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How China has silenced roar of Kenyan factories

FINANCIAL STANDARD
By Dominic Omondi | September 21st 2021

The flood of Chinese products has swept through the country’s nascent cottage industry. [Courtesy]

When China hoisted itself to the pinnacle as the “factory of the world,” it set off a huge tremor, cutting through the heart of Kenya’s manufacturing hub. 

The old mould-festered buildings in the sprawling Industrial Area aged faster; the rusty sputtering machines went mute, leaving behind a ghost town. 

The Chinese dragon had landed in the African jungle. And the African lion, its roar leaked away by the sharp tongues of flames from the mythical beast, ran for dear life.  

A lot of Kenya’s manufacturing powerhouses crumbled. A compilation of data by the Kenya Association of Manufacturers (KAM) shows that in the last five years, a total of 34 local companies have shut down, mostly due to competition from cheap Chinese imports

Some retreated to higher grounds, watching from a distance as a river of Chinese goods from video games and mobile phones to chandeliers and sofa-sets, footwear and suitcase flowed into the region.  

Battery maker Eveready East Africa, already reeling from an electric shock as more Kenyans got connected to the grid, took off for Egypt in 2014.  

This saw the country lose about 100 jobs when the battery manufacturer shut down its Nakuru plant, succumbing to pressure from cheap imports of dry cells.

The company outsourced its flagship D-sized dry-cell battery manufacturing to an Egyptian firm to concentrate on sales and distribution in the region through partnerships.  

Eveready East Africa, Nakuru. [Boniface Thuku, Standard]

Also in 2014, Cadbury Kenya shut its Nairobi plant, shedding off another 300 jobs as it opted to import its products, including Cadbury Drinking Chocolate, Oreo biscuits, Cocoa and Trident chewing gum from Cairo. 

Earlier in 2007, personal care giant Reckitt Benckiser stopped direct manufacturing in Kenya because of “costs and economy of scale issues.”

About 50 permanent employees and hundreds of casual labourers were rendered jobless as the manufacturer of Harpic and Jik opted for a foreign manufacturing base. 

Packaging Manufacturers, a packaging firm, also closed shop in 2017 due to increased competition of imported paper and paper board from the world’s second-largest economy. 

Other manufacturing firms that have since exported jobs overseas from Kenya, leaving thousands without a place to eke out a living, include Procter & Gamble, Bridgestone, Colgate Palmolive, Johnson & Johnson and Unilever. 

At the heart of this mass exit by the firms is a steady increase in Chinese imports, which have risen two-and-a-half times in a decade to Sh361.3 billion in 2020, data from the Economic Survey 2021 shows.  

This was a decline from 2019 when imports from China were estimated at Sh376.7 billion.

The dip was largely due to disruption in global supply chains owing to the negative impact of the Covid-19 pandemic. 

The flood of Chinese products has not only affected large industries, but it has also swept through the country’s nascent cottage industry, including the jua kali sector, where millions of poor Kenyans eke a living making spades, sufurias, and furniture.  

Made in China containers. [Courtesy]

Along Jogoo Road, Nairobi, for example, you can find an immaculately made spade from China being sold alongside its heavy, crude local version.  

Tobias Orlando, the head of membership and governance at KAM, reckons that the government needs to shield local manufacturers from unfair competition. 

“The only way to save such companies is to impose import duty on items that can be manufactured locally,” said Mr Orlando. 

But as they say, if you can’t beat them, join them. There has been something akin to a dance between the dragon and the lion and not necessarily a duel.  

That is exactly what Sameer Africa, manufacturer of Yana tyres, did in September 2016. 

After years of bruising competition from cheap and subsidised tyres from China and India, the tyre manufacturer associated with the late billionaire Naushad Merali, decided to close its Nairobi factory and commence offshore production by manufacturers domiciled in India and China.

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