Textiles and apparel key to Kenya 10-year growth plan
Textiles and garments are a major growth driver of Kenya’s industrial exports
The Kenyan government has earmarked the textile, apparel and leather sectors as key drivers of major economic growth under a decade-long plan to transform the country into a newly industrialising middle-income nation.
At the heart of the so-called Industrial Transformation Programme is a five-point strategy to create an industrial hub and grow the manufacturing sector to levels above 15% of Gross Domestic Product (GDP) from a static 11% over the past decade. The programme is, in turn, guided by Kenya Vision 2030, the country’s economic development blueprint.
Increasing industrial exports “is critical to job creation and economic growth as well as domestic and foreign investment,” according to Adan Mohamed, Cabinet Secretary for Industrialization and Enterprise Development. “We have identified opportunities that will more than double the amount of current formal manufacturing sector jobs to approximately 700,000 and add US$2-3bn to our GDP.
“To realise these opportunities, we need to overcome six challenges: infrastructure and land availability, skills and capabilities in priority sectors, quality of inputs, cost of operation, access to markets and investor-friendly policies.”
A five-point strategy over the next ten years will start with the launch of sector-specific flagship projects, which will include textiles and apparel, and leather. Proposals include the development of an integrated textile cluster in Naivasha, a lakeside town in the Rift Valley, near a geothermal power plant, and the launch of a leather cluster in Machakos and two other locations.
This will be followed by plans to develop Kenyan SMEs by supporting rising stars and building capabilities with model factories, create an industrial development fund, and drive results through the newly formed Ministerial Delivery Unit.
The programme document notes that textiles and garments are a major growth driver of Kenya’s industrial exports, growing to $415m since the African Growth and Opportunity Act (AGOA) was signed in 2000. The sector accounted for 30% of growth in total exports over the past five years.
Kenya believes it is uniquely positioned to expand this sector. “Our labour cost is relatively cheap compared to that of Asia, and our preferential access to global markets creates a cost advantage that appeals to buyers as they look to diversify their sourcing base.”
That said, Kenya accounts for just 0.4% of the $84bn American textiles market, whereas Bangladesh commands 6% of the US market at $225bn.
The Government believes: “We have the opportunity to build our share of the US [textile and apparel] market, enter other new markets and expand our range into higher value products in order to generate an additional $140m to $200m in GDP and create 105,000 jobs.
Likewise, Kenya has one of the largest livestock herds in Africa (60m heads) and an established, but underutilised, leather sector. 90% of its $94m leather exports are unfinished wet blue leather. “Further processing of finished leather and leather goods will create an additional 35,000 jobs and $150m to $250m in GDP and contribute to substituting a portion of $86m in shoe imports yearly,” the proposal adds.
There are, of course, challenges too. Specifically, these include a lack of skills beyond basics in apparel production, limiting opportunities to offer design and embellishments for seasonal goods and fast fashion, for example.
High costs of labour, transport and overheads mean production costs are 10-20% more than the lowest cost of garment manufacturing; and the high cost of capital is discouraging investment in manufacturing plants.
Competitiveness is also hampered by the lengthy time to market for garment manufacturing – 118 days from order to delivery to the US – driven by a lack of local textiles (76% imported). And there is limited access to international markets such as Canada, South Africa, Turkey and the Middle East for Kenyan-branded leather and textile products.
On the leather side, low expertise to produce finished leather and leather products is described as “problematic,” while low hide quality driven by poor farming and slaughtering practices limits leather potential.
While interest in sourcing apparel from sub-Saharan Africa is on the rise, the results of new survey earlier this year suggest few players currently have concrete plans to tap into its potential: SOURCING: Apparel buyers point to potential in Africa. Executives also suggest the industry needs to formulate a collective strategy to build "something special" in Africa: The stars are aligning for apparel from Africa.
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