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PRESS RELEASE

Improving Competitiveness of Manufacturing in Kenya

October 23, 2015

NAIROBI, October 23, 2015— New World Bank reports released today point the way to improving the competitiveness of key manufacturing sectors in Kenya. Analysis shows that the performance of the timber-furniture, textile-apparel, and leather and leather products value chains in Kenya are important for employment and growth in the country.

The reports provide an updated and comprehensive analysis of competitiveness for these manufacturing sectors in Kenya. They also suggest ways to accelerate growth, productivity, and innovation of Kenyan firms in these sectors.

While Kenya has made some headway in the global apparel market, there is an opportunity to grow faster by addressing bottlenecks to competitiveness, says the Apparel and Textile Industry report. According to the Export Processing Zone (EPZ) Authority, Kenya’s AGOA exports, employment, and investment in the past four years (2010-2014) grew by 17 percent, 12 percent, and 21 percent per year, respectively, taking up a third of all apparel exports from Sub-Saharan Africa to the United States.

Kenya’s textile and apparel sector has the potential to grow, increase its contribution to GDP, and serve as a source of gainful employment for its fast growing, young population,” says Diarietou Gaye, World Bank Country Director for Kenya.

The Furniture Industry report finds that Kenya is the largest market for furniture and also the largest producer of furniture in East Africa. Its market is expected to grow at an 8 percent Compound Annual Growth Rate (CAGR) between 2013 and 2018, driven by the growing population, urbanization, and increasing purchasing power.

Kenya’s capacity to capture this opportunity could be boosted by better institutional collaboration, tackling constraints related to the supply of raw materials to increase production and quality; improving productivity and innovation through better skills and technologies, and by enhancing access to markets locally, regionally, and internationally,” says Maria Paulina Mogollon, Finance and Private Sector Development Specialist.

According to the Kenya Leather Industry report, Kenya is the third largest livestock holder in Africa, but a number of factors hinder the growth of its leather industry. Amongst Kenyan tanneries, a major difficulty is the lack of quality effluent facilities, which increase the environmental and health costs associated with processing finished leather. In the handbag and travel ware sector, where target markets are high-end international tourists and exports markets, challenges include the high cost and low availability of quality hides, scarce design and process skills, difficulties in accessing and understanding export markets, and the insufficient availability of growth capital.

In the footwear subsector, where the competition is largely domestic and based on price, Kenya’s market share has been eroded by imports of new low-cost leather footwear (mainly from China and India), and donated, second-hand footwear (mitumba).

These reports were prepared by the World Bank Group through the Kenya Investment Climate Program 2, which is generously supported by the DFID of the United Kingdom, and the Dutch Government. 

Media Contacts
In Washington
Aby Toure
Tel : (202) 473-8302
akonate@worldbank.org
In Nairobi
Peter Warutere
Tel : (254-20) 293-6444
pwarutere@worldbank.org


PRESS RELEASE NO:
2016/146/AFR

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