The extent of the impact of COVID-19 on Kenyan manufacturing

The COVID-19 pandemic has brought unprecedented challenges to the manufacturing sector in Kenya, with a study revealing that 79% of manufacturers in the country are currently experiencing cash flow constraints. Job Wanjohi, Head of Policy at the Kenya Association of Manufacturers, discussed the implications of these findings in a recent interview with CNBC Africa. The study also highlighted a significant reduction in both casual laborers and permanent workers, with 40% of casual laborers and 17% of permanent workers being let go by manufacturing companies in response to the pandemic. Wanjohi emphasized the importance of retaining the workforce to navigate the 'new normal' brought about by the prolonged duration of the pandemic. He noted that companies, especially those in essential sectors, are facing challenges due to constraints in logistics and supplies, which ultimately impact the number of jobs that can be retained. The situation has led manufacturers to focus on retaining cashiers and permanent workers, with a particular emphasis on the challenges faced by casual laborers who typically work on a temporary basis. The impact of COVID-19 on the manufacturing supply chain has been significant, with 80% of raw materials being imported from countries like China and India. The disruptions in the global supply chain have led to increased importation costs and forced manufacturers to consider diversifying their sourcing strategies. Challenges in inspecting agencies at ports of exit, reduced docking of ships at the Port of Mombasa, and delays in cargo consolidation have added to the difficulties faced by manufacturers. Wanjohi highlighted the need for government intervention to address these challenges, including increasing the free period for goods at ports and streamlining processes to reduce delays and costs. Despite efforts by the Kenyan government to support the manufacturing sector through stimulus packages and policy interventions, Wanjohi expressed concerns about the implementation and accessibility of these measures. He emphasized the importance of translating policy announcements into tangible benefits for manufacturers on the ground. Regarding the government's target of raising the contribution of manufacturing to 15% of GDP by 2022, Wanjohi acknowledged the challenges posed by the pandemic but remained hopeful about the sector's potential for growth. He noted a decline in the GDP contribution from manufacturing in recent years but highlighted an increase in real-time value addition. While the target may be ambitious given the current circumstances, Wanjohi expressed confidence in the resilience of the manufacturing sector and its ability to make a positive impact in the future.