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World Bank labels Kenya manufacturing growth mediocre

By Domnic Omondi | August 14th 2019
By Domnic Omondi | August 14th 2019
A worker at the Rivatex textile company in Eldoret. The Government has earmarked the textile and apparel sectors as key in the job-creation agenda. [Kevin Tunoi, Standard]

The World Bank has described the pace of growth in manufacturing jobs in Kenya as "mediocre", pouring cold water on the country’s ambitious plan to create over a million new jobs by 2022.

The global lender in a new report also paints a bleak picture of Kenya’s attempt at upstaging Ethiopia in creating over 600,000 jobs in the textile and apparel value chain.

Titled “Jobs in Global Value Chain” (GVC), the report released last month shows that in 14 years to 2014, Kenya’s growth of jobs produced by firms engaged in manufacturing activities linked to the global supply chains such as textile, car assembly or food production has been “mediocre.”

During this period, the report found that the fastest growth in GVC jobs was in Bangladesh and Vietnam, followed closely by Ethiopia and India.

“GVC job growth in Kenya was mediocre and comparable to China and Indonesia,” noted the report.

Kenya’s poor performance in job creation was due to a decline in market share, a situation that contributed to depressed GVC job growth, according to the report.

“Kenya, Senegal and South Africa all lost market share, depressing GVC job growth,” read part of the report.

Even more telling was how Ethiopia was able to widen its lead against Kenya in the production of garments as Addis Ababa fashions itself as a hub for apparel production in the region.

President Uhuru Kenyatta has since earmarked textile and apparel as low-hanging fruit in the job-creation pillar under the Big Four agenda.

To this end, President Kenyatta recently commissioned a revamped Rivatex textile company in Eldoret that is expected to create over 3,000 direct jobs.

There are also plans to breathe life into the defunct Kisumu Cotton Mills (Kicomi) as part of the President’s objective to shore up the share of manufacturing to national output (gross domestic product) to 15 per cent from the current nine per cent.

However, Kenya will have to first of all beat Ethiopia. The neighbouring country has been attracting most of the textile and apparel investors with its cheap power and labour as well as other Government incentives such as free land. From 2000 to 2014, Ethiopia’s global value chain share of textile has increased from 2.46 per cent to 2.99 per cent, according to the study by the World Bank which compares the production of Global Value Chain goods in 11 countries.

However, Kenya’s share has declined by over a percentage point from 1.66 per cent to 0.65 per cent even as the country has specialised more in food production.

While nearly almost of the three African countries assessed - Ethiopia, Kenya and Senegal - stand out as being specialised in delivering value-added to food GVCs, Ethiopia does well in textile as well.

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