Banning clinker imports will spur growth of cement industry
By Narendra Raval | February 2nd 2020
Kenya’s development ambitions are currently premised on the Jubilee administration’s Big Four Agenda through which it seeks to achieve enhanced manufacturing, food security, universal healthcare and affordable housing by 2022.
Under the Big Four, the government is targeting to expand manufacturing and increase its contribution to GDP from 9.2 per cent to 15 per cent; construct 500,000 new affordable houses; achieve 100 per cent food security and nutrition; and 100 per cent universal healthcare.
While the government has been working to realign its budget priorities to the agenda, its full realisation also heavily relies on private sector support.
We appreciate that the government has also put in great efforts to facilitate a conducive environment for private sector growth through significant improvements in the ease of doing business, reforms in the Judiciary and review of labour laws, among others.
An expanded and thriving manufacturing sector will boost the government’s efforts to create more job opportunities for the millions of skilled, educated youth.
In this regard, the Devki Group of Companies has been working on an expansion strategy to boost its production capacity to meet market demand and thus support the affordable housing dream, in addition to job creation.
The Sh5.8 billion cement manufacturing plant in Nakuru County is now operational and will directly provide employment to 700 Kenyans.
The plant has a production capacity of 750,000 metric tonnes and is currently the biggest investment in the county. The second phase expected to be complete this year will increase production capacity by 1.5 million tonnes.
Devki Group is also putting up a second clinker line in Emali, Kajiado County, for production of raw material for cement that will increase the company’s total capacity to 3.5 million tonnes of clinker annually, which is the total requirement for Kenya. Our new Kwale steel factory, which is set to become the biggest plant in the continent, will create a further 3,000 direct jobs.
While we appreciate government efforts in the last 10 years to address bottlenecks that the manufacturing sector has been facing and continues to face, more needs to be done if it is to optimally play its part in realisation of the Big Four Agenda.
In my view, there are two vital quick gains for manufacturers in the cement industry that can be realised through strategic government interventions.
One, since the country has enough clinker to meet local demand, the government should impose duty or a total ban of clinker importation.
This will protect local industries from competition, create more jobs for Kenyans and save the country billions of shillings in foreign exchange annually.
Taming clinker imports will also reduce cement prices and encourage more Kenyans to build houses.
We urge the government to impose duty – 25 per cent or more - on clinker importation from September 2020 or ban clinker importation like the Tanzania government to protect local industries and create more jobs for the Kenyan people.
Two, the government needs to wholly address the issue of electricity supply, which is another huge impediment to growth of the manufacturing sector. While tremendous progress has been made to reduce the cost of electricity, investors are still grappling with challenges such as acquisition of land for way leaves, which is stalling construction of factories.
On our part, we are committed to fixing the country’s clinkers gap and making Kenya a regional market for raw material in cement production.
- The writer is Chairman of Devki Group of Companies
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