Kenya is embarking on a pivotal shift in its approach to economic development, aiming to transcend short-term, project-based initiatives and embrace a long-term, multi-sectoral strategy that promises sustainable growth. This transformation will be driven by the Holistic Productive Capacities Development Programme (HPCDP), a 10-year initiative designed to reshape the country’s economic future and accelerate the realization of Kenya’s Vision 2030 and the Fourth Medium-Term Plan (MTP IV). The program, set to begin in 2025, represents a key element in the Kenyan government’s efforts to address pressing challenges such as economic diversification, industrialization, value addition, and digital transformation.
The Long-Term Vision: Moving Beyond Short-Term Solutions
Prime Cabinet Secretary Musalia Mudavadi has emphasized the need for Kenya to transition from short-term, project-focused interventions to long-term, systemic solutions. Speaking during a high-level consultation with key development partners, Mudavadi outlined the importance of a programmatic approach that fosters economic diversification, industrialization, and digital transformation.
The HPCDP, developed in collaboration with the United Nations Conference on Trade and Development (UNCTAD), is a testament to Kenya’s commitment to addressing the root causes of its economic challenges. By focusing on building strong economic foundations and empowering individuals, businesses, and institutions, the program aims to create a conducive environment for innovation, job creation, and inclusive growth.
“It is through this integrated approach that we will create a conducive environment for job creation, innovation, and inclusive growth,” said Mudavadi, underscoring the need for a collaborative effort between the government and its development partners to mobilize resources and ensure the program’s success.
Key Pillars of the HPCDP: A Holistic Framework for Growth
The HPCDP is structured around five interlinked pillars, each of which plays a crucial role in driving Kenya’s economic transformation:
- Economic Diversification and Industrialization: This pillar focuses on reducing Kenya’s dependence on low-productivity sectors by promoting value addition, industrial growth, and the development of new industries. By enhancing value-added production, the program aims to create a diversified economy capable of competing on a global scale.
- Infrastructure and the Natural Environment: Recognizing the critical role of infrastructure in economic development, the HPCDP seeks to improve Kenya’s physical and digital infrastructure. This includes investments in transportation, energy, and communication systems that are vital for supporting industrialization and economic growth. Additionally, the program emphasizes the sustainable management of natural resources to ensure long-term environmental and economic sustainability.
- ICT for Digital Transformation: Kenya has already established itself as a global leader in digital innovation, with advancements in mobile money and digital platforms. The HPCDP aims to build on this success by further integrating ICT into all sectors of the economy. By promoting digital transformation, the program seeks to increase productivity, foster innovation, and improve service delivery across the public and private sectors.
- Private Sector Development: A strong and dynamic private sector is essential for driving economic growth and job creation. The HPCDP will support the development of small and medium-sized enterprises (SMEs) through access to finance, capacity building, and market linkages. This pillar is closely aligned with the government’s Bottom-Up Economic Transformation Agenda (BETA), which prioritizes the growth of micro, small, and medium enterprises (MSMEs) as a key driver of economic development.
- Skills Formation: To support Kenya’s long-term development, the HPCDP places a strong emphasis on human capital development. By investing in education and training programs, the program aims to equip the country’s workforce with the skills needed to thrive in a rapidly changing global economy. This focus on skills development is critical for addressing the high levels of youth unemployment and ensuring that Kenya’s growing youthful population can contribute to the country’s economic growth.
These five pillars collectively offer a comprehensive approach to fostering structural transformation, which is essential for positioning Kenya on the pathway to becoming a middle-income economy by 2035.
Alignment with Kenya’s Development Agenda
The HPCDP is not an isolated initiative but is intricately aligned with Kenya’s broader development agenda. It complements key pillars of the government’s Bottom-Up Economic Transformation Agenda (BETA), including agricultural transformation, MSME growth, affordable housing, healthcare, and the digital economy. By fostering synergies between these initiatives, the HPCDP aims to drive Kenya’s sustainable growth and enhance its global competitiveness.
“Our advancements in digital transformation have positioned Kenya as a global leader in this space,” said Mudavadi, highlighting the importance of leveraging the country’s digital strengths to accelerate economic growth. The program’s focus on digital transformation is particularly relevant in light of Kenya’s growing tech sector, which has been a key driver of innovation and economic activity.
Resource Mobilization and Partnership Building
One of the critical factors for the success of the HPCDP will be the mobilization of resources and the strengthening of partnerships between the government, development partners, and the private sector. The projected budget for the program is USD 20 million, with implementation set to run from March 2025 to February 2035. Mudavadi emphasized the importance of securing firm financial commitments from development partners, including countries like Qatar, Germany, Turkey, Japan, and Saudi Arabia, which have expressed interest in supporting Kenya’s development ambitions.
“We are encouraged by the willingness of partners like Qatar, Germany, Turkey, Japan, and Saudi Arabia to support our ambitions. We look forward to further expanding these partnerships,” he said. These partnerships will play a crucial role in providing the financial and technical resources needed to operationalize the program and ensure its success.
Addressing Challenges and Seizing Opportunities
Kenya’s economic growth over the past two decades has been impressive, with the country recording above-average growth rates in Africa, exceeding 5% for the 15 years preceding the COVID-19 pandemic. This growth enabled Kenya to achieve a GDP per capita of USD 2,082 in 2021. However, despite this progress, the country still faces significant economic and social challenges, including high levels of youth unemployment, limited industrialization, and inadequate infrastructure.
The HPCDP seeks to address these challenges by turning them into opportunities for scaling up economic growth and job creation. By promoting economic diversification, industrialization, and digital transformation, the program aims to meet the demands of Kenya’s rapidly growing youthful and educated population.
Mudavadi highlighted the importance of building Kenya’s productive resources, entrepreneurial capacities, and institutional linkages as key factors in achieving sustainable economic development. “Despite a myriad of challenges, we see opportunities that are defining the future of the country and its people,” he said.
The Path Forward: From Vision to Reality
The implementation of the HPCDP marks a significant step forward in Kenya’s development trajectory. By focusing on long-term, systemic solutions, the program aims to lay the foundation for the country’s successive development agenda beyond 2030. The HPCDP is designed to accelerate the implementation of Kenya’s Vision 2030 by bridging the country’s productive capacities gap and transforming the economy from one reliant on low-productivity sectors to a diversified, high-value economy.
The launch of the National Productive Capacities Gap Assessment (NPCGA) in May 2023, followed by the high-level dialogue on the HPCDP in August 2023, has laid the groundwork for the program’s operationalization. The consultative process has involved key stakeholders, ensuring that the program is designed to address the most pressing challenges facing Kenya’s economy.
As Kenya moves towards the operationalization of the HPCDP in 2025, the government is committed to working with its partners to ensure the program’s success. Mudavadi urged all participants in the high-level consultation to consider the long-term vision of the program and the critical role each stakeholder plays in turning this vision into reality. “Let us ensure that the outputs from this consultation are actionable and that they serve to strengthen our collective resolve in advancing Kenya’s development agenda,” he said.
Conclusion
Kenya’s shift towards a long-term, holistic approach to economic development through the HPCDP represents a significant milestone in the country’s journey towards sustainable growth. By focusing on economic diversification, industrialization, digital transformation, and human capital development, the program offers a comprehensive framework for addressing the country’s economic challenges and unlocking its full potential. As Kenya prepares to operationalize the HPCDP in 2025, the success of the program will depend on the continued collaboration between the government, development partners, and the private sector, as well as the mobilization of the necessary resources to drive the country’s economic transformation.
