision of adequate Security Security continues to be an important factor in the business operating environment. In the year under review the Association continued to urge all its members to alert authorities of any security threats that they may be aware of. KAM also engaged the police on security matters. Courtesy calls were also paid on a number of officials to discuss security matters.

4, Sustaining existing markets and opening up new markets for Kenyan Goods Market expansion for locally manufactured goods was a priority item. KAM in collaboration with other Business Membership

2014 COMESA MARKET SHARE Zambia Zimbabwe 2% Swaziland 8% 0%

Comoros 1% Congo 24%

South Sudan 23%

Djibou2 1% Sudan 7% Seychelles 0% Source: KNBS Economic Survey

Egypt 20% Mauri2us 1% Malawi Libya 4% 0%

Madagascar 0%

Ethiopia 8%

Eritrea 0%

PRAU TEAM

Walter Kamau Trade Policy

Frida Mbugua Legal Affairs

Lilian Odhek Trade Policy

Maria Limo Customs & Standards A N N UA L R E P O RT 2 0 1 4

Anne Ndungu Research & Business Writer A NNUA L RE PO RT 2 0 1 4

Patrick Kaleve AGOA Visas & Work Permits

Joseph Wairiuko IPR & Anti Counterfeit

Wambui Ndungu Research & Tax Administration

K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

KAM added its voice to the tripartite negotiations within the EAC. About 70% of KAM’s proposals to the Tripartite Free Trade Area negotiations, especially on the rules of origin, sanitary and phyto-sanitary measures were taken up so far. The Tripartite FTA is expected to be launched in June 2015 and outstanding issues, like the rules of origin, will continue to be negotiated after the launch of Free Trade Area.The Revised EAC Rules of Origin were approved by the Council of Ministers and Gazetted on 23rd January 2015. The rules will improve market access in the EAC and reduce non-tariff barriers( NTBs).

not reflect the actual values from the factories. The engagement enlightened KRA on the manufacturing processes and how the final costs which were declared by manufacturers are determined. The evaluation criteria improved after the visits. Through the Secretariat’s advocacy efforts, bonds that were imposed for sugar imports were removed and a new Customs Procedure Code was developed, also non-implementation of the KRA stringent new export procedure which required, among other documents, a Landing Certificate as a legal document issued in the country of importation.

KAM participated in the harmonization of standards. Ninety nine(99) standards were harmonized as EAC standards in 2014, among them are the 22 grain standards on staple food which are also applicable to four non EAC countries namely; Zambia. Malawi, Ethiopia and South Sudan.

In 2014, KAM also formed a joint committee between KEBS and KAM to resolve standards related issues affecting members. This has improved the working relationship between KEBs and KAM members. The committee met during scheduled quarterly meetings in which the meeting advocacy efforts on standards that affects the industry were reviewed. Reviewing of re-packaging requirements for all foodstuff with the possibility ofa general standard on foods and specific standards on food packaging; Supermarkets to stop the practice of repackaging of Butter,Cheese,Edible,Fats and Oils, Frozen foods,Margarines and Fat Spread,Water and Milk unless they fulfil the standards requirements. The Supermarkets were given a grace period of three months Le.30th April 2015 to effect the changes. The implementation period will be 1st May 2015.

KAM participated in the review of the SQMT Act and requested review of the SQMT Regulations to address industry concerns on strict liability contained in the Regulations. The regulation is under consideration by the EAC Standards Secretariat.

5. Ensure tax legislation and tax administration promote production

Charles Ongwae, KEBS MD, with Betty Maina, KAM CEO during a courtesy call on the KEBS MD.

Organisations, lobbied for the conclusion of the EAC-EU Economic Partnership Agreements. Although the negotiations were concluded after the deadline of 31 October, industry was appreciative of Government’s efforts in getting the negotiations concluded. The agreement will open way for a $7billion market for Kenya made products. The Association gave input for the negotiations between EAC, SADC and COMESA for the Free Trade Area. KAM anticipates opening up of a wider market for Kenyan goods if the negotiations are concluded by end of this year. The Association lobbied to ensure that the interests of locally manufactured goods are incorporated into the negotiations. In the EAC region, non tariff barriers to trade hampered the smooth flow of goods. As part of the yields from the Secretariat’s

Georgina Wachuka Regulatory Affairs

Penina Mwangi AGOA Visas

lobbying 8 out of 10 reported NTBs were resolved and emerging NTBs will continue to be addressed through the National Monitoring Committee for Non- Tariff Barriers in 2015. KAM shall continue to fight for the removal of the remaining NTBs. Industry welcomed the NTBs Bill, enacted by the East Africa Legislative Assembly in February 2015, which sets a timeline for removal of all outstanding NTBs. There were changes in the Common External Tariff (CET) classifications which were revised and favoured the metal sector. CET rates were increased for grades of metal products manufactured locally to promote local industries.

The Association maintained good relations with key regulators mainly Kenya Revenue Authority, Kenya Bureau of Standards and Kenya Sugar Board. In 2014, a joint committee between KRA, KAM and other business membership organisations was set up to resolve customs valuation issues. Members had raised complaints over the valuations that were done by KRA which were used in determining the applicable tax. The valuations did

KAM was coopted into a committee that was set up by National Treasury to implement the duty free importation of industrial spares. The committee was set up as part of Government efforts to reduce the cost of doing business by exempting manufacturers from paying the full Common External Tariff. The committee approved 41 applications for duty free imports.

Locally, KAM continued to spearhead the Buy Kenya, Build kenya initiative on behalf of industry. In order to strengthen capacity for local industries, local entities were authorised to engage foreign companies under joint venture agreements with the caveat that foreign firms’ stake were not to exceed 30%.

Brenda Wawire Edible Oils

Emmanuel Alenga Customs & Standards

Walter Nyamwaya PRAU Support Officer A N N UA L R E PO RT 2 0 1 4

KAM Members at a meeting with KEBS

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K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

9. Policy stability

List of Acts and Bills reviewed.

Policy stability remains a key ingredient in shaping investment decisions. KAM continued to engage Government on policy matters and reviewed Bills and acts to ensure that the interests of manufacturers in the respective legislations were captured. A partnership was fostered with the judiciary to collaborate on the adjudication of business cases and the time it takes in addition to the implications of the judgements. The partnership led to the formation of the Business Court Users Committee whereby business meets regularly with the judiciary to discuss outcomes of judicial decisions on the business environment.

Guests at a KAM breakfast meeting with Cabinet Secretaries and Principal Secretaries

Permits and visas KAM assisted members in processing visas for duty free exports under the Africa Growth Opportunity Act(AGOA). 4000 visas were processed in 2014 and KAM realised a total income of Ksh 8,000, 000. The Secretariat also assisted members in processing 48 work permits for alien employees as well as 87 Special Passes and realised Ksh 1,946,000 in revenue.

6. Improve trade logistics and keeping Kenyans and their goods moving swiftly and safely- with a focus on infrastructure, transport and Borders KAM appended its signature to the Port Charter which was launched by H. E. President Uhuru Kenyatta in June. The Charter seeks to improve efficiencies in cargo clearing at the Port with a view to decongest the Port. By signing on to the Port Charter, KAM committed on behalf of its membership, together with 23 other agencies, to enhance infrastructural development and improve efficiencies at the Port. There have been positive reports on port efficiency and developments from the time that the Charter was signed.

7. Setting aside land for industrial investment Progress was made in setting aside land for industrial development. At county level,County Governments pledged to set aside land for industrial development and other investments. KAM added its input to the Special Economic Zones Bill which will also give incentives for manufacturers who will operate from the Zones.

8. Fighting fakes

KAM also established a partnership with Ministry of Environment, Water and Natural Resources in addressing climate change matters which would have a detrimental effect to businesses in the long run if not addressed. As Vision 2030 aims at transforming Kenya into a newly-industrialising middle income country providing a high quality of life to all its citizens in a clean and secure environment, the manufacturing sector will be one of the target sectors to realizing this vision. However, climate change, resource scarcity, population growth and urbanization will continue to have an impact on these aspirations and also affect the sustainability of businesses. It is from this background that the Association participated in the set up by the Ministry of Environment to develop the Climate Change Framework Policy and Bill. In addition, KAM has been keen in promoting resource efficiency among its members and nationally and participated in the development of the green economy strategy and implementation plan which will guide Kenya’s transition into a green economy. KAM lauds this transition because the move complements the Association’s efforts in the green movement and will encourage the private sector to use climate sensitive technologies and be resource efficient to support the country’s low carbon development pathway. Review of the Energy Policy and Bill was also critical to KAM to ensure that our advocacy on adequate, reliable and quality power supply at affordable cost is addressed at the policy level. KAM also ensured that energy efficiency and conservation is given a key focus in this policy and bill to reduce wastage in the country.

