The livelihood of close to 160,000 people who depend on furniture production is at stake as appetite for imports grows among shoppers in Kenya, a joint report of the Industrialisation ministry and the World Bank Group indicates.
The report shows that Kenyans have increasingly shunned local furniture commonly displayed on roadsides, opting instead for imported pieces stocked in malls and supermarket chains.
“Mall retailers source large volumes of standardised pieces, contrary to the piece-by-piece production that local manufacturers typically focus on,” the report said.
“Jua Kali enterprises have limited access to formal retail because their products lack quality assurance, standardisation and volume. This means growing consumer demand is increasingly met by imports in the first place, and formal manufacturers in the second place.”
Multiple new malls are under construction or have opened their doors to the public recently. These include Thika Road Mall, Garden City, Mountain Mall, Greenspan Mall, the Hub (Karen), The Junction, Galleria Mall and the upcoming Sh15.5 billion Two Rivers Mall.
Between 2009 and 2013, furniture imports grew at a rate of almost 24 per cent compared to a 10 per cent growth for the overall furniture market in Kenya.
Today, imports constitute 13 per cent of total domestic furniture sales, with seats and office furniture being particularly favoured.
Data shows that the cost of producing the same items are as high as 40-50 per cent higher in Kenya compared to the main import sources of China and Malaysia.
“Locally manufactured furniture is not cost-competitive vis-à-vis imported furniture. In fact, Kenyan products are only competitive in local and regional markets after import duties (25 per cent) and shipping costs are considered,” the report said.
The local industry is also facing limited skills and the use of outdated technology.
The report adds that all these problems must be addressed for local production to meet the domestic market and for the potential export opportunities.
The supply of timber, which remains erratic, must also be solved by eliminating import licenses.
The World Bank and the ministry also want marketing entities for the Jua Kali sector set up to secure contracts for artisans and ensure quality control.
“This would allow Jua Kali entities to supply formal furniture outlets, manufacture bulk components for formal furniture market outsourcing, access export markets, and compete for government public procurement.”
The value of the local furniture market stood at Sh4.96 billion in sales in 2013.
SOURCE: BUSINESS DAILY