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Local producers eye State support to fill supply gaps

BUSINESS
By Peter Theuri | March 19th 2020

A Kenyan worker wears a dust mask as she works at the Hela intimates export processing zone (EPZ) limited factory in Athi River, near Nairobi, Kenya, July 27, 2017. Picture taken July 27, 2017. [REUTERS/Thomas Mukoya]

Manufacturers are pushing to increase their output and fill the supply gaps left by import restrictions due to the coronavirus.

Kenya’s producers have in recent years found themselves fighting a tight battle with foreign goods, which have got a toe-hold in the market largely because of cheaper pricing.

Locally manufactured goods are now best primed to take their dominant space on the shelves as traders are unable to ship in merchandise from countries such as China.

The Kenya Association of Manufacturers (KAM) sees the coronavirus blockade as a route for the local industry to alleviate the shortages already in the market or expected to crop up in the short term but says the sector needs government support.

KAM Chairman Sachen Gudka said the government should step in to cushion local manufacturers not only from the impact of the coronavirus but also to increase the sector’s competitiveness and sustainability over the long term.

“We can forge the resilience of local industries by enhancing our local value chain - from raw materials to finished products. By doing so, we can shelter the manufacturing sector from industrial and trade risks arising out of external shocks,” he said in a statement on Tuesday.

“This way, Kenya can source raw materials and intermediate products locally before turning to international markets.”

Raw materials

However, manufacturers will at the same time have to contend with depleted raw materials as many producers source their inputs from outside the country.

The government on Tuesday said it will allow cargo ships to dock at Mombasa port, though the crews will have to be quarantined to prevent spread of the virus.

Local manufacturing relies heavily on importation of inputs, with data from the Kenya National Bureau of Statistics showing that in 2018, 34.66 per cent of all imports were industrial supplies.

Further, 19.1 per cent of the imports were fuels and lubricants.

The industrial sector contributed 7.7 per cent of Kenya’s gross domestic product in 2018 against the often stated target of 15 per cent by 2022.

Mr Gudka said they had established measures that will ensure local producers and consumers are cushioned from the impact of the pandemic.

“To make it easy for consumers and local producers to source material within the country, KAM has launched an online directory with locally available goods and industrial inputs, and this is available to the public,” he said.

“Other manufacturers, such as Pwani Oil, have reduced the prices of essential goods such as soaps and cooking oil to cushion the consumer.”

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