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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Kenya’s warehousing shortage hurting economic growth: report     

NAIROBI, (Xinhua) -- Kenya’s warehousing shortage is hurting economic growth by reducing sales of manufacturers, according to a report released on Wednesday.

The research released in Nairobi by mega-city developer, Tilisi Developments Limited, shows that almost a fifth of manufacturers in Kenya have lost sales in the past five years on a warehousing shortage that is getting sharply worse.

“Industry estimates suggest that Kenya may need three times the amount of warehouse space currently available,” said the report.

The finding shows that access and location are the largest problem facing the current warehousing sector.

A detailed survey of 56 companies in Kenya, spanning manufacturing, pharmaceuticals, horticulture, logistics and retailers, found that 16 percent had sought new warehousing in 2017/2018, with a rising proportion failing to find any solution.

The search levels represented a sharp jump from the previous year, when 9 percent of respondents searched for new warehousing, while 5 percent did in 2015.

The survey shows that the majority of companies seeking warehousing in the last five years, being 31 percent of the total respondent base, suffered business damage as a result of not finding adequate storage.

“Some 43 percent reported delays in meeting orders, while 29 percent reported lost sales. A further 14 percent said the difficulty and longevity of their search for new space delayed their expansion plans,” states the report.

Kavit Shah, co-CEO of Tilisi Developments, said the Kenyan gross domestic product (GDP) is being hampered excessively by the difficulties involved in finding new space for storing and sorting goods for distribution.

Shah said a significant driver of demand for warehouses is the growth of e-commerce sector in the country.

Shah added that Kenyan warehousing is primarily made up of small-scale go-downs in contrast with global markets because of the smaller size of the economy.

The CEO noted that there is a low level of satisfaction with the quality of warehousing in the country.

“About 43 percent of pharmaceutical companies have reported warehousing problems impacting medicines and healthcare while 38 percent of the Fast Moving Consumer Goods have warehousing issues impacting productivity and pricing,” he added. 

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