Country increasingly relying on others for supplies, with imports growing at 23pc to nearly Sh1.16trl against exports of Sh394.4 billion.
While the total exports may not give a clear picture of the hard times the country’s manufacturing firms are facing, a look at exports to selected regional countries does.
Tanzania, which Kenya has had a long-standing trade feud with, posted the biggest drop in the order book, Sh5.66 billion, compared with last year.
Orders from Kenyan factories continue to face increasing threat from cheaper products from Asia and import substitution in key regional countries, putting into question the competitiveness of the country’s manufacturing sector.
The country is increasingly relying on foreign countries for supplies, with the value of imports growing at faster rate of 23 per cent year-on-year, to nearly Sh1.16 trillion in eight months to August.
The value of exports, on the other hand, was flat in that period, expanding by 0.2 per cent to Sh394.4 billion, latest data from the State-owned Kenya National Bureau of Statistics (KNBS) shows.
While the total exports may not give a clear picture of the hard times the country’s manufacturing firms are facing, a look at exports to selected regional countries does.
Tanzania, which Kenya has had a long-standing trade feud with, posted the biggest drop in the order book, Sh5.66 billion, compared with last year.
Demand from land-locked Uganda, Kenya’s largest trading partner, and Rwanda, was largely muted, with the value of orders falling by Sh717 million and Sh267 million, respectively, to Sh41.127 billion and Sh11. 394 billion.
Exports to Ethiopia also fell by Sh1.02 billion in the January-August period to Sh4.675 billion, with only Somalia, where consignments are largely khat (miraa), posting a Sh3.05 billion rise to hit Sh13.929 billion.
“When we started the EAC, they didn’t have many industries. (But) their industries have been growing. What, for example, Uganda used to import from here, it is now manufacturing,” chairperson of Kenya Association of Manufacturers Flora Mutahi said in an interview. “They are also wooing our manufacturers to set up shop there.”
The significant fall in demand from Tanzania is linked to barriers erected on Kenyan goods by Tanzania Food and Drugs Authority (TFDA).
The south-neighbouring country has been accused of requiring Kenyan companies exporting mainly food, cosmetics, wooden pallets and cigarettes to register, re-label and retest certified products.
This is despite “mutual recognition of notified certification marks issued by the standards bodies in partner states” under the East African Community’s Standardisation, Quality Assurance, Metrology and Testing Act, 2006.
“There is a multiplicity of fees charged for registration of products, which makes goods uncompetitive and costly,” KAM said in an earlier statement. “TFDA officials are (also) taking packets of products at the border as samples. Manufacturers are incurring losses, having already paid for all items.”
Besides imports substitution and non-tariff barriers in EAC countries, the local industry continues to battle competition from China and India whose cheap goods are not only increasingly finding their way into the country, but into the EAC bloc.
The value of imports from China between January and August this year, KNBS data shows, rose to Sh273.03 billion from Sh218.93 billion a year earlier, while imports from India slumped to Sh117.05 billion from Sh140.70 billion.
President Uhuru Kenyatta on June 1, 2015, during Madaraka Day celebrations, directed State ministries, departments and agencies to increase the share of supplies from local companies to 40 per cent from 30 per cent.
The order, under the “Buy Kenya, Build Kenya” initiative, was aimed at boosting local industries. But manufacturers have cried foul play, claiming that domestic suppliers present samples of local products during the tendering process, only to jump onto a plane to India and China to source for the same when they land State deals.
KAM this week held a three-day second annual manufacturing summit in Nairobi to create awareness on availability and quality of local products. United Nations Industrial Development Organisation country representative Emmanuel Kalenzi said Kenya should promote transfer of technologies that make products from countries like China and India cheaper. Kenya is a signatory to the World Trade Organisation’s Trade Facilitation Agreement, commonly known as Bali Agreement ,which was reached in Indonesia in 2013.
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