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Higher quality imports threatens Kenya manufactured products

NAIROBI (Xinhua) -- The World Bank has warned that higher quality imports are threatening locally manufactured products.

World Bank Group Finance and Private Sector Development Specialists for East and Southern Africa Maria Mogollon told a media briefing in Nairobi that leather and apparel imports have already displaced the local market almost entirely.

"While Kenya has made headway in improving competitiveness of the manufacturing sectors, there are some bottlenecks that need to be addressed," Mogollon said during the launch of the priority manufacturing sector value chain reports.

Mogollo said manufacturing has the potential to be a cornerstone of the economy in terms of job and wealth creation. "However, the government and the private sector needs to take action to ensure its growth and development," he said.

Mogollon said in the furniture industry, imports are expanding fast and already account for 13 percent of the market share.

She added that there is currently lack of sufficient push for the development of the local furniture industry.

Mogollon said Kenya has all the key ingredients required to develop a competitive furniture industry.

"It has a logistically advantageous geographic position that provides easy access to regional and international markets," she said.

The World Bank official stated that East Africa’s largest economy can promote exports of manufactured goods by increasing awareness of Kenyan products through well coordinated branding efforts.

"It is approximately 30 percent more costly to produce a pair of low-cost men’s leather shoes in Kenya than in Ethiopia," said Mogollon.

According to the Export Processing Zone (EPZ) Authority, Kenya’s AGOA exports, employment, and investment in the past four years (2010-2014) grew by 17 per cent, 12 per cent, and 21 per cent per year respectively, taking up a third of all apparel exports from Sub- Saharan Africa to the U.S..

World Bank Kenya Country Director Diarietou Gaye said that Kenya’s apparel exports to the U.S. under the Africa Growth and Opportunity Act (AGOA) trade regime have grown by 17 per cent in the past four years.

"Kenya’s textile and apparel sector has the potential to grow, increase its contribution to GDP, and serve as a source of gainful employment for its fast growing, young population," said Gaye.

The furniture industry report finds that Kenya is both the largest market for furniture and the largest producer of furniture in East Africa.

Its market is expected to grow at an 8 per cent Compound Annual Growth Rate (CAGR) between 2013 and 2018, driven by the growing population, urbanization, and increasing purchasing power.

Cabinet Secretary in the Ministry of Industrialization and Enterprise Development Adan Mohamed said Kenya has identified four priority value chains it will pursue in the manufacturing sector.

"Under Agro-processing value chain, where only 16 per cent of agricultural exports are processed, we want to double this amount in order to boost the agriculture sector," Mohamed said.

The value chain report provides is in tandem to the realization of Kenya’s Industrial Transformation Program and Kenya’s Vision 2030.

While Kenya has made some headway in the global apparel market, there is need to focus towards addressing bottlenecks to competitiveness, says the Apparel and Textile Industry report.

Mohamed disclosed that subsequent to the renewal of the AGOA agreement for another 10 years, the textil-apparel sector remains the country’s growth engine for industrial exports.

"We are uniquely positioned to grow and expand this sector more than ten-fold beyond the current market share of 0.4 per cent.

"We intend to enter new markets and expand our product range into higher value and niche products," he said.

According to the Kenya Leather Industry report, Kenya is the third largest livestock holder in Africa, but a number of factors hinder the growth of its leather industry.

Amongst tanneries, a major difficulty is the lack of quality effluent facilities, which increase the environmental and health costs associated with processing finished leather.

In the handbag and travel ware sector, where target markets are high-end international tourists and exports markets, challenges include the high cost and low availability of quality hides, scarce design and process skills, difficulties in accessing and understanding export markets, and the insufficient availability of growth capital.

"For the Leather value chain, we are aware that over 90 percent of our 94 million dollars leather exports are unfinished wet blue leather.

"This state of affairs denies us the opportunity for over 35,000 jobs and up to 250 million dollars in GDP.

"We want to ensure that we fully take advantage of the largest livestock base of 60 million," Mohamed said.


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