Labour Institutions and Labour Relations Act

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Mining Bill

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VAT Bill

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Alcoholic Drinks Amendment Bill

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Scrap Metal Bill

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Industrialization Bill

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Public Procurement and Assets Disposal Bill

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NSSF Act

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Energy Bill

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Climate Change Bill

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EAC SQMT Regulations

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Nairobi City COunty Plastic Carry Bags Control Bill, 2014

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Nairobi County Finance Bill

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Kiambu County Finance Bill

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Kiambu County Revenue and Administration Bill

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Mombasa County Finance Bill

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Nakuru County Finance Act

Outlook Industry in Kenya is expanding and there is a major drive to further industrialize. Kenya can grow into a formidable industrialization hub on the African continent if the operating environment is enabled. In the next five years industry is poised to be the largest employer in Kenya and this dream can only be achieved with a supporting business environment. An industrialization led economic growth will spur development for the nation.

Export Trend EAC '000 KSh

Trade in illicit goods and fakes is an industry estimated to generate over $2 billion annually. KAM stepped up its efforts in the fight against illicit trade which is depriving the formal market and licit goods of a lucrative market share. KAM worked with other stakeholders including Government and its agencies to fight counterfeits and illicit trade. In partnership with Kenya Magistrates and Judges Association (KMJA), an illicit trade manual was unveiled at the Annual KMJA conference. The publication was then launched in Malaba by the Chief Justice, Willy Mutunga. A roll out plan for the manual will be implemented in 2015.

160,000,000 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0

Source: KNBS Economic Survey

•

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Uganda

Tanzania 2011

Rwanda 2012

2013

Burundi

Total

2014

K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

KAM Consulting

The Association acknowledges and appreciates the work that has been done so far by the Government of Kenya in supplying reliable and cheap energy. The country is not exactly where it ought to be in terms of pricing but clearly the Government is working on getting the country there.

KAM will remain sustainable through provision of income generating services to augment the Association’s revenues. @njogu_joyce @KAM_kenya #manufacturing

KAM also educated the market and worked with stakeholders to achieve Standard Power Purchasing Agreements and Proposed Net metering. KAM promoted renewable energy and energy efficiency financing as a new area of business for financiers. The Association also worked with County Governments in developing County energy legislation for 7 counties in the country.

CENTRE FOR ENERGY EFFICIENCY AND CONSERVATION (CEEC) Centre for Energy Efficiency and Conservation specialises in carrying out energy audits aimed at assisting companies in assessing energy usage and recommends energy efficiency as well as management initiatives. During the year 2014, CEEC carried out 49 General Audits and 46 Investment Grade audits. All the audits were subsidized

Joyce Njogu Head of KAM Consulting

Global Strategic Objective: To strengthen and stabilize KAM Consulting unit efforts to provide high quality demand driven and profitable firm level services that will generate revenue for KAM and support KAM’s sustainability.

Innovation and creativity characterised the delivery and service offering by the KAM Consulting unit which met the needs of members and augmented the Association’s revenues. Memoranda of Association were signed with the following institutions: International Technik Ltd, Strathmore Business School, KPMG, Indian School of Business Hyderabad and Ernst and Young to support the delivery of some of the courses under the Manufacturing Academy. Developments in the energy sector enabled the manufacturing sector, business community and other investors to plan well for expansion. Manufacturers consume about 60 percent of the energy produced in country. KAM looks forward to the delivery of the 500MW project. KAM congratulates Government in getting the country into the league of the top 10 world’s largest producers of geothermal energy. This a very big achievement and the KAM family is upbeat about more developments in the sector.

through the funding from the Ministry of Energy and Petroleum and the Danish International Development Agency (DANIDA). Both large and small enterprises from all across the country benefited from the audits. Combined potential savings was Kshs: 0.95 Billion and required investment of Kshs: 1.52 Billion with a Simple payback of 1.6 years. On the same note, CEEC undertook Impact assessment study to ascertain the level of implementation for Energy audits conducted between 2009-2012. Out of the 152 companies surveyed, 84 of them have implemented 50% or more of the recommended measures. They are now enjoying combined cost savings of kshs 286 million annually after investing Kshs 342 million with a simple payback of 1.2 years. The Centre also carried out specialized energy efficiency and renewable energy trainings during the year. Over 500 personnel have undergone various trainings and a total of 121 Certified Energy Managers (CEMs) and 15 Certified Measurement and Verification Protocol (CMVP) graduated from the courses. Technology transfer was done amongst companies and 5 exchange visits were facilitated by KAM so that companies could learn from each other. CEEC expanded its horizons to the water field. Resource audits were introduced for water & waste water. In the year under review four pilot audits were carried out.

Energy Management Awards Hall of Fame Award Category

Winner

Runners-Up

Overall energy management Award-Large Mzuri Sweets Energy Consumers

1st Runner –up: Kenafric confectioneries

Overall Energy Management Award- Kanyenyaini Tea Factory Medium Scale Energy Consumers

Premier Food Industries

Best Energy Management Team Award

Kenafric confectioneries

Fuel Savings Award Consumers

Sarova Whitesands

- Large Energy SpinKnit

2nd Runner –up: BAT Nairobi

Mzuri Sweets

Fuel Savings Award - Medium Scale Energy Olenguroune Tea Factory Consumers

Beiersdorf

Electricity savings Award - Large Energy Kenafric Confectioneries Consumers

Mombasa Cement

Electricity Savings Award (SME)

Sarova Shaba

Olenguruone Tea Factory

Service Sector Award

Sarova Panafric

Sustained High Performance Award

Bamburi NGP

SpinKnit

Best New Entrant Award

Mzuri Sweets Ltd

Olenguruone Tea Factory

The Technical committee Award for best Bidco Oil Refineries Ltd Assessment tool presentation.

1st Runner –up: Sarova Whitesands 2nd Runner –up: Turtle Bay Beach Hotel

BAT Nairobi

KAM C TEAM

Catherine Mukoko Manufacturing Academy

Fred McOloo SMEs

Martha Cheruto Energy Services

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Beatrice Kithinji CEEC A NNUA L RE PO RT 2 0 1 4

Jeff Murage AFD/SUNREF

David Njugi SBECC

Peris Kasae AFD/SUNREF

Industrial tariffs for selected African Countries 2014, USD

20 15

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K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S 10

to provide technical support to project sponsors and partner banks. SUNREF conducts due diligence on the projects to mitigate technical risk and makes recommendation to the partner banks for financial consideration. SUNREF also helps build capacity among projects developers and staff of partners banks. The funds have been used to transform renewable energy and how energy efficiency markets operate through harnessing renewable energy such as the roof-top photovoltaic system at Strathmore University. Strathmore’s power bills were on average USD 300, 000 per year with the electricity power outages and quality of the same being a huge challenge. The solar PV project installed with the assistance of SUNREF will generate 800 Mwh per year saving the institution USD 93, 000 per year. From the first phase to date, the program has helped reduce carbon dioxide emissions by 65 kilo tonnes annually in Kenya through the installation of 22 MW of renewable energy which is expected to produce 120 GWh/year in renewable energy per year. Different technologies have been so far financed under SUNREF, from mini-hydro projects, to Energy Efficiency, Solar PV, and Biomass. Year 2014 has seen the achievement of a great milestone in March with the awarding to KAM of SUNREF Phase 2, after a successful competitive tender. SUNREF phase 2 has in addition a funding of 60 million Euro provided to the partner banks from Agence Française de Développement for disbursement to certified projects. SUNREF team under KAM has successfully released 18 certificates of Technical Eligibility for Projects, paving the way

Mzuri Sweets Limited scooped the Overall Energy Management Award

The Association engaged Kenya Power and went on a joint campaign around the country to meet industrialists to ascertain power challenges on the ground. The meetings gave birth to the Boresha Stima Viwandani initiative where dedicated power lines were to be installed for the top 200 energy consumers. KAM received tremendous support for energy projects from the Government of Kenya, French and Danish Governments and we are grateful for the support.

