{"id":106,"date":"2020-02-21T22:00:18","date_gmt":"2020-02-21T22:00:18","guid":{"rendered":"https:\/\/www.manufacturer.com\/news\/?p=106"},"modified":"2020-09-18T03:45:27","modified_gmt":"2020-09-18T03:45:27","slug":"us-kenya-opportunities-through-strategic-alliances","status":"publish","type":"post","link":"https:\/\/www.manufacturer.com\/news\/us-kenya-opportunities-through-strategic-alliances\/","title":{"rendered":"US \u2013 Kenya Opportunities through Strategic Alliances"},"content":{"rendered":"<p>US \u2013 Kenya Strategic Partnership Opportunities<\/p>\n<p>In 2019, Kenya had a GDP (gross domestic product) of $99 billion, with a 5.8% annual increase from 2018 \u2013 2020, making it the 62<sup>nd<\/sup> largest economy in the world.<\/p>\n<p>Previously we published an article \u201cThe Growth, Opportunities, and Risks in Ethiopia Production.\u201d \u00a0We continue to explore apparel production in Africa.\u00a0 <a href=\"https:\/\/www.manufacturer.com\/news\/the-growth-opportunities-and-risks-in-ethiopia-production\/\">https:\/\/www.manufacturer.com\/news\/the-growth-opportunities-and-risks-in-ethiopia-production\/<\/a><\/p>\n<p>Kenya has 52 textile mills, of which only 15 are currently operational, but only at less than 45 percent of capacity.\u00a0 The existing mills operate with out-dated technology; they suffer from low levels of skilled labor and poor productivity.<\/p>\n<p>Thousands of apparel companies operate in Kenya. Approximately 170 are medium to large; while upwards of 74,000 are micro companies. Twenty-one companies operate in the EPZA (Export Processing Zones Authority), <a href=\"https:\/\/epzakenya.com\/company-directory\/garments-and-garment-related-activities\/\">https:\/\/epzakenya.com\/company-directory\/garments-and-garment-related-activities\/<\/a> employing an average of 1,800 people per company.<\/p>\n<p>Kenya was ranked as the fourth-largest economy in Sub-Saharan Africa, after Nigeria, South Africa, and Angola.\u00a0 Because of relationships with powerful nations (USA, England, EU), Kenya can boost its economy faster than others.<\/p>\n<p>United States President Donald Trump has announced that the US will look closely at making a bilateral trade deal with Kenya. <a href=\"https:\/\/www.atlanticcouncil.org\/event\/the-future-of-the-us-kenya-strategic-partnership\/\">https:\/\/www.atlanticcouncil.org\/event\/the-future-of-the-us-kenya-strategic-partnership\/<\/a><\/p>\n<p>If this initiative comes to fruition, Kenya will become the first country in the Sub-Saharan region to forge a bilateral trade deal with the United States.<\/p>\n<p>For Kenya, this will allow it to significantly improve its share of the global textile industry.<\/p>\n<p><strong>Strengths<\/strong><\/p>\n<p>Investment by textile firms in new technology will significantly reduce their operating costs, even in a high power cost environment. \u00a0However, firms are reluctant to undertake such investments when they are unsure about the survival or competitive prospects of Kenya\u2019s textile and apparel sector.<\/p>\n<p>In regards to power, there have been very impressive gains made, with prices falling since 2014 from 20 to 14 cents per kWh (kilowatt per hour).\u00a0 This cost nonetheless remains high.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-110 size-full\" src=\"https:\/\/www.manufacturer.com\/news\/wp-content\/uploads\/2020\/09\/Screen-Shot-2020-02-18-at-11.38.23-AM.png\" alt=\"\" width=\"634\" height=\"419\" srcset=\"https:\/\/www.manufacturer.com\/news\/wp-content\/uploads\/2020\/09\/Screen-Shot-2020-02-18-at-11.38.23-AM.png 634w, https:\/\/www.manufacturer.com\/news\/wp-content\/uploads\/2020\/09\/Screen-Shot-2020-02-18-at-11.38.23-AM-300x198.png 300w\" sizes=\"auto, (max-width: 634px) 100vw, 634px\" \/><\/p>\n<p>There have been investments in Mombasa port: the rail link, the e-single window, and other initiatives addressing trade logistics.<\/p>\n<p>The MOIED (The Ministry of Industrialization and Enterprise Development) is eager to discover opportunities for growth in the near term.\u00a0 The aim is to revive enthusiasm for the textile and apparel sector, while simultaneously improving nation wide infrastructure.