Kenyas clothing exports have been disrupted by a partial lockdown and slumping demand in key markets

Kenya's clothing exports have been disrupted by a partial lockdown and slumping demand in key markets

Kenya's clothing manufacturing industry has been punched hard by Covid-19's devastation of its main export market, the United States.

The sector had been growing at the cutting edge of sub-Saharan Africa's expanding outsourcing industry. But the London-based Overseas Development Institute has noted that "garment factories in sub-Saharan Africa have started laying off workers," and Kenya is no exception. 

Already, more than 100 apparel manufacturing facilities at industrial estates in Nairobi, Mombasa, Kisumu and Machakos have temporarily closed, while others are struggling to stay operating. 

According to Zachary Mwangi Chege, the director general of the Kenya National Bureau of Statistics, job losses are high in a sector that last year had more than 61,000 workers. 

EPZ layoffs

Indeed, Meshack Mwangangi, the chief shop steward of Kenya's Textile and Tailors Workers Union, estimates about 40,000 apparel industry workers in the export processing zones (EPZ) that house many of Kenya's export-oriented clothing manufacturing units – and 49,500 of the country's clothing industry workers – have been sent on temporary leave since March. 

This information is backed up by a Kenya Private Sector Alliance survey that showed 81% of 2,466 businesses checked had been impacted by Covid-19, with most EPZs in Nairobi, Mombasa and Kisumu in the sample. 

EPZ companies that have temporarily laid off workers include Africa Apparels Ltd, Simba Apparels Ltd, New Wide Garment Ltd, Bedi Investment Ltd and Alpha Knits Ltd. 

This is no surprise given most economic activities at the country's 40 EPZs have been disrupted by restrictions resulting from a partial lockdown imposed by the government since 25 March, which includes a nationwide curfew running from 7pm to 5am. 

"But even before the partial lockdown was enacted some garment and apparel making firms had started suffering for lack of export business," Mwangi told just-style.

Amidst the crisis, the government has allowed EPZ factories to offload all their products onto the Kenyan market. This suspends restrictions that usually allow such entities to sell just 20% of their products into the local market to gain the tax benefits linked to EPZ operations.

According to Cabinet Secretary Ukur Yatani, the new direction is meant to cushion the industry from heavy losses inflicted by the global Covid-19 pandemic. "The economic meltdown has affected global supply chains and markets, effectively causing difficulties in manufacturing and exporting of goods from our industrial estates in Nairobi, Mombasa and Kisumu," Yatani said in a media briefing.

PPE contracts

To survive, several clothing factories have been producing face masks and other Covid-19 personal protective equipment, as exports declined. "We have been hit hard by the Covid-19 outbreak and now we are trying to stay afloat by making aprons, surgical face masks and safety foot-wear," Isaac Maluki, a director of Shona EPZ Ltd, told just-style.

But according to Maluki, Covid-19 protective gear contracts are tough to secure, with state-funded factories such as the Kitui County Textile Centre and Rift Valley Textiles Ltd said to have been getting preferential treatment. 

Government spokesman Cyrus Oguna however stressed garment firms are free to compete for this business: "All what we are demanding is that products should meet medical specifications set by the Kenya Bureau of Standards," he explained. 

That said, even those firms benefiting from such orders can struggle to complete the work given the challenges of sourcing the necessary fabrics and other materials from their usual suppliers – often based in China. 

According to the Kenya Private Sector Alliance (KEPSA), more than 80% of clothing and textile firms that have relied on intermediate goods from China have been adversely affected by supply chain disruption. "Small and mid-sized companies have been hardest hit by the slowdown in the economy caused by the coronavirus epidemic," said KEPSA's chief operations officer, Carole Karuga.

So far, there are no indicators that the situation will improve in the short-term, given the pandemic's general disruption of the economy and movement of workers and the fact that the government has not released a comprehensive stimulus package or a protection scheme for firms and workers ravaged by Covid-19 (although the government has said it will help EPZ companies export products). 

Commenting in a briefing note, the Overseas Development Institute  suggested that the time has come for firms and the governments in sub-Saharan Africa to establish support schemes especially for small-and-medium-sized enterprises and workers.

Already one of the biggest beneficiaries of the African Growth and Opportunity Act (AGOA) duty-free trade agreement with the US, Kenya is also in talks on a proposed US-Kenya Free Trade Agreement.

Of the total US$667m in US merchandise imports from Kenya in 2019, nearly 70% (US$453m) were apparel items – making the sector the single largest stakeholder in the proposed FTA. 

Read more at the following link: US-Kenya trade deal – Here's what the apparel industry wants.