SUSTAINABLE USE OF NATURAL RESOURCES AND ENERGY FINANCING (SUNREF) There is a drive to encourage use of renewable energy and energy efficiency initiatives in Kenya in order to ensure that industry thrives on reliable and cheaper alternatives of power as well as harness the opportunity to sell the surplus energy to

Anne Kariuki CEEC

Sylvester Makaka Energy Services

for their financing. Currently the SUNREF team is working to support 0 more projects with also more banks expected to join Uganda Kenya Tanzania the program. (Jan 2015) South Africa*

India

Egypt*

Ethiopia*

Fig 1 regional electricity cost comparison. Industrial tariffs for selected African Countries 2014, USD

20 15 10 5 0

Uganda

Kenya

Tanzania

South Africa*

India

Egypt*

Ethiopia*

(Jan 2015)

Sustainable Business Energy Change (SBECC)

Climate

This program was launched in April 2014, and is supported by the British Government’s International Climate Fund (ICF). The primary goal of the fund in Kenya is to enable the country to cope with the effects of climate change and improve access to clean energy. This will be achieved by providing transformational change by helping Kenya to scale up private sector innovation

other sectors therefore reducing the industry’s production costs for particularly small and medium enterprises. Through assistance from the Regional Technical Assistance Programme (RTAP)- now known as SUNREF, 8 projects received funding to the total value of USD39 million in debt finance and USD58 million in total investment under the first phase of the project funded by Agence Française de Développement (AFD). SUNREF is run and operated by KAM and supports projects in Kenya Uganda and Tanzania. In 2011, the AFD, in partnership with the EU-Africa Infrastructure Trust Fund, funded the implementation of a credit line and technical assistance component with the aim of transforming how renewable energy and energy efficiency markets operate as well as to assist in building the necessary infrastructure so that renewable energy and energy efficiency measures are a standardised in East Africa. SUNREF has a mission to ensure that the line of credit provided to partner banks is disbursed to technically certified projects and

Andrew Njoba SBECC

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Dr Ben Chumo, Managing Director of Kenya Power receives token of appreciation for prime platinum sponsorship of EMA from KAM Chairman, Pradeep Paunrana

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and investment in low carbon services and assets such as clean renewable energy. Enabling this change will require targeted support to critical aspects of climate change governance, and stimulation of the private sector demand. The overall objective of the programme is to strengthen business society engagement in climate change mitigation advocacy in order to support improved policy and regulatory framework conditions aimed at providing attractive and enabling conditions for increased investment in a low carbon and climate resilient infrastructure in Kenya. KAM runs the SBECC project with the aim to catalyze private-sector investment in renewable energy by facilitating implementation of the renewable energy projects; support improved policy and regulatory framework conditions in the County Governments, with a goal of enabling and attracting investments in low carbon and climate resilient infrastructure; promote renewable energy technologies and solutions by facilitating industrial and technology cooperation through project demonstration; and, strengthen business society engagement in climate change mitigation advocacy at all levels of policy authority (National and County). SBECC completed the following projects last year under the program: â&#x20AC;˘

â&#x20AC;˘

Legislation supporting preparation of Climate Change Mitigation policies and bills for the following counties: Mombasa, Machakos, Nairobi, Kiambu, Nakuru, UasinGishu, and Kisumu; Completion of sixteen (16) Project Pre-feasibility studies for renewable energy projects in the following segments: Small-Hydro, Solar, Biogas and Biomass. The total project pipeline from this initiative will enable the development of project sizes amounting to 24MW, and $ 57 Million in Total Investment.

Further activities under the programme to be rolled out in 2015 include; providing technical assistance to renewable energy developers by facilitating full-feasibility studies; conducting capacity building forums for County Governments, in order to advocate for mainstreaming of clean energy in budget and county development plans; conducting renewable energy expos and awareness forums to showcase leading technologies and solutions to the market.

K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

economic mix. The sector often addresses local niche market needs and have the potential to tap into opportunities available in the international market. KAM engaged SMEs in the year 2014 with funding assistance from the Royal Danish Embassy through Micro Enterprise Support Programme Trust (MESPT). KAM conducted one day regional forums for SMEs in Nairobi, Nakuru, Kisumu and Mombasa to exhaustively identify and discuss challenges hindering their growth. A study report was produced which informed the discussions and was later used to inform the ongoing detailed tailor-made training products/services for the SME sector. Surveys and one on one interviews were also carried out during forums to get first hand information from the small and medium enterprises. Key issues that were raised from the engagements included; Institutional strengthening, technical, operational and management strategies. KAM began implementing some of the interventions identified from the needs assessment which included; Training and advice on business strategy and business planning; raw material sourcing, supply chains and procurement management.

Partnership Development for SME Work KAM identified potential partners to further the work on SME development. Two separate fora were organised in collaboration with the Japanese and Italian embassies which brought together over 100 SMEs. The fora discussions were on access to modern manufacturing technologies relevant to SMEs. Negotiations are at an advanced stage with other local partners, international institutions and embassies to nurture local SMEs through networking events and exchange programs.

Training Products/Services Design for SMEs. The Association identified experts to offer support in designing and customizing training materials, facilitate the training events and conducting post training follow-ups to address the identified constraints in the SME sector. All training materials have been designed with the targeted group needs in mind. The selected consultants, together with the project team, concluded work on design of the first training modules on Business planning which was rolled out to SMEs in four regions of Kenya namely; Kiambu, Nakuru, Kisii and Uasin Gishu Counties. The implementation will be concluded in 2015.

CEOsâ&#x20AC;&#x2122; training on strategy coordinated by the Manufacturing Academy

Manufacturing Academy In response to the plight by industry to bridge the skills gap between industry requirements and the skills set possessed by the graduates from various institutions, the Manufacturing Academy tailor-made courses to suit the needs of industry. All the courses that are offered by the academy are NITA approved.

Provision of the necessary education, training and skills A total of 213 participants went through 12 trainings offered by the Academy throughout the year. A total of Ksh 10,764,027 was realised in revenues from the trainings. The trainings covered a broad spectrum of industry needs on both the technical and the theoretical side. 8 of the trainings were Open House

Advocacy work has been at the centre and core of SME Development work at KAM. A sub-committee of the board was set up to address prompt payment of suppliers by buyers e.g. the supermarkets. The issue will be followed through in 2015 with KENTRAK to ensure a Code of Payment is put in place.

Business Information Services The main highlights for the year were the KAIZEN Conference and the Business Leaders Conference, hosting of the Ethiopian

The Association increased its engagements with the Small and Medium Enterprises (SMEs). SMEs are a critical part of the

In house trainings was also conducted for Jua-Kali Artisans through GVEP International on Good Manufacturing Practices. Local and international trainers coordinated the respective trainings to ensure that each participant received world class training. Feedback received from the companies shows that the trainings have helped companies in equipping the employees with requisite skills and productivity and efficiency has been boosted. A Permanent Working Group on Vocational and industrial Training in Kenya was established. The Partnership was between KAM, Kenya Private Sector Alliance , Linkage of Industry with Academia and German Industry and Commerce in Kenya. The initiative is aimed at transforming the quality of the Technical Vocational and Industrial Training (TIVET) in Kenya.

SME Policy Advocacy Work

SMALL AND MEDIUM ENTERPRISES (SMEs)

and covered the following topics: Production Management, Employment Contracts Management, Lean Manufacturing, Waste Management, Discipline Management, Managing Sexual Harassment, New Manager in the Factory Setting, Performance Management. 3 Partnership Programs were held under the following topics: Accelerated Sales Force Performance with (Indian School of Business), Procurement Fraud Detection with (KPMG), Strategy and the CEO with (Strathmore Business School).

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Panel discussion during the visit by the Addis Chamber of Commerce and Sectoral Associations

Delegation and the Addis Chamber of Commerce and Sectoral Associations. BIS also held nine policy related seminars in 2014. The seminars were demand driven and were open to both members and non members. The following topical issues were discussed at the seminars; New National Social Security Fund (NSSF) Act; Training to review the progress of Tripartite Free Trade Area Negotiations; Standardization, Quality Assurance, Metrology and Testing (SQMT), Procurement Systems; Budget, Single Customs Territory and new export procedures,EAC Duty Remission Scheme; Transfer pricing and; iTax. About 500 attendees participated in the various seminars. A total of Ksh. 77 258,983 was realised in revenue from the seminars and conferences.

10th Annual KAM - KAIZEN Conference KAIZEN conference participants

KAM hosted the founder of KAIZEN Institute, Sensei Maasaki Imai, at the 10th Annual Kaizen Conference, which was held under the theme, “Celebrating 10 years of KAIZEN in Kenya”, in July 2014. The two-day conference was attended by 100 participants from the manufacturing, service and hospitality sectors. Sensei Maasaki Imai took the participants through the KAIZEN concept and improvements that could enhance management in modern day leadership.

KAIZEN® (Original Definition)

Companies shared best practices and had an opportunity to learn more from the mastermind of KAIZEN.

KAI ZEN

Change

Good

(for the better)

KAIZEN® = Continual Improvement KAIZEN and GEMBAKAIZEN are the trademarks of KAIZEN institute

Culled from Sensei Masaai Imaki’s Presentation at the 10th KAIZEN Conference in Kenya. Participants at a Tripartite Seminar

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Membership

Governors Round Tables

KAM has been able to establish Governors Round Table (GRT) sessions, a platform that promotes dialogue between business representative and County Governments on social and economic issues. Out of the GRT sessions we have been able to develop specific County Business Agenda publications that guide the Counties on key priority focus areas towards creating enabling environment for doing business.

The Association has consistently delivered to its membership. There is value in becoming a KAM member. @tobiasalando @KAM_kenya #manufacturing

Global Strategic Objective: To aggressively grow membership and engagement to a level where KAM mirrors and represent 75% of active manufacturers in Kenya.

