Kenya’s Manufacturing Sector Grows by a Mere 0.2 pc – KNBS

The Kenya National Bureau of Statistics (KNBS) Economic Survey 2018 shows that the country’s manufacturing sector real value added rose marginally by 0.2 percent in 2017 compared to a growth of 2.7 percent in 2016.

The sector’s output volume contracted by 1.1 percent with the reason attributed mainly to decline in food products, beverages and tobacco, leather and related products, rubber and plastics and non-metallic minerals sub-sectors.

Uncertainties relating to the prolonged electioneering period, a rise in inflation, high production costs and competition from imported goods negatively affected the sector.

Also, the ban on production and use of plastic carrier bags had adverse effects on the volume of output of the sector.

The food sub-sector declined by 10.8 percent mainly due to low availability of raw materials for some key agro-based industries resulting from unfavourable weather conditions during the period under review.

The total approved credit to the sector rose to 311.8 billion shillings in 2017 from 275.8 billion shillings in 2016.

Production of sugar declined significantly by 41.2 percent from 639.7 thousand tons in 2016 to 376.1 thousand tons in 2017 mainly attributed to low cane deliveries by farmers.

In addition, the dairy sub-sector production volumes contracted by 12.1 percent in 2017. The quantity of processed milk dropped from 448.5 million litres in 2016 to 383.2 million litres in 2017. This was mainly due to reduced milk intake by the processors. Similarly, on the production of yoghurt and other fermented milk, there was a 3.5 percent drop in the same period.

Other food products not elsewhere classified reduced by 7.2 percent in 2017. This decline was mainly due to a drop in the quantities of processed tea and semi-processed coffee. Production of tea dropped by 7.0 percent from 473.0 thousand tons in 2016 to 439.8 thousand tons in 2017. Semi-processed coffee dropped by 15.1 percent to 33.7 thousand tons in 2017.

The quantity of milled rice dropped by 20.0 percent while prepared and preserved fruits and vegetables dropped by 1.5 percent over the same period. Fish processing declined by 3.3 percent in the year under review.

Grain milling sub-sector recorded a growth of 8.3 percent in 2017 as the number of bakery products increases by 8.1 percent in the same period. Meat and meat products sub-sector recorded a 6.1 percent growth, a success attributed to 10.2 percent increase in the number of sausages processed.

Meanwhile, the beverages and tobacco sub-sector declined by 0.9 percent as the production of beverages takes a marginal drop of 5.2 percent in the quantity of beer produced in 2017. Tobacco products, on the other hand, dropped by 4.4 percent.

The textile sub-sector recorded a decline of 1.7 percent mainly attributed to a drop of 8.9 percent and 2.2 percent in the production of blankets; and twine, cordage and rope, respectively in 2017.

The leather industry’s decline of 12.0 percent was attributed to the reduced production of finished leather and shoes with uppers of leather, which decreased by 13.3 percent and 8.2 percent, respectively.

Meanwhile, as this goes on, the Producer Price Index (PPI) which measures the change in prices of goods sold by producers at basic prices rose by 4.6 percent in 2017 to 118.89 from 113.67 in 2016. The main contributors to the increase in the index were the manufacture of food products, electricity and manufacture of basic metals which increased by 9.3, 5.0 and 5.3 percent, respectively. The index for other non-metallic mineral products dropped by 1.2 percent in 2017.