Shocking data shows factories run for only 3 months in a year

Shock of local factories that run for only 3 months in a year

If a typical Kenyan manufacturer operated for 24 hours a day, they would take three months to complete the work they do in a year.

A new damning report shows that on average, manufacturing plants in the country run for less than eight hours a day for five days a week, meaning that they only produce for 86 days each year.

The report by the Strathmore University titled “State of Manufacturing in Kenya: An Investigation of the Technological Solutions Used” says the sector is doing badly in terms of output.

“In the study, only about 46 per cent of companies run full eight hours a day while the rest run between six and eight hours. Moreover, 50 per cent of companies run three to five days a week, thus affecting the country’s quest to become a 24-hour economy,” said Strathmore University lead Researcher Ismail Ateya.

Manufacturers have been demanding for incentives from the Government but have not been able to increase their capacity to produce even with lower tariffs on electricity and protectionist policies against imports from more efficient manufacturers abroad.

The State two years ago introduced the Time of Use Tariff, whereby manufacturers operating during the off-peak hours of between 10pm and 6am would get a 50 per cent discount on power costs. The tariff, however, comes with a condition that the power billed has to be what a manufacturer consumes over and above what they have been consuming on average for the previous three months.

These requirements have resulted in only a handful of heavy power users benefitting from the lower power rates as companies grapple with a tough operating environment that has eroded consumer spending, resulting in low demand for manufactured products. Out of the over 3,200 large power consumers that qualify to use the tariff, only 818 have taken advantage of it, according to Kenya Power.

In its first term starting 2013, the Jubilee administration had planned to increase installed capacity to 5,000MW in four years and cut the cost of power from Sh20 to Sh10 per kilowatt-hour. But as production ramps up and manufacturers let their machines lie idle, the Government is staring at a crisis that will see power prices rise by up to 70 per cent since it has contracted additional capacity.