Nipate
Forum => Kenya Discussion => Topic started by: Omollo on April 12, 2017, 12:01:32 PM
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These mutherfuckers lie with their mouths closed!
The price of oil has never been lower for over 30 years! That Uhuru is charging heavy taxes on oil keeping artificially high cannot be blamed on the real oil prices.
The World Bank has once again lowered Kenya’s projected economic growth rate to 5.5 per cent citing heavy headwinds for the country.
In its latest economic update released on Wednesday, the global lender said drought, weak credit growth and higher oil prices will drive down growth of the economy in 2017, falling below the earlier projected 5.9 per cent last year.
Potential for fiscal slippages, drought conditions lasting beyond 2017 and security concerns during the elections remain critical domestic threats to the economy, according to WB.
The lender of last resort also cited external risks, including weaker growth of trading partners’ economies, uncertainties of the US interest rates hikes that could lead to the strengthening of the dollar and destabilise capital flows from emerging markets.
ACCESS TO CREDIT
“While Kenya’s growth has been robust in the recent years, it falls short of the levels envisaged in the Medium Term Plan II and what is required to transform Kenya into an upper middle economy by 2030,” WB said in its bi-annual update of Kenya’s economy.
The lender said Kenya must boost growth in agriculture, and that access to credit for the private sector will be the key in putting the country back onto a higher growth path.
Kenya’s economic headwinds are, however, expected to ease next year, with a projected growth rate of 5.8 per cent and 6.1 per cent in 2018.
The average growth of 5.9 per cent in 2016 was largely driven by the service sector, which contributed up to 3.2 percentage of the growth rate.
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Even one business closing down is too many...
It is easy to think of Kenya as a country on the rise. Its economy, East Africa’s biggest, has been chugging along at a steady growth rate of 5–6% for the last few years, fitting the optimistic “Africa Rising” narrative characterised by thriving economies with improved quality of life for citizens.
The only speck in the country’s stellar show is its sluggish manufacturing sector. This key sector, which is expected to create jobs in a country with youth unemployment of over 17%, is steadily losing steam.
Indeed, according to the Kenya National Bureau of Statistics, growth in the sector fell to a dismal 1.9% in the third quarter of 2016, down from 3.3% at the same point in 2015. This is a far cry from increasing its share of GDP by 10% per annum as envisaged in the government’s Vision2030 programme.
The dream of becoming an industrialised nation by 2030 is therefore receding. Nowhere is the impact of slowed manufacturing growth more felt than in Nairobi, the capital city, where dozens of factories are closing down or relocating to other regions. Among other reasons, owners blame the high cost of production, counterfeits and a tough business environment.
But cheap imports are the main reason behind the slump in the manufacturing sector. In 2014, for instance, battery maker Eveready shut down its factories in Kenya citing the influx of cheap imports. Tyre maker Sameer Africa is the latest manufacturer to close down due to proliferation of cheap imports, mostly from China and India.
Domino effect
The domino effect is already playing out in most parts of the country. In the downtown area of Nairobi, home to many of the country’s rapidly expanding population of entrepreneurs, the effects of cheap imports are clearly evident.
James Waeni sells shoes in one of the many stalls along Price Road. He thrives on narrow margins, the reason why he makes journeys to China to get his products at a fraction of the local cost. It does not help that shoes can be easily manufactured locally.
In fact, a spot check in Nairobi’s Industrial Area reveals that a local shoemaker has slowed down production due to slow sales as wholesalers and retailers continue with their exodus. Waeni knows very well that going for cheap imports kills local manufacturing, but for now, he says it makes business sense.
“China-made goods are fast moving compared to locally made products. They fly off the shelves simply because of the cheaper price tags,” says the youthful entrepreneur. He is just one of the many business owners who are moving to China to buy manufactured goods at a cheaper price, despite rising concerns about the quality of the products.
This trend makes a mockery of the “Buy Kenya, Build Kenya” slogan introduced by the government in a campaign to spur local production. The campaign began in June 2015, when Kenya’s President Uhuru Kenyatta promised to enforce policies to ensure increased production and consumption of locally manufactured goods and services.
For a start, he announced that 40% of all goods and services procured by the government at all levels should be locally produced. Almost two years down the line, the campaign has borne no fruit.
“It has become expensive to do business in Kenya because of costly inputs. Power is expensive compared with our competing countries like Egypt,” explains Dr XN Iraki, a University of Nairobi lecturer.
Due to the high cost of doing business in Kenya, he adds, multinational firms have no other option but to shut down their manufacturing units as they look at importing their products from their affiliated firms in other countries, a less costly alternative. It does not help that Kenya’s bilateral trade with China is tilted in favour of the latter.
According to data from the Kenya National Bureau of Statistics, the value of imports from China was KSh320bn ($3bn) in 2016, while Kenya’s exports to China averaged KSh5bn.
In 2016 China supplied Kenya with railway construction materials, including steel, worth more than KSh13bn. Meanwhile, local steel manufacturers face tough times as cheap steel from China keeps them out of business, forcing massive layoffs.
- See more at: http://africanbusinessmagazine.com/region/east-africa/made-kenya-narrative-loses-steam/#sthash.bUWS47Pn.dpuf