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Kenya textiles: invest and win

  Photo: Tailoring curtains made from China-sourced fabric.
  Tailoring curtains made from China-sourced fabric.
Kenya' textile sector is doing a roaring business for both imports and exports. But the country needs to revamp its cotton farming and invest in modern manufacturing infrastructure in order to realise its full potential, said local industry watchers.

Kenya's import market is dominated by Chinese mainland trading firms keen to make the most of the country's favourable trade relations with the US and re-export trade throughout rising East African economies.

But among Kenya's list of priorities should be the need to address the high cost of energy, thereby reducing production costs and being able to compete globally, said the analysts.

The growth in textile exports has been impressive recently. It has been facilitated through the Africa Growth and Opportunities Act (AGOA) enacted in 2000 by the US government and intended to improve trade with Africa.

AGOA contains a provision restraining shipping fabrics from a third source country which could have had a dampening effect on Kenya's trade. But this was not enacted, since it was considered the continent had insufficient supplies of relevant raw materials.

This provision was set to lapse last September but in August was extended until September 2015, when AGOA itself expires.

AGOA has been the major catalyst for exports and has facilitated employment of an estimated 30,000 Kenyans by companies from mainly China, India and Indonesia working at the Export Processing Zone in Athi River, a mining town outside the capital, Nairobi.

Foreign exchange earner

Photo: Mix and match: Kenyan textiles.  
Mix and match: Kenyan textiles.  
The Export Promotion Council (EPC) indicated that the country expects to earn US$257 million through textile exports this year, accounting for 4.5% of Kenya's total exports.

This makes textiles Kenya's third highest-ranking foreign exchange earner, with a capacity to extend this margin with more investment and quality controls, textile experts said.

"There is a huge multi-million dollar business for SMEs (and individual cross border trading) that is not factored into the report, and the earnings are much higher than indicated in the official survey,'' said Julius Korir, EPC's Managing Director.

According to the Kenya Association of Manufacturers (KAM) there are 60 textile players and about 100 registered SMEs in various aspects of the Kenyan textile market.

"One of the major benefits has been the numerous linkages that spread employment opportunities,'' said Bella Akinyi , KAM's Public Relations Manager.

The benefits of a liberalised market have also encouraged large and small importers to source abroad for the domestic market.

Also, the growth in small trading is best indicated by the thousands of trading stalls across the country and particularly in Nairobi, offering low-priced textiles.

The bulk of this business involves imported textile goods largely from China, India, Dubai and Turkey.

Significantly, the real clothing boom has been for affordable apparel that is of good quality.

But denim jeans are driving the mass market, with prices as low as US$11.6 for a pair of mid-quality jeans.

China the largest source of imports

  Photo: China-made curtains at Jamia Home Fashions.
  China-made curtains at Jamia Home Fashions.
According to the Kenya National Bureau of Statistics (KNBS), China is currently the largest source of all imports, selling an estimated US$450 million.

For textiles, India is the second largest importer next to China.

"We are seeing more textiles from China than from any other country,'' said Junil Shah of Memsahib Textile Store, which one of the country's biggest retailers.

He said that the market has been dynamic and gravitates to natural fabrics such as cotton and linen to suit the tropical climate.

Previously, the bulk of China-made textiles were curtain materials, while India dominated bed sheets and Turkey took a good part of the duvet market.

Photo: Rolls of textiles.  
Rolls of textiles.
Initially, curtains were sourced as finished products but more dealers are importing them in huge rolls to allow consumer discretion on size.

"They come in sizes of  between 59 and 65 metres long with prices between [US$10 and US$17] per metre, depending on the quality,'' said Mohammad Ugas of Jamia Home Fashions, a retailer in Nairobi.

Ugas said Kenya's property boom and a growing desire by most people to buy curtains have helped fuel demand. He said upper income shoppers preferred blackout curtains while lower income consumers opted for lighter fabrics.

Several Chinese mainland companies are also opening wholesale and retail outlets in Kenya and spreading to major towns.

The clothing business in the country from Asia also includes Thailand's Kings Collection, a retail outlet in Nairobi.

Charles Charo, Manager at Chinese mainland-based Winven Investment Limited said that entry into other urban centres had helped grow the business.

Photo: Clothing at Sanma Boutique, Nairobi.   Photo: Suit materials in Nairobi shop.
Clothing at Sanma Boutique, Nairobi.   Suit materials in Nairobi shop.

Competition grows

  Photo: Turkish promotion.

Turkish promotion.
The boom in the textile business is seeing competition step up.

Earlier this month the Furtex trade fair was on at the Kenyatta International Conference Centre showcasing Turkish textiles and other goods.

Kenya's hub status and esteem as a regional power house has placed it in good stead to serve the East African region.

Korir of the EPC said that peace in Sudan had spawned a huge new market there this year, especially for school uniforms. Demand for a larger range of clothes would grow as the oil-rich but largely underdeveloped country begins to progress.

The trend is also replicated in Somalia where calm is settling in after decades of civil strife, Korir said.

According to Barrack Ndegwa, Integration Secretary of the East Africa Community (EAC) trade development organisation, most "hard issues” relating to the textile trade have been addressed and there is a good flow of goods across borders.

"Our main agenda was to open up the region for trade through a well-formulated tax regime and create accessibility to landlocked countries; this has worked out well,” said Ndegwa.

Second-hand goods compete

This year, the Kenyan government increased the duty on importing second-hand textiles to close the price gap with more highly-priced original textiles. But industry observers contend that what is really required to keep the textiles and clothing markets competitive are better quality goods and marketing.

Photo: Shah seeing new customers.  
Shah seeing new customers.  
They want to see increased cotton farming to sustain industry needs and encourage modern factories, with higher output of quality goods for domestic and export trades. "We need good seeds for good yield and low prices on fertilizers as an initial step towards stepping up growth in the sector,'' said Akinyi of KAM.

Currently Kenyan manufacturers have to rely on significant imports from Uganda and Tanzania to meet its needs.

Akinyi also cited a need for modernisation of manufacturing, in order to ensure consistency in quality and output.

But even with rising competition, local textile firms are keeping market share with items like the wrap-around khanga and kikoy which were largely tourist items but have since been adopted by Kenyans as leisure wear.

"I am seeing a new clientele among Kenyans looking for variety in local textiles to wear [as clothing] or use as textile covers,'' said Sundip Shah, Proprietor of Sanma Boutique, a retailer in Nairobi.

from special correspondent John Kariuki, Nairobi

Government/Organisation Tel/Fax/Email/Web
East Africa Community (EAC) Tel: (255) 27-2504-253, (255) 27-2504-258
Fax: (255) 27-2504-255
Email: eac@eachq.org
Web: http://www.eac.int
Export Promotion Council, Kenya (EPC) Tel: (254) 20-222-8534, (254) 20-222-8538
Fax: (254) 20-222-8539, (254) 20-221-8013
Web: http://www.epckenya.org
International Trade Administration (ITA) Email: agoamail@trade.gov
Web: http://www.agoa.gov
Kenya Association of Manufacturers (KAM) Tel: (254) 20-232-4817, (254) 20-232-4818
Fax: (254) 20-216-6658
Email: info@kam.co.ke
Web: http://www.kam.co.ke
Kenya National Bureau of Statistics (KNBS) Tel: (254) 20-317-583, (254) 20-317-586, (254) 20-317-588
Fax: (254) 20-315-977
Email: info@knbs.or.ke
Web: http://www.knbs.or.ke

Content provided by Picture: HKTDC Research
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