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Published Sunday, September 9, 2018 22:00

By Constant Munda

 

The labour-intensive manufacturing sector posted the highest growth in loan defaults in the first three months of the year, Central Bank of Kenya (CBK) report shows, reflecting poorly on a pillar of President Uhuru Kenyatta’s Big Four plan.

Non-performing loans (NPLs) in the sector rose by Sh6.6 billion to Sh46.2 billion in March from Sh39.6 billion in December 2017, the CBK said in a report released last week.

Loans to the sector remained flat, growing 0.35 per cent to Sh310.5 billion, the data in quarterly economic review shows.

“The manufacturing sector registered the highest increase in NPLs, by Sh6.4 billion, due to slow down in business, which led to delay in loan repayments,” says the report.

The manufacturing sector’s contribution to national wealth — gross domestic product (GDP) — has been stagnant at about 10 per cent for more than two decades but started declining in the last two years.

The sector’s contribution to the GDP fell to 8.4 per cent in 2017 from 9.2 per cent the year before due to what industrialists claim is “high cost” of production at about 12 per cent above the global benchmark.

Mr Kenyatta is banking on modernisation and building of new factories to help grow the sector’s share of the national wealth to 15 per cent, thereby helping create 800,000 new decent jobs for youth by 2022.

The plan, under the manufacturing pillar, is to create an additional 1,000 small- and medium-sized factories in sub-sectors such as agro-processing, leather, textiles and fish-processing.

Kenya Association of Manufacturing has warned taxes, levies and electricity costs were strangling growth in the sector. Read More

 

Source: Business Daily