Kenya: Apparel firms ride on Corona battle
The apparel sector is one of those targeted by the government for expansion in a bid to bolster the economy and create jobs.
Although it has been identified as a key pillar of the economy, the textile sector has for long remained in the doldrums.
The government has instituted a number of measures and demonstrated renewed commitment over the recent past to boost the sector.
This began with the revival of the Rift Valley Textiles (Rivatex) in Eldoret. The plant has now employed hundreds of workers while many more depend on it directly and indirectly. Farmers who had abandoned cotton for lack of market have also been encouraged to resume growing the crop.
This is not the first time the government has trained its eyes on the sector. The African Growth and Opportunity Act (Agoa) is one of the long-standing initiatives in government’s move to unlock the potential of the industry.
The Act was created 19 years ago between governments of the US and some African countries, including Kenya. Under the deal, African countries export their textile and apparels to the US duty-free.
Why does the government consider this sector so important? Due to its rich value chain, the sector holds the promise of creating a large number of employment opportunities.
From cotton farming, textile mills and apparels/fashion industry, the sector can generate the much needed jobs while being a key boost to the economy.
Despite these raft of measures having been put in place, the industry is yet to live up to expectation. And now the sector has received impetus from unlikely situation; the Coronavirus pandemic.
Various counties have set up centres to make face masks, with Kitui County taking the lead. Firms in the Export Processing Zones (EPZ) have also switched to producing face masks and personal protective equipment as they seek to stay afloat as tough economic times bite. Now the EPZ are a beehive of activity as they churn out face masks and other personal protective gear.
Each day 639,700 masks and 106,000 personal protective equipment are being sewed up at 16 companies, which up until few months ago were solely producing garments for export.
Revital Health Care is producing 180,000 face masks a day, while New Wide Garments and Hela intimates are making 100,000 masks a day in what has turned to be the government’s viable option to keep an economy sputtering to a standstill running.
The success of turning EPZ quickly into tailoring shops for masks and protective equipment such as gloves, overalls, head covers, aprons and caps has given government the reason to dream big in terms of expanding the apparels sector.
“We’ve managed to quickly scale up capacity, meet required standards and ramp up production within no time, and what we see is great potential to offer employment as we facilitate more companies to scale up,” EPZ Chairman Paul Gicheru said.
In his speech late April, President Kenyatta launched a hygiene programme that would initially involve residents in 23 informal settlements, spread across seven counties producing face masks.
Phase two of the programme will be rolling it out nationwide, kicking off what could turn to be a textile sector fit to replace mitumba if right policies and incentives are put in place.
“To demonstrate the principles of this approach, the making of face masks will be undertaken by 4,048 tailors residing in those settlements. For their neighbourhoods, they will make up to 250,000 masks per day. This intervention stimulates the local economy while advancing our war against the Coronavirus,” he said.
The President noted that textile firms and SMEs will get incentives to make products even after Covid-19 is contained. “There are already aspects of the post-Coronavirus economic recovery plan that we are progressively rolling out. My administration shall activate micro, small and medium enterprises across the country to manufacture basic medical equipment and supplies for domestic use and export,” he said.
A 2015 McKinsey report said Kenya Ethiopia, Kenya, Tanzania, and Uganda have the potential to trade goods worth Sh300 billion in garments and apparel by 2025.
This assumed that as the Asian markets mature, rising labour costs would drive apparel sourcing to East Africa to take advantage of tax holidays offered by EPZ and the extension of Agoa, which extends duty-free and quota-free access to US markets.
However, in 2016, East Africa exported Sh18 billion in apparel, which pales in comparison to Sri Lanka and Bangladesh’s Sh3.750 trillion.
Kenya Private Sector Alliance (Kepsa) says technology will be key in upping the apparel sector game. CEO Phyllis Wakiaga says: “Demand for cotton at a regional level is large; textile mills could be established to sell domestically, regionally and perhaps, in time, internationally. If Kenya brings in technology to support the vertical supply chain, there’s potential to attract domestic and international investment.”
The government says the strategy to produce quality apparels has existed for a while. referring to the shift in production from China to East Africa. Coronavirus disruptions will speed up reorganisation of supply chains Industrialisation CS Betty Maina says.
“We’ve always had a strategy for industrialization, but coronavirus has given us an impetus to implement them,” she told Smart Company. “This includes a range of actions to boost production by SMEs and financing them and expand markets by accelerating the buy Kenya build Kenya initiatives to create local demand and supporting them to export.”