Over 65 per cent of manufacturing firms in Kenya don't survive

Diarietou Gaye, WB Country Director

NAIROBI: Kenya’s manufacturing firms have declined steadily since 1970s and new firms have only a 35 per cent chance rate of surviving in the market.

The value added per worker in the sector has also drastically reduced in the last 30 years, while the relative size of the sector has been stagnant and developed lesser in Kenya as compared to other countries.

The worrying statistics are contained in a new World Bank report titled “Anchoring High Growth Can Manufacturing Contribute More? World Bank Country Director Diarietou Gaye delivers a speech during the report launch.

“Over a long period, the relative size of the sector has been stagnant, it has lost market share abroad, and it is struggling with structural inefficiencies, low overall productivity and large productivity differences in firms across sub-sectors point to lack of competition,” the report notes.

According to the report, the contribution of manufacturing to GDP and exports has been stagnant. The report indicates that manufacturing growth trailed overall economic growth in Kenya between 2010 and 2013.

Compared with other countries, manufacturing growth was lesser in Kenya. According to the report, the manufacturing sector only contributed 11 per cent of GDP in 2013 and employed only 12 per cent of the 2.3 million who make up Kenya’s labour force translating to a partly 280,000 individuals.

The manufacturing sector contributed 26 per cent of Kenya’s merchandise exports out of which 40 per cent was sold in the East African Community. Kenya’s top 10 manufacturing exports and top two export destinations in 2013 were apparel and clothing accessories, vegetables, fruits and nuts, inorganic chemicals, tobacco and manufactured tobacco substitutes and boilers, machinery and mechanical appliances among others.

The top destinations for Kenyan exports were the US, Canada, France, Germany, Uganda, Tanzania, Mauritius, Italy, China and Rwanda. A weak business environment is pointed out as a key constraint for the manufacturing sector, unlike other sectors it has the greatest impact since manufacturing needs “access to capital for investments, infrastructure to import inputs and export and distribute finished products, affordable and reliable electricity to produce.”

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