Stem loss of jobs in the steel industry

Close to 500,000 Kenyans who depend on the steel industry are on the verge of losing their source of livelihoods. This is as local manufacturers of steel battle a flood of cheap finished products from China and Russia. Already, thousands have lost jobs as the effects of low global prices of steel hit home. Therefore, some sort of government intervention is required. And while protectionism is not always the answer, extra-ordinary times, they say, call for extra-ordinary measures. In the current state of affairs, local steel manufacturers cannot compete against finished steel which are priced at the same level with, or lower than the raw materials needed to produce steel.

Indeed, even the current 13 per cent import duty imposed on finished steel imports has not been protective enough. The conversion cost of steel in the local steel mills is just too high, thanks to, among other factors, high energy costs, labour and finance. As the Kenya Association of Manufacturers noted, the government can temporarily increase the duty on steel imports until that time when things will normalise in the global market. But this is not all. The high cost of energy, which has contributed immensely to the prohibitive costs of conversion, also needs to be addressed.