A cargo ship arrives at the port of Mombasa. FILE PHOTO | NMG
Summary
- 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.
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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