Furniture makers lose exclusive State supply deal

Several furniture dealers surveyed by Business Daily estimated the cost of setting up a modern factory capable of churning out high quality furniture similar to the imported versions at about Sh200 million, a cost that is too high for the sector dominated by small scale businesses.

In an earlier interview, Mr Michael Mwangi of Slims East Africa, a firm dealing in imported furniture, said the policy opens up a significant potential for investing in local furniture, but pointed at the huge capital needed.

“We welcome the move, but since firms that make furniture are essentially small businesses plagued by thin capital, there is need to help in financing the sector so that the necessary machines, the biggest cost items, are in place.”

Similar sentiments were expressed by Rahul Haria, the managing director of Furniture Palace, a major dealer in imported furniture.

Tax imposed

He said the tax imposed on timber and machine imports, among other capital goods, is prohibitive to investors wishing to engage in making furniture.

“If the government zero-rates timber and machine imports, then we can consider venturing into making of furniture as opposed to importing finished pieces.”

Mr Mosonik is, however, optimistic that going forward, the ready demand for firms meeting the criteria will spur investment in local manufacturing.

For now, exotic furniture dealers who were to miss out on State contracts have a window of opportunity to net part of the millions spent annually in the public sector to buy furniture.

The government had earmarked some Sh500 million to buy furniture in the near term to coincide with the new policy.