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Scare for job-seekers as growth in manufacturing sector slows

BUSINESS
By Dominic Omondi | October 3rd 2016
Manufacturing sector experienced the slowest growth between April and June 2016 signalling tough times for job seekers.PHOTO: COURTESY

Manufacturing sector experienced the slowest growth between April and June 2016 signalling tough times for job seekers.

According to the latest data from national statistician Kenya National Bureau of Statistics (KNBS), the sector expanded by 3.2 per cent in the second quarter compared to an impressive growth of 5.6 per cent in the same period in 2015.

This is even as Government has put in place a number of measures including bringing down the cost of electricity down to spur the sector’s growth. The slow growth is attributed to the contraction in the processing of fish, manufacture of edible fats and margarine, production of soft drinks, processing of maize meal, manufacture of bread and processing of wheat.

“Despite growths in cement production and manufacture of galvanised sheets, the sector’s performance was also curtailed by a decline in the assembly of motor vehicles during the review period,” read data released by the statistics bureau.

And even as German automaker Volkswagen announced that it would set up an assembly plant in the country after 40 years hiatus, assembly of motor vehicle sub-sector experienced a decline in assembly during the period under review. Recently, the automobile industry association while thanking the Government for removing excises duty on assembly of motor vehicles, it has urged authorities concerned to move with speed to reduce the cost of electricity, which has raised manufacturing costs.

Manufacturing sector does not comprise a huge fraction of the country’s gross domestic product as agriculture, but economists believe it has the potential to address unemployment and underemployment.

The manufacturing sector was valued at Sh183.4 billion during this period, compared to Sh160.8 billion in the same period last year. Nonetheless, overall the economy expanded by 6.2 per cent during the period under review compared to 5.9 per cent in the same period last year, thanks to better performances in agriculture, forestry and fishing; transportation and storage; real estate and wholesale and retail trade, according to KNBS.

Interest on commercial banks went up to an average of 18.15 per cent, compared to 15.57 per cent in the same quarter last year, while inflation eased down to 5.6 per cent against last year’s seven per cent.

The rise in interest rates was despite the downward revision of Central Bank of Kenya’s rate from 11.5 per cent to 10.5 per cent.

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