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Companies’ output falls amid shortage of raw materials

BUSINESS
By Wainaina Wambu | April 20th 2020

Manufacturers are facing an increased idle capacity for production due to a shortage of raw materials in the wake of the coronavirus pandemic. 

Kenya Association of Manufacturers (KAM) Chief Executive Phyllis Wakiaga (pictured) said the supply chain disruption caused by the pandemic had seen costs of raw materials shoot up, with firms having to seek alternative sourcing amid delayed deliveries.

Kenya relies heavily on Chinese imports. A survey by the manufacturers’ lobby last month indicated that 87.23 per cent of companies were exposed to a shortage of raw materials due to reduced supply from the Asian country.

Wakiaga urged for government intervention in reducing barriers to allow easier importation of the much-needed raw and intermediate materials.

“At this point, we need to make sure we support the industry as much as possible to continue to produce for the nation,” she told The Standard.

Manufacturers are also facing stock-outs and an inability to meet clients’ orders.

The coronavirus pandemic was seen as a chance for the revival of local industries, but this has not happened.

Kenya’s annual import bill stands at about Sh1.76 trillion, with China accounting for about 21 per cent of imports.

This means that at least Sh377 billion worth of products may need to be sourced elsewhere or substituted by local production due to the disruption caused by the virus.

Wakiaga noted that the delays in restoring full production in affected source markets will curtail Kenya’s efforts at building local economic resilience, especially in manufacturing.

Covid 19 Time Series

 

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