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Kenya needs to be wary of foreign investors in cotton farming

A resurgent textile industry in Kenya using locally grown cotton would have a beneficial effect along the entire value chain. It would also benefit the local dairy industry as the cotton seed would go into making cake for cows.

The solution would seem to lie in giving individual farmers the incentives to grow cotton together with their subsistence crops. This would include high-yielding seeds and other inputs on credit. Farmers would also need extension services by well-trained officers working on set targets.

Kenya is best advised to base its manufacturing plans on attracting local investors with foreigners coming to supplement these efforts. Ideally, the revived cotton growing and textile firms would create the base on which the expected foreign investors would build their factories to produce finished clothes for their global customers.

However, Kenya won’t benefit much if the main reason that attracts multinational investors is cheap labor. This would be particularly true for firms relocating from China because the workers there have begun demanding a living wage. Such firms would be mainly attracted by the cheap labor in Kenya and especially in Ethiopia which offers wages that are even lower than Kenya’s.

This attitude coupled with multinationals’ track record of avoiding payment of legitimate taxes in countries where they are making the bulk of their money means the host country is a net loser.