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Car assembly drives growth

By Peter Theuri | April 29th 2020
Mechanics at the ISUZU East Africa, General Motors (GM) assemble a ISUZU truck. The GM assembles a variety of vehicles and sell them with zero mileage.   

The manufacturing sector’s added value rose by 3.2 per cent in 2019, slower than the 4.3 per cent recorded in 2018.

The volume of output for the sector, however, increased by two per cent in 2019. The value of this output jumped 6.6 per cent from Sh2.4 trillion recorded in 2018 to Sh2.6 trillion last year.

This was attributed to increased production of motor vehicles, trailers and semi-trailers, animal and vegetable fats, and oils and pharmaceuticals.

The number of assembled motor vehicles went up by 38 per cent to 7,802 in 2019.

Kenya’s manufacturing sector is gunning to reach a contribution of 15 per cent of gross domestic product and has been laying down strategies to help reach this target, including through increased value addition on exports.

While some sub-sectors posted an improved performance, there was a decline in the production of wood products, sugar, electrical equipment and other non-metallic mineral products, among others.

Formal employment in the manufacturing sector rose by 1.6 per cent, from 347,900 jobs in 2018 to 353,300 in 2019. This accounted for 12.1 per cent of the total number of persons engaged in the formal sector in the country.

More than 17.5 million people continued to work in the informal sector.

The amount of credit advanced to the sector by commercial banks and industrial financial institutions increased from Sh335.7 billion in 2018 to Sh366.9 billion in 2019.

Among the main complaints that the Kenya Association of Manufacturers have constantly made is the unavailability of cheap funding, which has stifled growth of innovation and promising startups.

Constrained supply of raw materials from agricultural activities has also been blamed for the slow growth of the manufacturing sector.

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