Our Membership has grown tremendously in the last three years with 64, 65 and 95 new Members being recruited in 2012,2013 and 2014 respectively. KAM aims at members’ satisfaction and thus, based on members needs, introduced an additional Chapter in Industrial Area as well as an additional sector to cater for the needs of the Multinationals with unique and specific interest Munir Thabit Mombasa Chapter Chairman

Members also gave input on the Medium Term Plan (20132017), which is in line with the national Blueprint, Vision 2030, that is aimed at making Kenya a middle income earning country.

According to a satisfaction survey conducted by the Association, there was an improvement from the previous year as members registered an average of 86% satisfaction level with the Association’s services.

KAM’s quest is to grow the whole industrial sector by empowering each sector on an individual basis for the prosperity of the nation.

The key engagements in Mombasa and its environs during the year were mainly around cost of doing business in the area. There were several engagements at County level as the membership team worked on improving the services and reach of members. The main advocacy issues which were handled in the county were on port tariff adjustments which the port stakeholders lobbied against. The tariff was however implemented with effect from March 15, 2014. The previous adjustment had been done in 2012.

A thorny issue for the membership during the year was on the Finance Bill which was passed unceremoniously by the County Government without consulting stakeholders. KAM lobbied the County Government to have the Bill Amended. The Association’s inputs were part of the adoptions made from stakeholders consultations on the Finance Bill which was subsequently reviewed.

The recruitment strategy was revamped and more engagement activities such as the members Sundowners, on topical issues which the Association is lobbying for were introduced.

Our service offering was enhanced and included the introduction of a Members Help Desk. The aim of the Members Help Desk is to track members issues and improve on the response time and resolution of the same. The platform enables members to track progress of their queries by using a unique identification number.

Mombasa

Members recruitment

Members are the heartbeat of Kenya Association of Manufacturers and all the activities undertaken by the Association are done with members in mind. In 2014, 95 new members joined KAM bringing the total membership to 853.

Tobias Alando Head of Membership

In the past one year the chapters have been able to build effective and strong Coalitions with other Business Membership organisations and use them as platforms to engage the County Governments on key advocacy concerns within the Counties.

Members were further aggrieved by the cess/entry fee charges which were increasing the cost of doing business.

Chapter Reports

Central Kenya

Through the support of Centre for International Private Enterprise (CIPE) KAM has established and strengthened its regional presence. Currently the Association has 7 regional chapters based in Mombasa, Industrial Area, Uasin Gishu, Nakuru, Kisumu, Machakos and Kiambu. The Chapters exist to advocate and lobby at the sub-national level on behalf of the KAM members.

County revenue and land issues took centre stage in the advocacy work for the Chapter in the year 2014. Members from the Chapter had an opportunity to engage the County Government in various fora on budget and land issues. The Association was successful in meaningfully engaging the county

MEMBERSHIP TEAM

Susan Gitau Mombasa Chapter

Eric Ochieng Nyanza/Western Chapter

John Kamau Nakuru Chapter

Edith Moroti Machakos Chapter A N N UA L R E PO RT 2 0 1 4

Edith Koske Uasin Gishu Chapter A NNUA L RE PO RT 2 0 1 4

Robert Juma Industrial Area Chapter

Gladwell Kamau Central Kenya Chapter

Judy Njino Global Compact Network Administrator

K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

The year in pictures 1

17 9

15 10

Pic 1: KAM CEO Betty Maina, Former Ghanaian President John Kufour and KNCCI Chairman Kiprono Kittony at the Governors Summit Pic 2: Panellists at the Women Empowerment Principles Forum held in Nairobi Pic 3&4: H.E. Hon Uhuru Kenyatta receives commemorative KAM House model and key at the official opening of the KAM House Pic 5: H. E. Hon. Uhuru Kenyatta signs the Port Charter Pic 6: Cabinet Secretary Ministry of Industrialization and Enterprise Development Adan Mohamed meets KAM Directors and some members at KAM House Pic 7: Cabinet Secretary, Ministry of Lands. Charity Ngilu meets KAM over land issues Pic 8: KAM staff members at Energy Management Awards Pic 9: Cabinet Secretary, Ministry of Energy and Petroleum, Davis Chirchir, meets with KAM on energy issues

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14 13

Pic 10: Arun Devani, MD Synresins Ltd , Betty Maina, CEO KAM, Sensei Masaaki, Kaizen, at the KAIZEN Conference. Pic 11: KAM Directors and Managers pose for a photo with the President at the official opening of KAM House. Pic 12: Head of Membership Tobias Alando addressing visiting Ethiopian Delegates Pic 13: KAM team which won the Masinga Dam Race Pic 14: Dr. Chumo receives a token of appreciation on behalf of Kenya Power from KAM Chairman, Pradeep Paunrana Pic 15: EMA Award Winners Pic 16: KAM Chairman Pradeep Paunrana in a panel discussion at the East Africa Business Summit Pic 17: Amb. Amina Mohamed, Cabinet Secretary, Ministry of Foreign Affairs and International Trade and KAM at a meeting to discuss export issues

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The year in pictures 2

1 3

11 Pic 1: Launch of Mombasa County Business Agenda Pic 2: Jas Bedi, Betty Maina and Rajeev Aurora at the US Africa Summit Pic 3: Participants at the CEO’s Forum on Sustainable Energy Pic 4: Betty Maina delivering a speech at the 8th Public Private dialogue Workshop in Denmark Pic 5: Polycarp Igathe handing over KAM leadership mantle to Pradeep Paunrana Pic 6: Dr. Ben Chumo, Keli Kiilu and some guests at the Chairman’s Ball

Pic 7: Munir Thabit Mombasa Chapter Chairman at the dinner hosted for Ambassadors and High Commissioners by KAM Pic 8: Jacinta Mwau, Edith Moroti and Catherine Mukoko at the Chairman’s Ball Pic 9: Zipporah Maina receiving recognition award for the construction of the KAM Building from KAM Chairman, Pradeep Paunrana Pic 10: Fourball at the KAM/KP Golf Day Pic 11: Panelists at the CEO’s Forum on Sustainable energy

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Rajan Shah Central Kenya Chapter Chairman

Government in the drafting of the County budget for the period 2014-2016. Several engagements were also held with the County Government to discuss the Kiambu Finance Bill. Memoranda were presented at all the forums with key issues which the members wanted to have incorporated into the legislation and most of the proposals by KAM were adopted.

The number of members who joined the Chapter in 2014 increased by 6. Members also participated in the stakeholders consultative meeting on the County Spatial Plan. The spatial plan proposed to have an industrial park and improved infrastructure in the road network system in line with KAMâ&#x20AC;&#x2122;s advocacy agenda. Following the successful Governors Roundtable held in collaboration with other business membership organisations in the county, a County Business Agenda was validated and published. The Agenda contains key issues of engagement with the county which the business community will use for engagements and tracking progress on resolution of issues in the county. A key win was realised from the agenda when the Kiambu County Government lifted the 2013 ban on change of land user. Further to the lift in the ban, land use zoning was implemented in order to guide proper utilization of land.

Nakuru

also enhanced inspection and maintenance of transmission infrastructure to reduce outages in the county. Members welcomed the initiative by the Nakuru County Government and Geothermal Development Corporation (GDC) to ensure that the geothermal energy generated by GDC will benefit the business community in Nakuru. A committee was set up to give inputs into the investments in the energy sector employment business opportunities and industrial parks.

Industrial Area In its first year of operation the Chapter made great strides in pushing advocacy issues for members in the Nairobi Industrial area. Activities commenced in the chapter with the appointment of the Chapter Committee led by Manoj Shah of Osho Chemicals. The rest of the committee members include; Manish ShahManoj Shah Interim Vice Chair, (Polyflex Industrial Area Chapter Chairman Industries), Hezekiah MachariaTreasurer (Twiga Chemicals), Marie Gesare-Member (Elys Chemicals), Amir Parpia-Member (Alpha Fine Foods), Anthony Kungu-Member (Proctor & Allan, EA Ltd).

Nyanza and Western Region The Chapter experienced the largest growth in membership for the year 2014. Membership grew from xxxx in 2013 to xxxx. by the end of 2014. Main advocacy issues which were lobbied for by the Association during the year included power issues, county fees water issues and waste collection.

Uasin Gishu & Surrounding regions

Major issues of concern which were handled at Chapter level included security, roads, sewerage and licensing issues. The County Government of Nairobi was engaged on the issues by the members.

Rajen Shah Nakuru Chapter Chairman

On the energy front, power utility, Kenya Power unveiled its plans to invest USD 600 million over the next three years in the electricity network in the County to effectively support industrial and commercial users. The Chapter has 80 % of the KAM membership.

Sagar Shah Nyanza/Western Chapter Chairman

A roundtable was held in Bungoma in Association with other business membership organisations as part of efforts by KAM to work in coalitions with other associations to strengthen its voice. The Governor committed to set aside land for an industrial park in the county and invited investors to the county. The initiative was supported by an ambitious plan by the county to set up a a regional development bank for the Nyanza Western regional cluster. In addition, Kisumu County presented an integrated strategic plan which will see the development of a modern city in Kisumu with a vision to advance wealth creation. Some of the elements of the plan including water supply and sanitation already received funding from a donor agency for the projects to commence.

