- Kenya imports cement making materials worth Sh10 billion every year
- The firm has threatened to stop clinker production and switch to imports to cut losses.
National Cement is set to send home at least 860 workers at the Emali clinker plant over low business due to import influx.
Kenya imports over 60 per cent of cement-making materials hurting local manufacturers. For instance, at least half of the clinker produced by Devki Group, National Cement's mother firm is idle.
Clinker, an ingredient that makes up about 86 per cent of cement, is currently manufactured in Kenya by four firms including National Cement but many cement players are denying them sales by favoring imports.
''It is difficult to sustain jobs when there is no demand to allow us to operate at full capacity,” Devki Group chairman Narendra Raval said in a statement.
He blamed the government's laxity to control imports, saying millions of dollar investments are going down because of policy gaps.
''How are we as a country and stakeholders in the manufacturing sector going to brew industrialization and job creation if we import,'' Raval said.
This comes in under six months after the firm, which is part of Devki Group, released 300 workers and shut its Mombasa clinker plant, citing “significant” underutilized capacity as imports eat into the local market.
The firm has threatened to stop clinker production and switch to imports to cut losses.
"Kenya appears to have become a duty-free country and we may also consider stopping local manufacturing and importing clinker like others,'' Raval said.
To effect this, Devki Group is planning to switch off its four and only leave a small segment for its own cement production, an indication that more workers will be rendered jobless.
It also pours cold water on the firm's plants to produce more clinker at the West Pokot factory whose construction is scheduled to start next year and be completed in 18 months.
Early this year, the Kenya Association of Manufacturers (KAM) asked the National Treasury to raise tariffs on clinker imports to 25per cent 10 per cent at present or to implement an outright ban on imports, a move opposed to a section of cement producers.
The cement producers argued that increasing the tariffs would lead to unfair competition and destroy investments. On the other hand, KAM holds that the move will promote the manufacturing sector and create jobs.
The latest data from the Economic survey shows that Kenya imports clinkers worth over Sh10 billion, yet local manufacturers can sufficiently meet the demand.
According to KAM, the country has an installed capacity of about eight million tonnes per year, meaning that it can serve the local firms seeking clinker.
Kenya has been toying around the idea to ban clinker, with President Uhuru Kenyatta insisting that local production will bring cement prices down, fueling his agenda on affordable housing.
“This will strengthen the country because it will make it far easier for us to achieve our target of half a million new homes for Kenyans,” Uhuru said during the inauguration of the National cement's clinker plant in 2018.
National Cement started its operations in 2011 at the Lukenya Cement grinding plant before setting up the Emali clinker plant in 2018 and venturing into clinker production.
The clinker plant, which has a capacity of manufacturing 1.2 million metric tonnes per year is a result of $280 million investments. A 15 Mega Watt power plant has also been constructed alongside a clinker plant located between Merrueshi and Mbirikani in Kajiado County.
The plant has an installed capacity of 3 million tonnes per annum.
Several other firms have also announced plans to expand their clinker capacities by 2023 and this will send production capacity to 10.7 million tonnes, further adding to idle capacity.
Huge road projects during the Covid-19 pandemic period helped push up cement consumption to a record high of 4.1 million tonnes in the first seven months of this year, official data shows.
The Sh70 billion JKIA-Westlands Expressway is one of the projects that have absorbed truckloads of cement in a period when economic activities were generally muted.
Cement consumption in the last five years to 2019 averaged 2.9 million tonnes but has had a six per cent annual growth since then.