Industry in Kenya

| Overview | Exports | Reforms | Privatization |

The manufacturing sector is a major sector of growth, with its share in GDP having risen from 13 percent in 2002 to 15.7 percent in 2007. Kenya, as the most politically stable country in East Africa, has attracted a large number of investors who now thrive in many sectors of manufacturing.

The manufacturing sector comprises of more than 700 established enterprises and employed over 218,000 people in 2000. Kenya exports mainly to East Africa and COMESA markets. According to the Economic Recovery Strategy for Employment and Wealth Creation Report, the manufacturing sector is a major source of growth, with still high potential of growth and investment.

Some key Kenyan manufacturing sub-sectors include galvanized iron sheets, cement, cigarettes, beer and wheat flour. All of these have increased in production between 2003 and 2005, particularly cement which has always been a good indicator of economic activity.

On the consumer goods side, products manufactured locally include stationery and grooming products.

Exports

According to Kenya's Export Processing Zones Authority (EPZA), in 2004, Africa was the number one recipient of Kenyan exports with 47.5 percent. Europe was next with 27.9 percent, followed by Asia with 15.8 and America with 2.8 percent.

The largest industrial sector contribution to exports in 2005 was garments (74.4 percent), followed by chemicals (7.2 percent) and agro-processing (5.2 percent). Despite the challenges facing the textile trade, Kenya maintained its position as the leading exporter of ready-made garments in East Africa.

The production of Kenyan manufactured goods has improved in the last years, although the growth of exports had slowed due to both internal and external factors, among them the end of textile quotas under the WTO and the increase in competition in this sector.

Reforms

The September 2006 Central Bank of Kenya's (CBK) Monthly Economic Review noted that the 2006/2007 government budget continued to improve tax incentives, simplify licenses and reduce the cost of doing business. Seventeen trading licenses were removed in 2005/2006 and a further 118 licenses eliminated in 2006/2007. There were also steps made to remove duties on selected imported inputs.

Privatization

The Kenya Electricity Generating Company (KenGen) produces approximately 80 percent of the country's electricity and made a strong debut on the stock market in 2006 with its heavily oversubscribed IPO.