KENYA MANUFACTURING DECLINE IN THE FACE OF SUBDUE DEMAND AND REDUCTION IN PRODUCTION

Phyillis Wakiaga ceo KAM

By Sofia Ali

Kenya manufacturers have experienced a setback in production and demand following covid – 19 pandemic that has seen placate demand and reduction in production in many companies, while the greatest effect of the pandemic has been loss of life and strain on health facilities. Businesses have not been spared too, according to survey done in May 2020 by KPGM in conjunction with Kenya Association of Manufactures (KAM).

In an interview with KAM Chief Executive Officer Phyllis Wakiaga, the manufacturing  sector plays  an  important  role  in  driving  economic  development   by   stimulating   and   sustaining   high  productive  growth,  boosting  employment  opportunities  for  semi-skilled  Labour  and  building  country  competitiveness globally through exports.

Wakiaga says the sector has however been hit hard and is facing significant challenges during this pandemic. “We are in the midst of the covid-19 pandemic as a country and for the last few months we have been able to look at the effects of the pandemic on the sector to see what opportunities are available and how we can carry on during this period. As the association, in March 2020 we carried out a survey that indicated possible disruption in the supply chain. Towards the end of May 2020 we carried out another survey to identify the impacts of the pandemic on the sector. We saw reduced demand, reduction in production and increased attentiveness at manufacturers’ levels to look at their cash flows.” Said the CEO

She however, reiterated the resilience of Kenyan manufactures citing innovation and capabilities of manufacturers to be able to produce quality products. “During this season we have seen a lot of innovation and resilience of local business, we have seen people diversifying their manufacturing around the essential goods required during this pandemic like face masks, sanitizers and other PPEs. This has demonstrated and proven that our local manufacturers have the capacity to produce quality products and can be relied on. ” Wakiaga was speaking in Kiambu County during the handover of PPEs to public hospitals handling COVID-19 patients.

Wakiaga said that the association was working on modalities that can enable the sector to recover in conjunction with the government and other stakeholders to get the sector back on track as other sectors in Kenya and around the world try to recover from the crisis. The demand for the products as remained subdued due to uncertain of the pandemic. “We are also working closely with the ministry of trade and industry on strategies to rebound and recover within this context of covid 19 and see how we can maximize on the opportunities in the sector. We are also working with KPMG on rebound recovery paper on the sector that will give guideline and opportunities within the sector” she said.

The manufacturing sector contributed 7.5 percent to the GDP for the fiscal year 2018-2019. Although, during the last quota, the sector experienced a drop of 30 to 50percent depending on the respective sectors of Manufacturing.

EPZ is one of the sector that is labor-intensive  and  can  play  an  important  role  in  alleviating  unemployment  especially  among  the  youth. The sector employ up to 52,000 people. The local sector employs directly about 21,000 people in formal sector and over 30,000 informally. The two sub sectors cumulatively employ over 200,000 indirectly. Additionally the sector by farm products from over 40,000 cotton farmers. Total  annual  turnover  of  the  apparel  subsector  is  estimated  to  be  Ksh  38  billion  while  the  textile  sector  is  about  Ksh  24  billion.  In 2017.

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