Doing business in Kenya: manufacturing industry
Manufacturing sector is an area where investment opportunities exist. Initially developed under the import substitution policy, there has now been a shift to export oriented manufacturing as the thrust of Kenya's industrial policy. The sector plays an important role in adding value to agricultural output and providing forward and backward linkages, hence accelerating overall growth.
The manufacturing sector now comprises of more than 700 established enterprises and employs directly over, 218,000 persons as at the year 2000. A wide range of opportunities for direct and joint-venture investments exist in the manufacturing sector, including agro-processing, manufacture of garments, assembly of automotive components and electronics, plastics, paper, chemicals, pharmaceuticals, metal and engineering products for both domestic and export markets.
Kenya has an integrated pulp paper mill plant producing paper and paper board from renewable forest products. However, the country imports coated white lined chipboard and other boards for packaging, newsprint, printed paper and other types of paper. Investment opportunities exist in the production of paper from other raw materials such as bagasse, sisal waste, straw and waste paper.
Textiles and Apparels
Textile, Garment and Apparel manufacturing has a very high potential in Kenya. The basic raw material inputs such as dyes and chemicals are imported, as are all textile equipment and most spare parts. Investment opportunities exist under the Manufacturing Under Bond scheme and in the Export Processing zones for the production of items such as yarn and garments.
Metal and Engineering Works
Kenya has a basic metal sector making a variety of downstream products from local and imported steel scrap, steel billets and hot rolled coils. Kenya imports steel billets, coils, wire rod and wires, steel plates, sheets, steel scrap and pig iron. The country possesses a broad-based metal products sector with various independent engineering, foundry and metalwork workshops. Opportunities exist in the development of a nucleus foundry making precision castings that are then processed into precision components.
Vehicle Parts and Assembly
The motor vehicle component industry is rapidly developing to supply the needs of a few motor vehicle assemblers to meet certain local content requirements. Opportunities exist for manufacture of components for use by local assemblers for domestic market and for export to regional markets.
Investment potential exists for the production of motors, circuit breakers, transformers, switch gears, irrigation pumps, capacitors, resistors, insulation tapes, electrical fittings and integrated circuit boards for both the domestic and export markets.
Although Kenya's electronic industry is still at its infancy, a number of firms in the assembly, testing, repair and maintenance of electronic goods are in operation and are rapidly increasing their scope of activities to meet the growing demands of the industry.
Key opportunities for direct investments, joint-ventures and subcontracting exist in assembly of a wide range of electronic goods in Kenya, especially within the Manufacturing Under Bond scheme and Export Processing Zone Programmes.
These include the production of:
• Consumer electronics, such as colour televisions, Video Cassette Recorders (VCRs), printers, floppy disk drives and Compact Disk Roms (CD-Rs);
• Telecommunication equipment, such as printed circuit boards, and transmission equipment; and
• Support items such as cables, cords, die casting and metal plating.
With a labour force which is well-equipped to meet the labour skill requirements for the industry and the relatively large domestic and export market potential of electronics in the region, Kenya offers an enormous potential for the manufacturing and assembly of electronic items.
Plastics, Chemicals and Pharmaceuticals
The plastics industry in Kenya is well-developed and produces goods made of polyvinyl chloride (PVC), polythylene, polystyrene, and polypropylene. All materials are imported in the form of granules.
A large number of pharmaceutical formulations are produced locally in the form of tablets, syrups, capsules, and injectables, but the bulk of pharmaceuticals is imported. There is room for additional investment in the pharmaceutical industry.
Many attractive investment opportunities in chemicals, pharmaceuticals and fertilizers remain unexploited. These include the production of PVC granules from ethyl alcohol; fomaldehyde from methanol; melanine and urea; mixing and granulating of fertilizers; cuprous oxychloride for coffee bean disease; caustic soda and chlorine based products; carbon black; activated carbon; precipitated calcium carbonate; textile dyestuff; ink for ball-point pens; and gelatine capsules.
Mining and Mineral Products
Opportunities exist in the production of glass as the country is not self-sufficient. A few manufacturing units produce ceramic pottery and tiles, however, substantial quantities of ceramic pottery, tiles, sanitary-ware, and insulators are imported. Investment potential exists in prospecting and mining of other minerals such as gold, precious stones and petroleum.
Wood and Wood Products
Making use of renewable resources, investment opportunities exist for production of high quality and hand carved furniture for export, high density board from saw dust for the domestic market, high quality veneers, wooden toys, sporting goods such as cricket bats and rackets for export, and other specialty items. Recognizing the importance of environmental preservation, the Government pursues an active re-afforestation programme.
About the Author: Robert is a tour consultant in Kenya and has planned business and vacation safaris for over 10,000 tourists in the East African region. He is a tour operation- major and involved in National tourism policy development in Kenya.
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