Export of manufactured goods has declined sharply, with Kenya losing its African export market to China and India.
In the last eight years to 2018, the country has watched helplessly as the market for some its key products including textile, glassware, cement, wood and carbon dioxide shrunk leading to massive job losses.
Struggling cement industry has seriously affected export earnings of the product which dropped by 80 per cent to Sh1.5 billion in 2018 from Sh7.5 billion eight years ago.
Cement manufacturers have been struggling with some of the companies downsizing in response to a turbulent environment. For instance, ARM Cement was placed under receivership then sold to Devki Steel when it fell into financial trouble. East African Portland Cement Company recently sent home most of its workers as it struggled to remain afloat as the cement industry faced headwinds with the slowdown in the construction sector.
Export of wood products has also suffered, plunging 65 per cent with the country earning Sh225 million a drop-down from Sh648 million earned in 2010.
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Other manufactured goods that have been hit include export of textile yarns and made-up textiles, a low-lying fruit under President Uhuru Kenyatta’s job creation ambition, which fell by a third.
And with some glass-making companies shifting base to neighbouring countries, export of glassware reduced by half with the country getting Sh927 million from Sh1.9 trillion eight years ago.
Export of machinery and transport equipment, aluminium and metal containers have also shrunk as the country continues to lose its competitiveness in manufacturing. Manufacturing sector’s contribution to the economy or gross domestic product has dropped from 10 per cent in 2010 to 7.7 per cent last year.
As a result, Kenya’s export market in the East African region and Comesa, dropped as countries in the trading blocs either found ways to manufacture their products or new trading partners such as China and India that are more competitive than Kenya. Even as exports to African countries have declined, imports have increased with Kenya’s trade surplus narrowing.
Uganda, for example, has seen its exports to Kenya rise nearly three-fold to Sh49.4 billion in 2018 compared to Sh19.3 billion in 2016.
Other countries that have since brought more goods to Kenya, mostly as a result of being in the same trade bloc, include Egypt.
The loss of export market has also led to job losses, according to Statistical Abstract 2019.
Data from the national statistician sounded a warning bell to those engaged in the manufacture of vegetable and animal oils and fats, as this sub-sector shed a staggering 12,743 jobs between 2014 and 2018. The job losses touched 18 manufacturing sub-sectors in what has been blamed on the increased cost of production, including the high cost of electricity, punitive taxes, bureaucracy and high cost of credit, a big blow to one of Uhuru’s Big Four Agenda.
The affected sub-sectors include textile, manufacturing, fish, vegetable and fruit processing that have been identified as part of Uhuru’s job creation ambition under the Big Four Agenda. Manufacturing is expected to create one million jobs by the time the President leaves office in two years.
Current figures could even be worse given that the other affected sub-sector, sugar manufacturing, for example, has seen even more job losses owing to the closure of Mumias Sugar, once the country’s biggest sugar miller.
Experts note that one of the reasons Kenya is losing out is because it does minimal value addition. “We do very little value-addition on tea and coffee,” says Timothy Njagi, a research fellow from Tegemeo Institute, a public policy think-tank affiliated to Egerton University. Dr Njagi says that most of the Kenyan tea is used for blending.