Can Kenya realize Textile City dream?

By winsley masese

A walk along the busy streets of most urban centres brings you face to face with rows of boutiques filled with similar-looking clothes.

And with a shirt retailing at, an average Sh2,000 at the numerous clothes shops along Nairobi’s Tom Mboya Street, there is clearly a ready market of willing buyers for the apparel.

But were the garments to be branded according to their country of manufacture, most of the clothes on the bodies of Kenyans who frequent these stores would be emblazoned “Mauritius” or “Turkey”.

Ironically, however, Mauritius does not produce a single seed of cotton. But Kenya does.

Mr Anthony Muriithi, the acting chief executive at the Cotton Development Authority (Coda), termed this reality sad.

“However, we have some comparative advantages. With well-developed processing infrastructure and enabling climatic conditions to support the growth of cotton, we only need to address the market-end metrics,” he said.

The remedy

For Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed, attracting foreign investors and setting up a city for the textile and apparel sector that would import raw material is the remedy. The city is to be up and running by December 2016.

“This is the moment for Kenya to develop the sector by taking advantage of the low-hanging-fruits concept,” he said at an investor forum in Nairobi a fortnight ago.

While addressing a group 40 investors from textile and apparel-producing countries such as Indonesia, India, China and Bangladesh, Mr Mohamed said Kenya can offer much-needed labour, which would create about 200,000 jobs.

“This is a group of investors looking for new investment destinations,” he said, noting that between them, they had a turnover in excess of Sh172 billion ($2 billion).

But Mr James Shikwati, a director at the Inter-Region Economic Network (Iren), has taken issue with the idea.

“To simply import raw materials and still retain the high cost of energy, punitive taxes and a hostile domestic market to local producers will not revive the cotton industry,” he said.

To create far-reaching impact in the sector, Mr Shikwati said there needs to be increased investment in growing domestic demand.

“It makes no sense to support industries to produce textiles and apparel for export, only for Kenyans to import the same products.”

To this end, the Government has to be at the forefront of purchasing local apparel, since it is one of the biggest consumers in the country, he said.

“This would have an immediate effect on the industry, which would eventually send positive signals to farmers.”

Huge boost

Mr Muriithi agreed that this would be a huge boost to Coda’s sector revival efforts: “If the Defense Forces and public hospitals bought locally made garments, it would be a good starting point to boost the market and increase demand for cotton as part of backward linkage plans.”

The Government expects investors to construct textile plants within the Export Promotion Zone in Athi River and initially source for raw materials from other markets. Once the plants are running, then the country can begin exploring ways of reviving the local cotton sector.

“The whole value chain analysis indicates that we stand a chance of success if we start to improve the sector through backward linkages with farmers,” Mohamed said.

However, Shikwati warned it may not be as easy to get farmers to grow certain cash crops as it may have been in the 1960s and 1970s.

“The current scenario affords farmers options for quick income from other crops, such as horticultural produce,” he said.

However, Muriithi said since 80 per cent of the country is arid and semi-arid, cotton growing would be the best alternative source of money for millions of farmers.

“We are working on plans to produce new certified seeds to boost the crop’s production,” he said.

The authority is also encouraging farmers to form co-operatives to improve their operations and get into value addition. Cotton seed can be crushed to make animal feed as well as cotton oil. 

Mr John Ochola, a co-ordinator at Econews Africa, an NGO that analyses global environment and development issues from an African perspective, said the only way a textile city would be viable in Kenya is if production costs reduced.

“Offering foreign investors tax incentives will not appropriately address the challenges the sector faces. A significant way to achieve this ambitious target is to create an enabling environment, and consequently rope in domestic investors.” 

Increased Investment

Further, during a previous visit to the EPZ, Mohamed was told that a lack of infrastructure was holding back increased investment in the sector.

“We are in the apparel sector and employ more than 5,000 workers. However, our plans to employ an additional 2,000 employees cannot work since we have no space for expansion,” said Mr Rudolf Isinga of New Wide Garments.

Mr Isinga said this had curtailed the firm’s efforts to increase production for the export market to take advantage of the Africa Growth Opportunity Act (Agoa).

The zone has about 3,000 acres and was set up to fire up export-led industrialisation, a key driver of the country’s long-term development plans.

But, as EPZ Managing Director Cyrille Nabutola admitted, “Only 30 per cent of the land is developed, but plans are at advanced stage to increase infrastructural facilities.”

There is no doubt there is high demand for textile and apparel, and Kenya’s sector could attain the Government’s growth projections. But the country must first get a handle on the high costs of doing business, a concern often raised by current and would-be investors.

“We are exploring ways to bring down the cost of energy to affordable rates,” said Mohamed.

Another issue is the skills gap in the sector, though Coda has said it is exploring ways of addressing this.

“We want to start a centre of excellence within the Export Promotion Centre to generate enough manpower to spearhead the revival,” said Muriithi.

The authority will also work with the Kenya Technical Training Institute to encourage students to take up professional training in the sector.

According to a 2013 study on the Kenyan textile industry commissioned by the African Cotton and Textile Industries Federation (Actif), government procurement of locally made uniforms and hospital lines would immediately result in the employment of 8,275 people and engagement of 6,325 new farmers.

It would also have saved EPZs Sh12.5 billion in foreign exchange used to import raw materials in 2012.

Indeed, the sector once held great promise. At its peak in 1984, there were 52 textiles mills and it employed over 42,000 people — it was the second-largest employer after the civil service.

Now, there are only 15 main textile mills in operation, all running below capacity.

Industry’s collapse

The key reasons given for the collapse of the industry are the Global Economic Reforms under the Structural Adjacent Programme (SAP), and the trade liberalisation of the 1980s and 90s.

Corruption and mismanagement at the defunct Cotton Board of Kenya also contributed to the collapse.

Cotton has been the basis for industrial transformation the world over for many centuries, and under Vision 2030, the sector has been identified as critical in employment creation, poverty reduction and food security.

“The key challenges revolve around poor productivity; high input costs, including labour, transport and energy; outdated technology; expensive credit; low investment; poor product quality; unpredictability of prices; and a lack of market outlets,” the Actif report found.

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