Advocacy issues for the county for the period were mainly on power and water issues.

The Chapter also engaged with other authorities such as Kenya National Highways Authority, Kenya Urban Roads Authority and Ministry of Roads on road issues in the County. Some road repairs were done in industrial area following aggressive lobbying by the Association.

Membership for the year increased by 8 new members in 2014. Main issues that were championed by the Secretariat in the reporting period were on energy and county fees. The Chapter engaged Kenya Power on energy issues and the power utility installed a dedicated feeder for manufacturers in the County. Kenya Power

K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

Albert Kimwatan Uasin Gishu Chapter Chairman

Following successful engagements with Kenya Power in the County, the power utility unveiled plans to improve the power supply in the North Rift region which were implemented. Members acknowledged that supply improved after the engagements.

As part of the stakeholder engagement, KAM was appointed to the Uasin Gishu County Budget and Economic Forum to represent the interests of manufacturers as well as contributing towards giving direction on financial matters of the county. Water shortages were a menace for manufacturers in the county throughout the year and the chapter engaged Eldoret Water and Sanitation Company on the issue. There was no immediate solution received on solving the issue from the water authority and companies were urged to invest in water reservoirs. The county has been expanding and the water supply has not been boosted to support the growth. The Secretariat will continue to lobby for a long lasting solution on the water shortage.

Eunice Mwanyalo Salt Sub Sector

Keneth Ndungu Projects

Jacinta Mwau Recruitment

Josephine Ngugi Business Information

The Secretariat collaborated with other business membership organisations and launched the Uasin Gishu County Business Agenda which will be used as a tool by the business community in the area on advocacy issues. Issues raised in the agenda were discussed during a Governorâ&#x20AC;&#x2122;s Roundtable and will guide lobby efforts to create a conducive business environment for businesses to operate in. Chapter Membership increased by 26% in 2014 and currently 75% of manufacturers in the County are KAM members.

Machakos Infrastructure issues dominated the engagements in the chapter in 2014. The drainage system was not functioning in Gideon Aswani some areas during the year. Machakos Chapter Chairman The Secretariat engaged key stakeholders in the county including Exports Processing Zones Authority, National Environment Management Authority and Mavhoko Water and Sewerage Company. Industries committed to enhancing internal inspections of their premises and to manage effluent discharge better. KAM will lobby for the development of a modern wastewater and solid waste management system in the Athi River Area. The cost of doing business was increased in the county because of CESS, business licences and branding licences. The Secretariat will in 2015 lobby for the waiver of branding fees for vehicles and downward review of the development fees from the current 2.5%. KAM lobbied for the County to reduce the cess fees and cost of business permits. In order to curb corruption and encourage accountability the Secretariat will lobby for non cash payment of all fees, commissions and levies. The Association will continue to lobby for the construction of storm water drainage system along Mombasa Road and other parts of the county.

Sectors Salt Subsector Sectors were revived in 2015 and members of staff were assigned to be the relationship officers for various sectors. The Salt sub-sector, whose satelite office is based in Gongoni, was awash with challenges from the community and County Government during the year 2014. Progress was made for issues such as cash payments of cess which the sector protested against and was rescinded. Land ownership issues which were a source of acrimony in Magharini and Malindi were discussed. A report prepared by the National Land Commission on land in the area was in favour of the Salt companies and has been elevated to the Presidency.

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corruption compliance, Business and Human rights, sustainability reporting and Post 2015 Development Goals.

After intensive lobbying by the Secretariat the sector was exempted from having an effluence certificate and will instead provide the Water Regulation and Management Authority with a recycling plan. There were also various engagements with the Cabinet Secretary of Mining as well as County Officials.

NO. SECTOR & Sub-Sectors

KAM SECTOR OFFICER

Metal & Allied Sector •Hot Rolling •Cold Rolling •Wire Products

Tobias Alando

Food & Beverage (Solids )

Maria Limo & Everlyne Mutui

Food & Beverage (Liquids ) •Edible Oil

Anne Ndungu/Peris Brenda Wawire

Energy & Electrical Sector

Anne Kariuki

Chemical and Allied Sector •General Industrial Chemicals •Agro-Chemicals •Paints & Resins •Cosmetics & Hygiene Products

Georgina Wachuka/ Patrick Kaleve

Pharmaceutical Sector

Bella Akinyi

Leather Sector

Catherine Mukoko

Plastic Sector

Robert Juma/ Beatrice Githinji

Paper and Paper Board Sector

Wambui Ndungu

Motor Vehicle sector •Motorcycle •Motor Vehicle & Accessories •Motor Vehicle Assembly •Bus Body Builders

Phyllis Wakiaga Emmanuel Alenga Emmanuel Alenga Jacinta Mwau/Tobias

10.

Textile and Apparels Sector •Local Textiles •Apparels Exporters

Joseph Wairiuko

11.

Timber, Wood and Furniture Sector -

Jeff Murage

12.

Service Sector •ICT •SME Focal Point

Lilian Odhek/Zipporah Maina Danson Ndetei/ Phyllis Fred McOloo/Rachael Mwangi

13.

Building Mining & Construction

Paul Mutambuki

14.

Fresh Produce

Martha Cheruto

15.

Multinationals

Fresh Produce 1%

Textile & Apparels 8%

The manufacturing sector has great potential to move this nation to a middle income country with a high quality of life as envisioned in Vision 2030. It has the power to eradicate poverty and all hands need to be on deck to create an enabling environment for the sector as well as prosperity for all.

Timber Wood & Furniture 2%

Pharmaceutical & Medical Equipments 3%

Service & Consultancy 12%

Paper & Paper Board 9%

Building, Mining & Construction 3% Motor Vehicle & Accesories 6% Chemical & Allied 9% Metal & Allied 10%

Energy Electrical & Electronics 5%

Leather & Footwear 1%

GCNK, with support from the British High Commission carried out case studies on four companies which shared best practices on dealing with corruption. A booklet was launched on the Case Studies on Antibribery and corruption British High Commissioner, Dr Christian Turner hands over a case study booklet on Business Against Corruption to KAM Chief Executive Betty Maina in Kenya. The booklet provides the elements to a comprehensive Anti-bribery and Corruption (AB&C) framework and actual case studies that showcase programs that have been employed Global Compact by local companies to combat bribery and corruption in the country. Business executives who attended the meeting pledged Global Compact Network Kenya is currently the largest network their commitment to fight corruption in their enterprises. in Kenya with over 100 members. In 2014 xxxx members were recruited to the network. There were peer reviews and best Future prospects case study learning platforms for members during the year. Increased activities were also recorded through engagements GCNK is poised to further grow in the years ahead. More with CEOs to take ownership of the activities to observe the 10 members will be recruited and some of the activities, including principles of the Global Compact. Business and Agriculture principles, CEO and Water, which are taking centre stage at international events will be strengthened in For the third year running, GCNK in collaboration with Save the the local network. Children and Safaricom, hosted the Children’s rights and Business Principles Conference. Over 100 executives participated at the meeting and Outlook In 2014 the local network hosted the inaugural Women Empowerment Forum which was attended by over 60 women executives in the business community. The event was held in collaboration with UN Women. 20 Trainings were held on anti-

Paida Nyamakanga KAM SECTOR ANALYSIS

Plastics & Rubber 9%

• Sectors and subsector pie chart with membership per sector

Business Against Corruption

Robert Rudin CEO of Ericcson Kenya receiving a compliance handbook on anti corruption from KAM Chairman Pradeep Paunrana Food & Beverage 22%

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Communication

use of the KAM logo and branding in the communication spectrum. The brand architecture of the organisation was maintained and continues to be felt in the market place. Speeches were drafted for the Chairman and the Chief Executive as well as other leaders who made presentation at various fora in line with keeping with the aspirations of the KAM brand of being an all inclusive member association and to ensure consistency of the messaging.

Stakeholder relations

The best communication professional will always stand the test of time. @paidareg @KAM_kenya BMOs Communication workshop 2014.

During the year 2014, KAM continued to maintain a good rapport with its stakeholders in an endeavour to ensure that there is a mutual understanding of KAM’s activities and advocacy positions between the Association and its stakeholders. To this end, a number of courtesy calls to various Government and County officials were held, where position papers were presented. Donors continued to be kept abreast on the developments of the various projects that KAM is undertaking. Different stakeholders were kept engaged through various fora organised by KAM in collaboration with other organisations.

Media Relations Paida Nyamakanga Head of Corporate Communication

Global Strategic Objective: To position KAM as an inclusive representative and voice of Kenyan manufacturing industry. The Association continued to position itself as the voice of industry which inspires global competitiveness. During the year under review communication to stakeholders was enhanced and efforts were channelled towards ensuring that stakeholders received targeted information. There is still an ongoing process to ensure that the database is streamlined to serve the stakeholders better.

