More than 100 apparel manufacturers have temporarily closed shop sending hundreds of workers home in the wake of a squeezed export market mainly the US.
The affected entities, mostly operate under Export Processing Zones (EPZs) in Nairobi, Mombasa, Kisumu and Machakos, the Industrialisation, Trade and Enterprise Development ministry has said.
“The clothing manufacturing industry has been punched hard by Covid-19 devastation as its main export has been the United States of America,” CS Betty Maina said.
Disruption on the US Market, caused by Covid-19, is now threatening gains from the sector, which is among the biggest beneficiaries of duty-free goods exported to the US under the African Growth and Opportunity Act (Agoa).
The Economic Survey 2020 shows EPZ garment and apparel sub-sector under Agoa reported growths in 2019, with the value of exports increasing by 10.6 per cent to Sh46 billion from Sh41.6 billion in 2018.
“Similarly, capital investment expanded by 3.3 per cent to Sh6.7 billion in 2019,” the Kenya National Bureau of Statistics notes.
Direct employment rose by 7.0 per cent to 49,489 persons in 2019.
CS Maina who appeared before the Senate Committee on Tourism, Trade and Industrialisation, chaired by Wajir senator Abdullahi Ali, on Wednesday said the country has lost six weeks of export opportunity for apparel to the US.
A few have however remained afloat, the CS said, and have turned to the production of face masks and other Covid-19 Personal Protective Equipment (PPEs), as exports declined.
The manufacturing sector, one of the Big Four Agenda pillars and critical for the country’s economic growth and development, remains among those affected by Covid.
At least 30,000 direct jobs had been lost in the sector by June, data by the Kenya Private Sector Alliance (Kepsa) indicates, with more than 5.9 million jobs being affected across the economy since the first case of Covid-19 was reported in March.
Manufacturing contributed about 7.7 per cent to Kenya’s GDP in 2019.
Other sectors hard hit by the Covid-19 impact include tourism and hospitality, public transport, construction, real estate and trade.
To support local production and sustain industries, the Industrialisation Ministry on July 8, identified and gazetted a list of 334 locally manufactured goods for preferential procurement by state agencies.
The list cuts across the sectors of pharmaceuticals and medicine, metal and allied, automotive accessories, paper and paper board, timber, wood and furniture, building, mining and construction.
Others are food and beverages, leather and footwear, textile and apparel, plastic and rubber, chemical and allied, energy, electrical and electronics.
“The more we support the locally manufactured goods the more we expand the economy,” CS Maina said.
Data compiled by Kepsa and shared with the government indicates at least 5,991,768 direct and indirect jobs have either been lost or workers sent home on unpaid leave as companies and businesses mitigate the effects of the virus.
This is sevenfold the 846,300 new jobs created last year as per the Economic Survey 2020.
Some jobs have however been created in the ICT the sector; with educational technology that combines the use of computer hardware, software, and educational theory and practice to facilitate learning, creating a huge area of potential growth.