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Kenya to produce shoes for US market

BUSINESS
By Moses Michira | July 19th 2015

Kenya could start producing shoes for the United States market under the renewed quota-free and tax-free access to the multi-billion dollar footwear market.

Abundance of skins and hides locally should enable Kenyan enterprises manufacture leather shoes for the US market, to enable the country expand the product offering beyond textiles under the African Growth Opportunity Act (Agoa).

"We have sufficient supply of leather here that would enable us compete with China on footwear," Industrialisation Cabinet Secretary Adan Mohamed said. He had been directed by President Uhuru Kenyatta to come up with a list of new products that Kenyan businesses could start producing for the American market.

But unlike China, the Agoa law allows for tax-free access for products sourced from developing countries in Africa.

"Kenya has all it requires to start producing shoes for the US and compete directly with other major producers, all we need are investors to put up manufacturing plants," he said, alluding to the possibility that opportunities in footwear manufacturing would be among top sectors the State would be selling in the upcoming Global Entrepreneurship Summit in Nairobi.

Currently, over Sh40 billion-worth ($400 million) of apparels including jeans and towels consumed in the US are manufactured in Kenya's Export Processing Zones.

In his ministry's projections, the renewal of the Agoa law would allow apparels exports to the US to hit Sh100 billion by 2018, two-and-half times more.

Clinching a share of the shoe market could significantly increase the total value of exports to the World's biggest economy. Shoes top a long list of new export prospects for Kenya, on a long list of commodities including flowers and vegetables.

The leather industry is largely underdeveloped in Kenya, owing to heavy reliance on importation of second-hand or new shoes while the bulk of the hides and skins harvest from slaughterhouses is exported in its raw state.

Two years ago, the National Treasury increased export duty on raw hides and skins from 40 per cent to 80 per cent to encourage value addition through processing to make leather. Mohamed was speaking on the sidelines of a quarterly meeting Thursday with the representatives of the private sector.

He listed a raft of supportive measures that could attract prospective investors. Kenya had, for instance, launched 'zonal property values' in one of the single biggest reforms in land-related transactions to cut the process of acquiring property.

The lands ministry was compiling a reference list of property prices in different zones, which would be used in stamp duty calculation, a key step that precedes the handover of an asset from buyer to seller.

Currently, the State relies on value computation done by own its property valuers attached to the lands ministry to determine the fair selling price of land and other fixed assets.

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