Enterprise

Ex-banker takes on cartels in Kenya’s textile industry

towel

Specialised Towels Manufacturers managing director Douglas Mutugi (left), Kenya Industrial Estates (KIE) CEO Parmain ole Narikae (centre), Industry and Trade secretary Adan Mohamed (second right) and KIE chairperson Rehema Jaldesa during a tour of the factory in Industrial Area, Nairobi. PHOTO | SALATON NJAU

After living and working in the US for decades, Douglas Mutugi returned to Kenya in 2011 to take charge of a towel making company.

The man who had previously worked at Bank of America and Wells Fargo set out to be Kenya’s Mr Towels.

He had earlier set up Specialised Towel Manufacturers (STM) in 1983 together with his mother Zipporah. Douglas was troubled that while his product samples were approved for production by local authorities in Kenya, supply contracts were awarded to foreign companies.

So he decided to return and grow the business, and take on cartels which were hell bent on locking out local entrepreneurs from such ventures.

He said this phenomenon being perpetrated by some unscrupulous briefcase companies was a major reverse to the government’s affirmative move to promote local manufacturers under the motto ‘Buy Kenya Build Kenya’ Initiative.

“I have sold towel samples to many women, youth and disabled people’s companies that were given a 30per cent share of government tenders, but very few give me the eventual job to mass produce the items as they fly off to China, Pakistan and India to source the finished products that at times are of low quality,” he said.

The venture is housed at a government-funded incubator in Nairobi’s Industrial Area.

Mr Mutugi, who worked as a banker in America for a decade before returning home to manage the family business in 2011 said STM products received a major boost when Kenya adopted a devolved system of government in 2013 where individual county governments formed teams to scout for quality products that were affordable.

“We had to hire more workers and ran 24-hour shifts to meet demand for specialised hospital blankets and towels as well as branding institutional products for our customers. But all changed when some traders realised they could use our samples to win contracts and then go abroad to seek cheaper deals,” he observes.

STM, he said, was among towel manufacturers that had been forced to reduce the number of employees since all government contracts sourced by local companies were being executed abroad.

Mr Mutugi said Kenya needs strict adherence to laid down regulations where any company importing goods that can be locally manufactured should have their imported products impounded and their trading licence revoked.

The MD said the company had outlived many storms since it was formed with a loan given to his mother Ms Zipporah Mutugi for construction of the building and purchase of equipment.

The textile industry, then controlled by established firms was impenetrable and STM had to rely on wholesalers to distribute their products, but the biggest breakthrough came when Uchumi Supermarkets expanded its branch network opening a new avenue for them.

Mr Mutugi said as multinationals closed shop, STM trudged on thanks to its network of small and medium enterprise networks who sourced for contracts across Kenya and ordered for various products at a commission.

STM has since expanded production to include Uganda and Tanzania supplies of finished products, but had reduced production of retail ware to concentrate on production of specialised towels, blankets and bedsheets for hospitals.

Mr Mutugi said State-backed Kenya Industrial Estates (KIE) also advanced them a second Sh10 million loan in 2011 that helped them expand their facility as well as purchase new equipment.

Skills gap

The KIE was created to support start-ups, especially in manufacturing, by providing support in the form of industrial sheds, subsidised credit, and training.

He said this made them overcome a major challenge in the textile skills market as textile trainees lack access to modern equipment and are still using outdated machines. 

“The automated machines we have require skilled personnel and we now apply the apprenticeship training model where we select students from the Textiles Institute who train on the job before returning to their college to graduate with an artisans certificate.

He said that the towels’ market needs strict surveillance by anti-counterfeit agency and Kenya Bureau of Standards inspectors to ensure no counterfeit or substandard products are sold in the retail market.

STM currently employs 30 permanent worker and outsources more labourers when orders increase from time to time.

It produces 10,000 pieces every month made up of a mix of towels, blankets, bed covers, bed sheets and pillow cases. Each product range comes in three varieties – entry level, mid quality and premium.

Hospital linen products – supplied to health centres across Kenya - account more than half of the business, Douglas said in an interview.

A high end bath towel costs about Sh850, face towel (Sh90), cotton blanket (Sh1,600), cot blankest (Sh750), bed cover (Sh1,500), bed cover (Sh1400), bed sheet (Sh975), and pillow case Sh250.