Last week the Overseas Development Institute (ODI) published an interesting paper on export-based manufacturing potential in Sub-Saharan Africa (SSA).
The report states that contrary to the common view, production, employment, trade and foreign direct investment in the manufacturing sectors has actually increased over the past decade.
Between 2005 and 2014, manufacturing production more than doubled from $73 billion to $157 billion, growing 3.5 per cent annually in real terms.
Some are higher with Uganda’s manufacturing growing by five per cent over 2010-2014, Zambia’s by six per cent over 2008-2012 and Tanzania’s by more than seven per cent in the last decade.
Further, SSA countries are increasingly exporting to each other (20 per cent of total trade in 2005, 34 per cent in 2014), and there is a great deal of foreign direct investment (FDI) into manufacturing among and between African countries.
The report states that there are exceptional opportunities in garments and textiles, agro-processing/horticulture, automobiles and consumer goods.
However, the share of manufacturing in total employment fell from 10 per cent in 1991 to 8.5 per cent in 2013. This is important to note because although manufacturing is growing, the employment creation ability of the sector seems more muted now.
Perhaps factors such as the growing role of technology in manufacturing is important over the past decade.
The report is very sober in noting the reality the whole of Africa’s share in global manufacturing exports remains less than one per cent, having fallen marginally since 2010.
Yet the good news is that between 2005 and 2014 exports grew at an average annual rate of 10 per cent or higher in the product groups analyzed.
In terms of insights on Kenya, the share of manufacturing exports is higher than Ethiopian and Rwandan. Further, the intra-African trade share of Kenya was high at 67.5 per cent in 2013.
But, as the report notes, this figure ought to be considered in the reality that the coastal countries with large ports, such as Kenya, facilitate regional import and export pushing trade numbers.
Top manufactures from Kenya include apparel, clothing and accessories, perfume, cosmetics and cleansers, iron and steel and inorganic chemicals.
Promising sectors
But compared to the peers, Kenya has a lower share of domestic value-added (DVA) content of gross exports as a share of total exported value added with DVA standing at a lower than average 62 per cent.
[www.businessdailyafrica.com/]