TRALAC - Trade Law Centre

Mauritius: AGOA Benefiting only the Textile-Clothing Industry

Friday, 28 May 2004

Source: The Nation (Nairobi)

The much-hyped recovery of the manufacturing sector remained muted during the year, with output expanding by a mere 1.4 per cent, against 1.2 previously.

KenyaAnd just some 11,990 workers are estimated to have landed jobs on the country's factory floors, pushing the total number employed by manufacturers to 241,754 persons.

Even then, there were some bright spots like the Export Processing Zones (EPZs) which - helped by a near-captive US market under the Agoa (African Growth and Opportunity) privileges - welcomed Sh15.7 billion in new investment during the year.

The figure represented a growth of 23.4 per cent, pushing sales from the zones to account for 5.8 per cent of the total turnover from all of the country's factories.

A significant 14.9 per cent of manufacturers' workforce were engaged in these zones.

Other industries that saw growth during the year include dairy production, fish processing, fats and oils, confectionery and chocolate, miscellaneous foods and animal feeds.

There were declines in some key anchors of the economy, like sugar and grain milling. Sugar millers are still besieged by high debts, high production costs and cheap uncontrolled imports, especially from the Comesa FTA states. Their maize counterparts have also had to grapple with cheap imports.

The survey takes much solace in the fact that some growth, however small, was registered at all, and credits this to preferential trade agreements like Agoa - which has breathed new life into a hitherto moribund textile industry - and the Comesa Free Trade Area (FTA), which has turned Kenya's neighbours into some of its most important trading partners.

Value of manufacturing output grew 6.1 per cent to Sh726.7 billion, against 2.3 per cent previously, signifying more elaborate processing.

Labour was dearer in Kenya's industries during the year, wage cost as a percentage of value added growing to 7.6 per cent, against a previous locus of 6.6 per cent, largely as a result of more firms adhering to the country's minimum wage guidelines and wage agreements with unions.

Industry still faces a serious financing crunch, with development agencies giving fewer loans, even after inquiries went up on the back of hope that faster economic recovery would follow last year's peaceful political transition.

Industrial Development Bank (IDB), a key development financier, approved Sh45 million to three manufacturers against Sh69 million in 2002, denoting a 35 per cent fall in lending.

Development Bank of Kenya was the main financier, giving out some Sh588 million in new loans against Sh47 million previously, as Kenya Industrial Estates financed 33 manufacturers at Sh5.06 million against 36 at Sh4.14 million in 2002.



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