GROWTH

Cement, leather sectors boost Kenya's manufacturing recovery

Economic Survey indicates real value added in the sector grew 6.9%.

In Summary

•The share of the manufacturing sector to GDP was 7.2 per cent while the volume of output expanded by 6.0 per cent in the same period.

•Most of the activities of manufacture of non-food products registered growths in 2021.

Operations at the Bamburi Cement Athi River plant /FILE
Operations at the Bamburi Cement Athi River plant /FILE

Increased production of cement, leather, and dairy products sub-sectors helped growth in the manufacturing sector which rebounded from a 0.4 contraction in 2020.

The Economic Survey 2022 shows last year, real value added in the manufacturing sector grew by 6.9 per cent compared.

The share of the manufacturing sector to GDP was 7.2 per cent while the volume of output expanded by 6.0 per cent in the same period, with most of the activities of manufacture of non-food products registered growths in 2021.

“Some of the non-food activities that posted significant increases include manufacture of other non-metallic mineral products (23.2%); manufacture of leather and related products (15.6%) and manufacture of motor vehicle, trailers and semi-trailers (18.9%),” the Economic Survey by the Kenya National Bureau of Statistics (KNBS) indicates.

Manufacturing was among drivers of economic growth during the year which was recorded at 7.5 per cent, a turnaround from a contraction of 0.3 per cent in 2020 when the impact of the Covid-19 pandemic was widely being felt across sectors.

Other sectors that contributed significantly to the economy in 2021 were transportation and storage (11.4%), real estate (8.9%), financial and insurance activities (7.1 %).

The performance in the cement sub-sector came with increased demand for the commodity at the height of key infrastructure projects among them the Nairobi Expressway and the rehabilitation of Longonot-Malaba railway line.

The sector’s performance, albeit not as strong as in 2020 was evidenced by a 23.4 per cent increase in cement consumption from 7.4 million tonnes in 2020 to 9.1 million tonnes in 2021.

A strong performance in the leather sub-sector also saw value of exports close the year at Sh1.9 billion.

In the same period, total sales by EPZ enterprises increased by 21.5 per cent to Sh98.7 billion.

Exports by EPZ enterprises increased by 22.8 per cent to Sh91.3 billion in 2021.

The sector was instrumental in the country’s exports with commodities such as titanium ores and concentrates, and soda ash also recording increases.

However, in the review period decline in production was recorded in prepared and preserved fruits and vegetables, animal and vegetable fats and oils, furniture and pharmaceutical products sub sectors.

On jobs, formal employment in the sector increased by 6.7 per cent to 338,000 in 2021 from 316,900 in 2020.

During the year, credit advanced to enterprises in the manufacturing sector increased from Sh409.3 billion in 2020 to Sh463.0 billion, the survey shows.

The 7.2 per cent share of the manufacturing sector to GDP however remains below the government's target of 15 per cent under President Uhuru Kenyatta Big Four Agenda which he hoped to achieve before the end of his second term, this August.

Kenya’s economy last year recovered from the crippling effects of the Covid-19 pandemic, mainly driven by resumption of most economic activities after the lifting of the containment measures instituted in 2020 to curb the spread of the virus.

The nominal GDP rose from Sh10,7 trillion to Sh12.1 trillion, representing an increase of 12.9 per cent.

“Activities in the manufacturing sector were more vibrant in 2021 compared to 2020. This was mainly on account of the relaxation of Covid-19 containment measures which saw reopening of the economy and increased demand,” KNBS director general Macdonald George Obudho said.

The food sub- sector expanded by 5.5 per cent while the non-food sector grew by 8.8 per cent, respectively in the review period.

In the manufacture of food products, activities that posted notable increase in 2021 included processing of sugar (16.0%); meat and meat products (13.1%); dairy products (10.8%); and bakery products (9.3%).

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