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Growth in Kenya's manufacturing sector slows down in 2022, raising concerns about future targets

Growth in Kenya's manufacturing sector slows down in 2022, raising concerns about future targets
  • Kenya's manufacturing industry experiences sluggish growth, with a decrease from 7.3% to 2.7% in 2022, according to government data. 
  • High production costs and fierce competition from low-cost imports pose significant challenges for Kenya's manufacturing sector. 
  • Low agricultural output, particularly in food crops, contributes to the industry's decelerated development in 2022, while the COVID-19 pandemic adds further complications.

According to official government data, Kenya's manufacturing industry continued to grow slowly in 2022 as a result of high production costs and rising competition from low-cost imports.

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According to the Kenya National Bureau of Statistics (KNBS) Economic Survey 2023, the sector's growth decreased to 2.7% in 2022 from 7.3% in 2021. This presents a hazy image of the industry's participants and the government's lofty goal to have it contribute up to 20% of the GDP and provide at least one million jobs yearly by 2030.

Low agricultural output, particularly of food crops, which serve as the primary inputs for agro-processing, has been partly blamed for the decelerated development in the previous year. The manufacturing industry in the year under review also tried to push on despite complications brought about by the Covid-19 pandemic.

Due to the fact that it was an election year, there was less economic activity since investors continued to be cautious. High manufacturing costs, fierce rivalry from imported goods, and the shilling's devaluation versus the major trade currencies all continued to be important obstacles for the industry.

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However, the production of drinks (2.6%), sugar (13.8%), and bread goods (6.3%) were the key drivers of the 0.6% increase in gross value added attributable to food manufacturing in 2022. Manufacturing activity other than food increased by 5.3% during the time under study.

“This was mainly buoyed by notable growths in the manufacture of motor vehicles, trailers, and semi-trailers (25.8%), basic metals (14.6%), and structural metal products (11.6%),” the KNBS survey states.

However, the amount of output decreased in the important agro-processing subsectors of animal and vegetable oils, dairy products, grain milling, and prepared animal feeds. Compared to a rise of 6.5% in 2021, the sector's overall volume of output increased by a meager 3.8% in 2022.

This is a Business Insider Article, for more articles like this, visit africa.businessinsider.com

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