ECONOMIC SURVEY

Manufacturing sector undergoes slow growth despite surge in output

The sector’s real value added increased by 3.2 per cent, a drop from 4.3 per cent recorded in 2018.

In Summary
  • In 2019, the automobile industry saw more firms launch local assembly plants,
  • The value of output increased by 6.6 per cent from Sh2.4 trillion in 2018 to 2.6 trillion in 2019.
Treasury Cabinet Secretary Ukur Yatani unveils the 2020 Economic Survey at the Treasury on Tuesday, April 28, 2020.
Treasury Cabinet Secretary Ukur Yatani unveils the 2020 Economic Survey at the Treasury on Tuesday, April 28, 2020.
Image: FREDRICK OMONDI

The manufacturing sector experienced slow growth in 2019 compared to 2018, the 2020 Economic Survey shows.

The sector’s real value added dropped to 3.2 per cent from 4.3 per cent in 2018.

However, output rose by two per cent, attributed to increased production of vehicles, trailers and semi-trailers, animal and vegetable fats and oils, and pharmaceuticals.

 

The value of output in manufacturing also increased by 6.6 per cent from Sh2.4 trillion in 2018 to Sh2.6 trillion in 2019.

In 2019, the automobile industry saw more firms launch local assembly plants, leading to an increase in the number of assembled vehicles by 38 per cent from 5,653 in 2018 to 7,802 in 2019.

Similarly, the production of bodies for vehicles, trailers and semi-trailers increased by 10.5 per cent and 3.9 per cent, respectively, during the review period.

Recently, Peugeot and Germany’s Volkswagen resumed car assembly locally, joining other brands already being put together in the country, including Toyota, Nissan, and Mitsubishi.

There was a decline in the production of wood and wood products, sugar, electrical equipment, and other non-metallic mineral products, among other products.

Production of wood and wood products contracted by 4.8 per cent in 2019 and that was attributed to a reduction in the production of plywood by 20.3 per cent.

The timber industry has been struggling as the export of wood products plunged 65 per cent in 2019 attributed to the ban on logging.

 

The amount of credit advanced to the sector by commercial banks and industrial financial institutions rose from Sh335.7 billion in 2018 to Sh366.9 billion in 2019.

The formal employment in the manufacturing sector rose by 1.6 per cent from 347,900 in 2018 to 353,300 in 2019.

Total sales by the EPZ enterprises dropped marginally from Sh77.2 billion in 2018 to Sh77.1 billion in 2019.

Imports by EPZ enterprises increased by 15.8 per cent, while purchases of local goods and services dropped by 7 per cent.

The total excise revenue collected from domestically manufactured commodities and services amounted to Sh116.9 billion in 2019, reflecting a growth of 25.3 per cent.

 

(Edited by F'Orieny)