There is a story of a very small country called Bangladesh. In 2015, the country was exporting $25 billion of garments and apparel to the world and they had the plan to double the exports to $50 billion.
Last year, they hit their target of $50 billion, four years in advance, offering 4.2 million jobs. Their manufacturing contribution in 2015 was 16 percent of their gross domestic product (GDP) and today it’s 22 percent.
Kenya’s manufacturing industry should go back to its path of generating 20 percent of the GDP by 2030. It is possible, Bangladesh has done it and Kenya can do it.
From a perspective of how manufacturing contributes to the GDP of other countries, China is at 28 percent, Egypt is at 30 percent, India at 16 percent, South Africa at 14 percent and Kenya is at 7.2 percent. Over the years has come down from 20 percent, which is a shame but it’s better to be honourable and accept that there is a problem and let’s move and let’s deliver the plan.
Going to the textile apparel sector, it’s probably one of the biggest supply chains in the world, and a huge market opportunity, Kenya today is the largest exporter under the African Growth and Opportunity Act (AGOA) to the US. That is about the third top export, overtaking coffee which is fourth at $500 million and has 52,000 jobs.
Covid 19-has brought a new reality to global supply chains, which are re-organising away from the traditional sourcing destinations, offering Kenya a business opportunity.
In addition, the current market access under AGOA and the recently endorsed US-Kenya strategic trade and investment partnership favours Kenya as the preferred sourcing destination.
There is opportunity ahead of us in just one market which is the US with $100 billion but if we also start to look at the European Union (EU) with 27 countries, that’s about $150 billion meaning the total pie is $800 billion.
If the size of the pie in the US is $100 billion under AGOA and our contribution to that market is $500 million, there is no need to chest-thump and say, we are the biggest and the best in Africa, yes we are but globally, what have you done, we are 0.5 percent of US imports, which is a shame because we are duty-free.
We must be cognisant that we need to remain globally competitive to secure a bigger slice of the market access available to Kenya. The main drivers of competitiveness that need urgent attention are as follows — bill of materials, productivity, utility costs, financing costs and logistics costs.
We need to aspire to build a world-class textile apparel value chain that is globally competitive irrespective of duty-free market access to secure global dominance as our competitive and comparative advantage. Let’s become world-class operators otherwise, we will be no-class operators.
There is an opportunity for us in one sector and in that sector, there are no factories left in our Athi River EPZ. I believe in Naivasha it can be a reality and deliver 100,000 jobs. We don’t have an option but to create jobs and even President William Ruto has said that his three agendas are spot-on, which are agenda one jobs, agenda two jobs and agenda three jobs.
The textile industry in Kenya is once again going to deliver that opportunity for jobs as we connect that pipeline back to the farm gates, the farmers and the field to fashion which is possible and it can happen thus this is a serious opportunity ahead of us that we should not lose.
Bedi is the Managing Director, Bedi Investments Limited.
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