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Fake goods threaten to wipe out manufacturing sector

By | May 22nd 2009 | 1 min read

By John Njiraini

Flooding of the local market with cheap imports and the worsening problem of counterfeits is threatening to wipe out local industries.

This is the gloomy reality according to the 2009 Economic Survey as the manufacturing sector growth slumped to 3.8 per cent last year against a 6.5 per cent growth recorded in 2007.

"This was the lowest growth in last five years," said the survey.

Apart from feeling the heat generated by cheap imports and fake goods, the sector was also badly battered by the post election violence, rising costs of energy, high inflation and depreciation of the shilling.

In effect most industries closed down while others were forced to adjust their operations by laying off employees and scaling down on production to remain afloat.

Sector critical

The number of direct formal wage jobs dropped marginally by 0.3 per cent from 264,812 to 264,095 but the situation was worse in the export processing zones were plummeted by 12.4 per cent to stand at 30,183.

The only relief in the sector was the rise in value of manufacturing output that rose by 14.5 per cent from Sh626 billion to Sh717 billion.

Value addition also increased from Sh190 billion to Sh223 billion.

But the sector, which is critical in terms of export earnings and job creation and is among the pillars expected to drive the Vision 2030, risks being wiped out by cheap imports and counterfeits.

Kenya Association of Manufacturers statistics indicated the sector loses a staggering Sh50 billion annually to influx of counterfeit products and illicit trade.

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