A number of initiatives to support the delivery of the Association’s business development plan were implemented using various communication tools such as events, mailshots networking sessions and social media. The main focus for the activities undertaken by the Secretariat were to ensure that the Association delivers effective and timely communication as well as managse its brand with a view to increase the Association’s brand equity. KAM participated in a number of high profile national and international events which included trade missions and conferences as it impelled the industrialization agenda. The KAM brand was visible at all the events.

Brand Management The Association continued to manage its brand positioning by ensuring consistent delivery of its promise to inspire global competitiveness. Brand visibility was enhanced by ensuring that KAM was present and had its voice heard on behalf of the manufacturing industry at various platforms. There was consistent

The Association continued to maintain good media relations in an effort to ensure that KAM position on issues is articulated and relayed correctly in the various media channels. Media houses were invited to cover KAM events and interviews were conducted on topical issues to advance the Manufacturing priority agenda as well as to relay information on KAM projects and activities. Key messages were developed at the beginning of the year and there was consistent communication of the same throughout the year. Over 200 media mentions were achieved by the association in the year 2014. Over 20 op-eds were also published on topical issues. A total of 36 Executive briefs on KAM engagements were published for stakeholders to keep track of the activities at KAM. A monthly publication of KAM Wins which tracked key gains for industry in the various advocacy initiatives as well as project

successes were published and a bulk one with wins for the whole year was also published at the end of the year. Research and various project publications which were done by the Association were also uploaded on the internet (Issuu) for easy access by stakeholders. New mailshots, KAM latest news and info alerts, were also introduced for stakeholders to receive the latest information and to streamline the information that is sent to members so that recipients’ inboxes would not be flooded with many emails on each day. An inhouse media refresher training was conducted by the Communication Unit for the Leadership Team in order to equip the team with relevant skills required for engaging with the media. As a result of the training, the leadership team increased engagement with the media and there was positive representation of KAM in all the engagements. A media brief was also done for the incoming chairman.

Media mentions per year (print only excluding advertisements) 2011

2012

2013

2014

News releases

185

205

233

255

Op-ed

Chairman’s Ball In its second year running, the Chairman’s Ball has grown to be a flagship event of the Association and continues to evolve over time. During the year under review the Chairman’s Ball was held under the theme, “where manufacturing sparkles and glows.” The chairman shared on the success of industry and the wins that had been gained through positive engagements with stakeholders.

“There is a long list of things that we have to do and an even longer list of what has been done. Kenya is currently receiving 45.7 % more in foreign direct investment.

COMMS TEAM

@Amb_A_ Mohammed @KAM_kenya Chairman’s Ball 2014. Bella Akinyi Corporate Affairs

Grace Mbogo Intern

Amb. Amina Mohamed receives a token of appreciation from KAM Chairman, Pradeep Paunrana at the Chairman’s Ball

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which was spearheaded by the KAM communication team. The workshop was the first of its kind and communication champions from the BMOs increased collaboration and there was enhanced communication on the Governors Roundtables.

KAM/KP Golf Day A golf day was held in Mombasa in December and in Nairobi in February, in collaboration with Kenya Power, under the theme “Boresha Stima Viwandani” to engage members on the effectiveness of the initiative which was birthed after engaging members in the counties. There were over 200 participants at each of the Golf Days. KAM continues to enjoy good relations with its partners.

Breakfast with PKF on opportunities in the oil and gas industry KAM and PKF partnered in hosting breakfast for metal sector members on the opportunities available in the oil and gas industry. The event, attended mainly by Chief Executives from the sector, sought to enlighten members on the array of opportunities available in the oil and gas sector in Kenya, Tanzania and Mozambique. PKF also partners with KAM in the Energy Management Awards as an audit partner.

Corporate Social Responsibility KAM team participated in the KENGEN Foundation 21 kilometre Masinga Dam Race to raise funds for the Heart Foundation. KAM won the best overall team award at the race, with an award valued at Ksh 120 000 which was donated to the Foundation. The race was graced by world Marathon Champion Tecla Lorupe.

Conferences and Summits SME advocacy issues were championed by KAM at a Juakali Conference which was held in August. KAM voiced that the Association is in support of a policy framework that promotes global competitiveness of both the large and small and medium sized enterprises as well as the challenge that has been faced by the SMEs as a result of the high cost of doing business exacerbated by inter county charges. Highlights of KAM’s engagements with SMEs were also given at the conference.

Some of the guests at the Chairman’s Ball 2014

A number of awards were introduced at the Chairman’s Ball which included which included Manufacturing Journalists of the year and special recognition awards for Most Promising SME, Exemplary Service at KAM, Most outstanding initiative from the public sector, Mark of confidence in Kenya and Fast Growing SMES. The aim of the awards was to recognise and appreciate excellence in industry. The event was graced by the Cabinet Secretary for Foreign Affairs, Amb. Amina Mohammed, who highlighted some

of the key achievements during the year and urged industry to continue working closely with government to propel economic growth.

Ambassadors’ dinner KAM maximised on the opportunity to meet the Ambassadors and High Commissioners at the 17th Biennial Conference to ensure that market expansion for locally manufactured goods in the various markets where KAM has missions remains a top priority for the diplomats.

Andrew Njoba (right) receives a prize for best KAM staff player at the KAM/Kenya Power Golf Day

Internationally, KAM in collaboration with other Business Membership Associations from Kenya participated at the USAfrica Summit where deliberations were held on strengthening trade ties between the two continents. Major wins from the Summit included discussions on keeping Africa Growth Opportunity Act (AGOA) alive.

Outlook

KAM addressed the diplomats at a dinner hosted in Mombasa and further aired its views during the conference. There was a commitment from Government to expand markets for locally produced goods and exchange of market intelligence information.

As the Association evolves along its strategic roadmap as outlined in the Business Development Plan for the period 2014-2016, communication will continue to be revamped to raise top of mind awareness of the organisation and its activities. KAM is positioned as the voice of industry and will continue to be a thought leader and communicator for Kenyan industry both locally and globally.

BMOs Communication Workshop

Participants at BMOs Communication Workshop

KAM shared its experiences in the work around engagements with counties with a view to impart skills to improve communication for Governors Roundtables. A total of 25 participants from various BMOs participated in the workshop KAM team won the Overall Best Team Award at the KENGEN 21km Masinga Great Dams Race

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Finance, ICT , HR and Admin

received recognition by the Chairman at the Chairman’s Ball which was held in October.

Investments Excess cash was invested into equity and treasury bonds with 90 day yields. A profit of Ksh.14.1 million was realised from the investments. Investments continue to be done onshore, with the approval of the FIMAPs committee of the Board.

Industry will continue to support productivity based wages to grow the economy and equitably reward the labour force. @zippiemaina @KAM_kenya #manufacturing

Zipporah Maina Head of Finance

Global Strategic Objective: To ensure that KAM is financially prudent, sustainable and has a highly motivated, professional secretariat that uses efficient and modern tools to deliver a broadened mandate.

KAM maintained its liquidity and financial stability in the year 2014. Construction pressures did not affect the budget because of the prudent financial management processes and practices at the Secretariat. KAM met its tax obligations and remitted all statutory taxes to the fiscus on time.

Income Generating Asset The KAM House which was under construction for two years was completed in time and under budget. All the material used for constructing the building were purchased locally (except for elevators which are not manufactured locally) in support of the Buy Kenya, Build kenya initiative. The total cost of construction was below the contracted budget of Ksh.420 million. The building was officially opened by H.E President Uhuru Kenyatta in December. The building is home to the Headquarters of the KAM Secretariat and the rest of the floors will be occupied by tenants. The building will be another revenue stream which will augment the Association’s operating capital going forward. The team that worked on the construction of the KAM House

Capacity building of the human capital was also implemented throughout the year through, training, coaching, mentoring and succession planning. Inhouse, local and international trainings were also conducted to equip staff members with requisite and relevant skills. The training manual was also streamlined to meet the training needs identified during appraisal processes.

Performance Management

Procurements

The Association has a performance management system in place for monitoring and evaluating each member’s performance against set targets from the Business Development Plan.

The Association continues to adhere to strict procurement rules enshrined in the procurement policy. 2 vehicles were purchased to replace the pool cars which will go on auction in 2015.

Workforce diversity

Sustainability

KAM does not discriminate against any gender in its recruitment. The current workforce is made up of both males and females, local and international staff members.

KAM ensures financial sustainability by sourcing for income generating activities/services which benefit its membership and charges fees for the services. Environmental sustainability is also at the core of the organisation’s work and the Association is involved in climate change programme activities. Through the Global Compact members are also encouraged to participate in environmental management initiatives. Staff welfare is a key area that the Association pays keen interest. KAM also participates in a number of social engagements as a corporate citizen of Kenya. The Association is well supported by membership fees from the 850 members in its portfolio.

