Kenya’s Manufacturing Sector Dipped To 2.4% In Q3

The manufacturing sector slowed down in the third quarter of 2022 on the back of decreased cement production.

The latest Kenya National Bureau of Statistics (KNBS) report indicates the sector contracted from 10.2 percent in the third quarter of 2021 to 2.4 percent in the third quarter of 2022.

The contraction was attributed to a decline in cement production from 2,640.2 thousand metric tonnes in the third quarter of 2021 to 2,302.7 metric tonnes in the period under review. This was a result of a decrease in construction activities from developers amid the high cost of construction materials.

Construction materials were high owing to the higher cost of input raw materials forcing manufacturing companies to adjust their prices between 2 and 10 percent to sustain their operation with others cutting down production.

This prompted developers to shy away from the prices amid inflating prices of other materials such as steel and paint. KNBS reported that during the quarter cement consumption declined by 14.6 percent to 2,217.7 thousand metric tonnes.

The sector was cushioned by an increase in sugar production, the processing of coffee, and the assembly of motor vehicles.

Sugar production increased by 6.1 percent from 166,994.0 metric tonnes reported in the third quarter of 2021 to 177,126.4 metric tonnes in the period under review. This was boosted by a steady supply of raw materials.

Similarly, production of assembled vehicles increased by 12.7 percent from 2,933 units in the third quarter of 2021 to 3,304 units in the period under review. The increase was triggered by support from the government which has enacted favorable policies like tax exemptions.

While the country’s real GDP expanded by 4.7 percent, inflating prices of commodities strained the performance of major sectors. Over 12 months inflation averaged 8.7 percent in the July-September quarter compared with 6.7 percent in the corresponding period a year earlier.