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Weaknesses<\/strong><\/p>\n<p>Knit and woven\u00a0apparel exports rank 27th and 33<sup>rd<\/sup> globally, which amounts to under one percent of<br \/>\nworldwide trade.<\/p>\n<p>Kenyan textile and apparel manufacturers face a number of competitive disadvantages.\u00a0 Many of which relate to the cost of doing business.<\/p>\n<p>For apparel firms, labor productivity and time-to market are central to their ability to compete. In terms of labor productivity, many Kenyan firms are at a competitive disadvantage on a cost basis.\u00a0 Sewing operators\u2019 wages in Kenya average US$180 per month compared to US$60 in Ethiopia.<\/p>\n<p>The cost of power, at 14 cents today, puts Kenya on a fundamentally unequal footing to textile firms in other countries that pay considerably less, such as Chinese firms that pay seven cents per kWh, or Ethiopian firms that pay six cents per kWh. This results in power costs accounting for up to 25 percent of Kenyan textile firms\u2019 operating costs.<\/p>\n<p>In addition, some firms are operating with equipment that is over 30 years old.\u00a0 This requires considerably more power than more modern equipment.<\/p>\n<p>A review of apparel firms in Kenya found the following changes: \u2014 the time required to achieve QA\/QC with revisions (design, style, fit) can take up four days, compared to a matter of hours in Bangladesh. \u00a0In a world of fast fashion this seriously hinders the time to market.<\/p>\n<p>Acceptable shipping times require fast and effective trade logistics. In Kenya, it takes longer for a container to get to the US than it does from countries such as, China, India, South Africa, and Vietnam. Costing on average of US$2,000, it is more expensive than all apparel exporting countries, except Ethiopia.<\/p>\n<p>As key competitors in Asia move towards farm-to fashion models (keeping all value-added activities from cotton production to supply chain within a given geography), countries such as Ethiopia and Uganda are trying to follow suit.\u00a0 Similar efforts at integration in Kenya have thus far not yielded positive results.<\/p>\n<p><strong>Conclusion<\/strong><\/p>\n<p>Despite this global shift toward new markets, the US is still the largest apparel market, valued at US$83 billion in 2013.\u00a0 Of this market, Kenya captured 0.38 percent in 2013, while China captured 100 times more at 38 percent.<\/p>\n<p>Kenya has a chance of improving in the apparel sector by increasing its GDP; well at the same time improving infrastructure, social capital, and creating more high paying jobs for citizens.<\/p>\n<p>Kenya has an opportunity to achieve many benefits from improved trading with the US, particularly in the textile and fashion industry.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>US \u2013 Kenya Strategic Partnership Opportunities In 2019, Kenya had a GDP (gross domestic product) of $99 billion, with a 5.8% annual increase from 2018 \u2013 2020, making it the 62nd largest economy in the world. Previously we published an article \u201cThe Growth, Opportunities, and Risks in Ethiopia Production.\u201d \u00a0We continue to explore apparel production [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":111,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[51,42,39,32],"class_list":["post-106","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-trade-agreements","tag-kenya","tag-textile","tag-trade","tag-usa"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>US \u2013 Kenya Opportunities through Strategic Alliances - Manufacturer.com News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.manufacturer.com\/news\/us-kenya-opportunities-through-strategic-alliances\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"US \u2013 Kenya Opportunities through Strategic Alliances - Manufacturer.com News\" \/>\n<meta property=\"og:description\" content=\"US \u2013 Kenya Strategic Partnership Opportunities In 2019, Kenya had a GDP (gross domestic product) of $99 billion, with a 5.8% annual increase from 2018 \u2013 2020, making it the 62nd largest economy in the world. 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