Staff welfare Medical cover benefits were enhanced on some packages and the board will continue to work on improving the same. A health and safety committee was established to assist in identifying issues that need to be brought to the attention of the management on occupational health and safety. There is ongoing work in this area

Human Resources Human Capital is key in delivering KAM’s work. In the course of 2014 the Association recruited, developed, nurtured and maintained a strong professional team to deliver on the company’s mandate. There was an increase in the staff complement from 45 in 2013 to 55 in 2014. The staff turnover was at 8 in 2014 compared to 6 the previous year. Cost of living adjustments were effected for all employees to cushion the staff members against inflation. KAM Staff Members at a Team Building Event

ADMIN TEAM

Paul Mutambuki HR & Administration

Rachael Mwangi Accounts & Administration

Danson Ndetei IT Support Services

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Everlyne Mutui PA to CEO

Hazel Machira Front Office

Teresia Mumbi Office Attendant

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Projects 1.Business Advocacy Fund sponsored Projects Project Name and Objective

Project Dates

1. Advocacy engagements on Economic Partnerships agreement Nov 2013 - Oct 2014 (EPA’s Advocacy) 2. Governors Round Table’s coordination with other BMO’s Nov 2013 - Oct 2014 like Chamber of Commerce, KMLC, Farmers Associations etc to ensure county issues impacting on doing business are consolidated and documented in a uniformed approach and engage regulators to address the issues 3. Climate change awareness and publicity supporting the Climate April 2014 - August 2014 Change Bill 4. Development of an Illicit Trade Manual for Kenya and working June 2014 - Nov 2014 with Judiciary programme

Walter Kamau (centre) receives a long service award from the KAM Chairman at the Chairman’s Ball, whilst his wife looks on.

5. New Proposal Approved in August: County Money Bills; August 2014 - July 2015 Private sector participation in the process of adopting Model County Revenue Legislation Handbook to ensure the drafted laws are consistent, constitutional, business friendly and meet expected quality. 6. Judges and Magistrates Annual Conference support enhancing November 2014 on KAM influencing capacity

Team building

2. Centre for International Private Enterprise sponsored project

Members of staff participated in a one day team building event under the theme “Get Up, Get Out and Get it.” Staff members were encouraged to work as a team and add value to the team. The results from the team building are yielding good results and is evident from the improved performance.

Information Communication Technology KAM continued to utilise Information Communication Technology platforms to improve efficiency in its operations. Progress was made during the transition to the new building to install security features such as access tags. Security screening on the Association’s software and communication platforms was closely monitored to stave off infringements. An ICT policy was also implemented to protect the Association from abuse of the ICT platforms.

The unit worked tirelessly throughout the year to maintain smooth flow of the ICT processes and a new platform for gathering stakeholders data, CRM, was introduced. Trillions of data were pushed through the Associations platforms throughout the year and upgrades were done for some of the systems to avoid downtime of operations. Staff members adhered to the electronic policy which went a long way in preserving the brand of the organisation in the ICT world.

Project Name and Objective

Promoting Local Governance Reform at Sub-national Level and Annually since 2006 (Current one running May 2014 - April 2015 50% Support to KAM Chapters administrative costs

3. Agence Francaise de Developpement sponsored project Project Name and Objective

Forecast The manufacturing sector will continue to drive the economy’s growth and more research and development should be implemented to spur development in the sector.

Project Dates

Renewal grant of 2.1Million Euros (Technical assistance and August 2012 - April 2016 administrative component) was signed in May and implementation ongoing with a new team Leader. Phase 1 closed with US$39 million disbursed to 8 projects. 28 Eligibility certificates had been issued which means a 20 Projects deficit of over US$100million dollars. Administrative / technical assistance budget was 2.6 million Euros for the 1st phase

4. DFID sponsored project Project Name and Objective

Project Dates

Strengthen business society engagement in climate change March 2014 - March 2016 mitigation advocacy

Stanley Langat Driver

Johnstone Konji Driver

Geoffrey Chepkwony Driver A N N UA L R E PO RT 2 0 1 4

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Projects (continued)

Corporate Governance Statement

5. DANIDA sponsored project

KAM is a company limited by guarantee without share capital. The Association is governed by a member’s articles and memorandum of association and also operates within a member’s charter which members consent to upon joining. The charter has the following contents;

Project Name and Objective

Project Dates

Increase energy efficiency by manufacturers through energy audits Jan 2011 – December 2015 & capacity building (trainings in energy efficiency and certified energy managers

1. 2. 3. 4. 5. 6. 7.

Mission and vision KAM’s strategic objectives Equitable treatment of members Modus operandi Conflict of interests Declaration against corruption Corporate governance and social responsibility and ethical business practices 8. Members’ special responsibilities (working within applicable laws & regulations) 9. No misuse of office by board or members of staff 10. Impartiality of Executive Officers without giving undue advantage to any member 11. Decision making through working committees and the board 12. Amendment/Replacement of the charter by executive committee

6. Ministry of Energy and Petroleum Project Name and Objective

Project Dates

Energy Efficiency and Conservation through audits, trainings. Ongoing Grant for financial year 2013 / 2014 has been increased to DKK 35 million Improving Community ‘Engaging with salt companies dialogue in the Malindi region, a KAM DI Program

7. GIZ Project Name and Objective

Project Dates

Business Ethics and Standards advocacy

January 2011- March 2014

8. Danish Agency- Civil Society in Development sponsored project Project Name and Objective

KAM’s core values of innovation, effectiveness, responsiveness and resilience guide the organisation’s vision to be a world-class business membership organisation effectively delivering services to its members. KAM is committed to promoting competitive local manufacturing in liberalised markets.

Project Dates

Improving Community ‘Engaging with salt companies dialogue in March 2011 – November 2014 the Malindi region, a KAM DI Program

KAM is owned, funded and managed by its members. At the apex of its governance structure is the member’s Annual General Meeting, which elects the Board of Directors to give strategic direction to the organisation. The Board further establishes downstream organs for membership engagement in the advocacy process such as board committees and working committees, sector and regional chapter committees and an executive secretariat to oversee and execute the operational plan.

9. British High Commision Project Name and Objective

Project Dates

Anti Corruption Activities

February 2013 to December 2014

10. Ministry of Industrialization and Enterprise Development Project Name and Objective

Project Dates

Standard and Labelling Programme

January to December 2014

KAM’s BOARD OF DIRECTORS KAM is lead by an able Executive Committee who comprises the Board of Directors. The Executive Committee is made up of 18 Board members. Mr Pradeep H. Paurana, Chairman Ms Flora Mutahi, Vice Chairlady Mr Polycarp Igathe (Immediate past Chairman) Mr Kaushik B Shah, Director Mrs Helen Kimani Mr Mahul J Shah, Director Mr Muhoho Kenyatta, Director Mr Bimal Kantaria, Director Mr Lutaf Kassam, Director Mr Bharat V. Shah, Director Mr Joseph Lithimbi, Director Mr Marc Engel, Director Mr Sachen Gudka, Director Mr Stephen Brooks, Director Mr Perviz Rajnikant Dhanani (Palu), Director Mr Joe Muganda, Director Mr Rajan Shah, Director Mr Mucai Kunyiha, Director The Executive Committee’s role is to manage KAM’s business. It may from time to time elect to the Executive Committee any person who qualifies for election under the organisation’s Articles of Association. The members of the Executive Committee are selfless and highly dedicated to their work. They are determined to see KAM achieve its set goals through its mission and vision. For this reason, the Executive Committee members offer their services to KAM on voluntarily basis. Their dedication is seen in their attendance to Board meetings, which are held six times a year. The Board Committees and the Working Committees have four Statutory Meetings per year, held on a quarterly basis, to review progress and emerging issues, but they may have bilateral dialogue meetings with relevant government agencies as need arises. The Board Committees and the Working Committees are outlined in the following pages:

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Corporate Governance (continued) Committee

Scope

Leadership

1) Trade and Tax Committee (TTC)

Budget Proposals

Bharat Shah - Chairman

Corporate Governance (continued) 5. Devolution and Security (DAS)

Tax Advocacy (policy and administration – All Sector Chairmen refunds, directives) Mucai Kunyiha Investment Climate Sachen Gudka Tracking and Influencing Trade Negotiations

Bharat Shah- Chairman

Export promotion

Open to members

Tracking Internal Trade Barriers

Rajan Shah

Inter-Governmental relations

All Chapter Chairs

Security Issues

Export promotion Monitoring barriers to Increased trade Trade policy advocacy

Steven Brooks - Chairman

Liaison with Inter-governmental Open to members Coordination Secretariat

6. Membership Development (MD)

Trade policy advocacy

Devolved Government

Membership Recruitment

Sachen Gudka -Chairman

Membership Retention

All Chapter Chairs

Communication

Open to members

Chapter Development Business information

Monitoring barriers to Increased trade Coverage – EAC, COMESA, Tripartite Sachen Gudka - Chairman (EAC, COMESA and SADC) EAC-EU/EU and WTO Open to members 2. Physical Infrastructure (PI)

