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Why you will not pay through the nose for diapers

FINANCIAL STANDARD
By Peter Theuri | June 14th 2021

 

According to KAM, there are seven diaper manufacturers in the country. [Courtesy]

 

Margery glides among countless shoppers in Naivas Supermarket’s Moi Avenue branch in Nairobi’s Central Business District, her shopping basket dangling gingerly in her left hand before stopping at the baby diapers’ section.

She scans through the various brands before settling on Molfix, a brand by Turkish firm Hayat.  

Other competing brands on the shelf include SoftCare, Pampers and Huggies.  

According to Margery, every mother knows the best diaper for her baby, with price a major consideration.  

“We look at prices in terms of which one does not keep changing. But we also look at how comfortable a diaper is on the baby, including the heat trapped, which could get to a level where it irritates the baby’s skin...,” she explains.

Most of the diaper packs with around 50 pieces retail at between Sh1,000 and Sh1,300.

While reading the budget last Thursday, Treasury Cabinet Secretary Ukur Yatani said the materials for the manufacture of diapers would continue to be obtained duty-free.

“Baby diapers are essential products and there is need to supply them at affordable prices. In this regard, last year, we allowed manufacturers to access inputs for the manufacture of baby diapers duty-free, under the Duty Remission Scheme. This was meant to support Kenya’s capacity to manufacture these products locally and create jobs,” said the CS.

“I am happy to note that many companies have responded to this incentive by increasing production. In order to nurture the growth of this industry and to continue sustaining the smiles of babies, we have agreed to extend the duty-free importation of inputs for the manufacture of baby diapers for a further one year.”

Besides this incentive, another factor driving up the diapers’ market in the country is the current baby boom during the Covid-19 pandemic.  

Data from National Hospital Insurance Fund (NHIF) showed that there has been a spike in births since last year following the arrival of the virus in the country in March.

According to official data, there was a total of 974,774 births captured in the system from March 2020 to February 2021 compared to 913,618 births in a similar period the previous year.

The change represented an increase of 61,156 births in NHIF’s database.

Industry players say this trajectory is likely to continue, providing an even bigger boom to diaper makers.

Industrialist Peter Kuguru, who at one time ventured into the diaper making industry, hailed Treasury’s incentive, saying it would spur the sector.  

“We should even consider offering diapers for free. It is an essential good that many women need but cannot afford. Such a necessity should be made available for all; if the government can distribute condoms free of charge, then why not diapers?” said Mr Kuguru.

He urged more local entrepreneurs to venture into the business as demand continues to outstrip supply.  

Kenya Association of Manufacturers (KAM) Chief Executive Officer Phyllis Wakiaga said the Duty Remission Scheme would help Kenya compete in the diaper manufacturing market.

“The Duty Remission Scheme is an import duty concession granted by the government to manufacturers who import inputs and raw materials. Over the years, Kenya’s diaper industry has faced stiff competition from imports from countries such as Egypt and Turkey,” she said.

 “If fully implemented, the proposal to extend duty remission on inputs for the manufacture of diapers shall continue to support the rapid growth of the sector, by reducing the cost of production and enhancing its competitiveness. Additionally, it shall help increase the local diaper manufacturers’ utilisation capacity.”

Power fluctuations

A supplier, who spoke in confidence and who has tried to venture into diaper manufacturing, said the biggest impediment to local manufacturing is the cost and maintenance of machines used to manufacture diapers.

“The machines cost over Sh60 million. That is not for the ‘small person.’ We also have problems with fluctuations in power supply, which mars smooth production and could even destroy machines,” said the supplier.

He said the diapers’ market in the country is crowded, and if one has to compete, they have to come up with something unique.

“Initially, diapers used to be for the for high-class citizens. Their market was limited to that social class, so new multinational companies came up with cheaper diapers and even single diapers for those who cannot afford packs. They would get smaller profit margins but then they would do volumes,” said the supplier, who has since moved to the adult diapers segment that is not as competitive.

He said the Duty Remission Scheme will make local manufacturing more attractive.

According to KAM, there are seven diaper manufacturers in the country.

These are Ecological Green Ltd, Interconsumer Products, Knitkraft Products, Sunda Industrial Company, Premium Hygiene Products, Ur Home International Kenya and Marsyetu Ltd.

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