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Manufacturing Firms In Kenya Moving To Ethiopia, Egypt Over High Cost Of Production

[PHOTO/ COURTESY]

The Kenya manufacturing industry is at stake, even as firms find the cost of doing business stifling in the country.

Most manufacturing firms are said to have shifted to neighbouring Ethiopia, citing high cost of electricity.

Among those severely hit by the rates are glass manufacturers, with one of them set to shift to Addis Ababa by November this year. This will leave only one glass manufacturer in the country, which might not survive.

Most glass consumers have opted to import cheaper glass from Egypt, hence posing a threat to local manufacturers who are forced to hike prices to cater for the cost of production.

In Ethiopia, a kilowatt of electricity for industrial use is estimated to cost Ksh4, while in Kenya it costs Ksh21.

The company shifting base, which is yet to issue an official statement, pays approximately Ksh300,000 per month for electricity.

Between August and December last year, 499 40-foot containers with empty bottles entered the country through Mombasa port, a signal that glass bottle consumers were shying away from local manufacturers.

Read: The Chandarians Lose Ksh20 Billion Claim In Squatter Squabble

Reports indicate that between July and December last year, Coca Cola Company – through Almasi, Equator and Nairobi Bottlers – and East African Breweries through UDV (Kenya) Limited imported 288 40-foot containers from Misr Glass Manufacturing Company, an Egyptian firm.

The cost of production has notonly hit the glass industry, but also other sectors.

In 2016, Yana Tyres manufacturer Sameer Africa closed its Kenya plant as a result of competition from cheaper brands from China and India.

Eveready battery manufacturer also closed their Nakuru plant and shifted to Egypt in 2014 citing high cost of production.

The same year Cadbury Kenya closed its manufacturing plant and relocated to Egypt, with the same reasons. The company now exports its products to Kenya.

Reports by the Standard also indicate that another biscuit manufacturer is headed to Ethiopia on the same account.

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Francis Muli

Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. He believes in unearthing societal rots that have been hidden from the public eye. He has also carved himself a niche in writing business stories. He has worked for various organisations including Kenya Television Service, Business Today among others. Follow him on Twitter @FmuliKE.

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