Main oversight over Ports, Railways, Stephen Brooks - Chairman Roads, ICT and Physical infrastructure Pradeep Paunrana Cargo Movement & Flow Marc Engel Cost of transportation Open to members

3. Energy (incorporating Association of Large Energy Consumers-AOLEC)

Electricity tariffs & supply, quality and Chairman Elected by AOLEC Members availability Open to members Fuel oils

7. Business Competitiveness Services (BCS)

Firm level programs and support

Helen Kimani- Chairlady

Export market access by companies Flora Mutahi (implementation) Lutaf Kassam Training and Capacity Building Kevit Desai SME strategy Susan Njoroge Fee based services Open to members Energy Services 8. Corporate Responsibility and Sustainability

Bio Mass Alternative and Renewable Energy

Sustainability

Marc Engel - Chairman

CSR

Safaricom Rep

Global Compact

Open to members

Responsible Business Practices

4. Legal & Regulatory Affairs (LEAR)

Quality Standards

Palu Dhanani- Chairman

Sub committees Quality and standards

KEBS – PVOC, Std Mark etc

Mucai Kunyiha

Legislation

Budget preparation & oversight

Mahul Shah (chairman)

Review Annual Accounts

Flora Mutahi, Lutaf Kassam

Helen Kimani

Review Membership Fees

Sachen Gudka

Liaison with Parliament

Muhoho Kenyatta

Approve Cost Structure for services

Mihir Chalishazar (By invitation)

Labour Regulations

Open to members

Subscription follow-up

Helen Kimani

Local Procurement

Magdalene Munyao (EABL)

Approval of New Members

Marc Engel

Anti counterfeits and IPR

Open to members

Operational issues

9. Finance Management and Projects (FIMAPS)

Anti Counterfeit and IPR Protection.

Fundraising and projects development and implementation

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Corporate Governance (continued) 10. Human Resources Committee

Performance Management including Kaushik Shah â&#x20AC;&#x201C; Chairman appraisal, rewards and remuneration/ compensation Flora Mutahi Talent Management Manpower Planning, retention and succession

Bimal Kantaria development Mihir Chalishazar (By invitation) Mucai Kunyiha

HR Structure and staff placement Appraisals and promotions Employee Satisfaction and Welfare Advice to Chief Executive on Human Resources matters

Financial Statements

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Kenya Association Of Manufacturers (A COMPANY LIMITED BY GUARANTEE) STATEMENT OF EXECUTIVE COMMITTEE MEMBERS’ RESPONSIBILITIES The Kenyan Companies Act requires the Executive Committee members to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company as at the end of the financial year and of its operating results for that year. It also requires the Executive Committee members to ensure that the company keeps proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the company. They are also responsible for safeguarding the assets of the company. The Executive Committee members are responsible for the preparation and presentation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the requirements of the Kenyan Companies Act, and for such internal controls as The Executive Committee members determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

AUDITORS’ REPORT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF KENYA ASSOCIATION OF MANUFACTURERS (A COMPANY LIMITED BY GUARANTEE) Report on the Financial Statements We have audited the accompanying financial statements of Kenya Association of Manufacturers (“the company”), set out on pages 8 to 31 which comprise the statement of financial position as at 31 December 2014, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. The Executive Committee members’ Responsibility for the Financial Statements

The Executive Committee members accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Financial Reporting Standards and in the manner required by the Kenya Companies Act. The Executive Committee members are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the company and of its operating results. The Executive Committee members further accept responsibility for the maintenance of accounting records which may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control.

The Executive Committee members are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the requirements of the Kenyan Companies Act, and for such controls as The Executive Committee members determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Nothing has come to the attention of the Executive Committee members to indicate that the company will not remain a going concern for at least the next twelve months from the date of this statement.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

Mahul Shah Sachen Gudka ---------------------------------------- ---------------------------------------- Director Director 21st May 2015

Auditors’ Responsibility

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we considered the internal controls relevant to the company’s preparation of financial statements that give a true and fair view in order to design audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Executive Committee members, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the state of financial affairs of the company as at 31 December 2014 and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Kenyan Companies Act.

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K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

Auditors’ Report (Continued) Report on Other Legal Requirements As required by the Kenyan Companies Act we report to you, based on our audit, that: i) we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; ii) in our opinion, proper books of account have been kept by the company, so far as appears from our examination of those books; and iii) the company’s statement of financial position (balance sheet) and statement of profit or loss and other comprehensive income (profit and loss account) are in agreement with the books of account. The engagement partner responsible for the audit resulting in this independent auditors’ report is Fred Aloo-P/No 1537.

Abridged Accounts

Certified Public Accountants (Kenya) Nairobi, Kenya 21st May 2015

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K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

KENYA ASSOCIATION OF MANUFACTURERS (A COMPANY LIMITED BY GUARANTEE)

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2014

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014

2014 2013 Notes Sh Sh INCOME

158,388,715

132,864,453

OTHER OPERATING INCOME

15,784,225

13,791,815

GRANT INCOME 16 185,603,119 229,095,358 ___________ ___________ 359,776,059 375,751,626 ADMINISTRATIVE EXPENSES

(153,068,807)

(116,826,388)

GRANT EXPENDITURE

(185,603,119)

(229,095,358)

14,144,464 ___________

21,091,113 ___________

35,248,597

50,920,993

TAXATION CHARGE 8(a)

(11,228,354) __________

(14,404,232) __________

SURPLUS FOR THE YEAR

24,020,243 __________

36,516,761 __________

FINANCE INCOME 7 SURPLUS BEFORE TAXATION

OTHER COMPREHENSIVE INCOME FOR THE YEAR Items that may be reclassified subsequently to profit or loss: NET LOSS ON AVAILABLE-FOR-SALE FINANCIAL ASSETS DURING THE YEAR 12 (91,468) (177,905) __________ __________ 23,928,775 (177,905) __________ __________ TOTAL COMPREHENSIVE INCOME FOR THE YEAR

23,928,775 ======

36,338,856 ======

2014 2013 Notes Sh Sh ASSETS Non current assets Property and equipment 9 385,690,207 228,045,993 Treasury bonds 12 84,197,776 84,242,544 Corporate bonds 12 10,158,150 10,204,850 Term deposits 13 4,938,089 5,000,837 Deferred tax asset 14 4,061,963 1,298,848 __________ __________ 489,046,185 328,793,072 __________ __________ Current assets Receivables 10 71,537,251 61,700,254 Earmarked funds receivable 16 52,309,652 40,351,492 Tax recoverable 8(c) 3,648,119 4,478,093 Treasury bills 11 - 19,584,358 Bank and cash balances 19,731,029 42,522,538 __________ __________ 147,226,051 168,636,735 __________ __________ Total assets 636,272,236 497,429,807 ====== ====== RESERVES AND LIABILITIES Reserves Capital fund 35,919,608 35,919,608 Revaluation deficit on investments (1,755,950) (1,664,482) Retained earnings 115,315,111 91,294,868 __________ __________ 149,478,769 125,549,994 __________ __________ Non current liabilities Gratuity provision 10,091,909 7,479,777 Borrowings 18 144,966,191 80,004,814 __________ __________ 155,058,100 87,484,591 __________ __________ Current liabilities Unexpended project funds 16 218,431,389 176,006,051 Subscriptions received in advance 4,486,955 1,362,740 Payables 15 108,817,023 107,026,431 __________ __________ 331,735,367 284,395,222 __________ __________ Total reserves and liabilities 636,272,236 497,429,807 ====== ====== The financial statements on pages 8 to 31 were approved and authorised for issue by the Executive Committee on 21 May 2015 and were signed on its behalf by:

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Mahul Shah ) Sachen Gudka) Members of the Executive Committee

K E N YA A S S O C I A T I O N O F M A N U F A C T U R E R S

Chapter Contact Details KAM Coast Chapter Mombasa Uni-Plaza House, 7th Floor, Off Moi Avenue P.O.90323-81000 GPO Mombasa, Kenya Tel: 041 2317119 Wireless: 020 235 1893 Email: Susan.gitau@kam.co.ke

KAM Eldoret Chapter 2nd Floor KCB Building Kenyatta Street Eldoret Tel: 020 2343820 Email: Edith.koske@kam.co.ke

KAM Nyanza/Western Chapter Reinsurance Plaza, Third Floor, Right Wing P.O. Box 3605-40100 Kisumu, Kenya Tel: 057 2025757 Eric.ochieng@kam.co.ke

KAM Nakuru Chapter

Vickers House, !st Floor Room F12 Nakuru Town Tel: 0713336631 Email: john.kamau@kam.co.ke

KAM Athi River Chapter Mabati Rolling Mills Athi River Tel: 0788 498 299 Email: edith.moroti@kam.co..ke

KAM Central Kenya Chapater KVA Offices, Thika Tel: 0723002433 Email: tobias. alando@kam.co.ke

KAM Industrial Area

Twiga Chemical Offices Industrial Area Tel: 0722415387 Email: Robert.juma@kam.co.ke

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