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KENYATEXTILE AND CLOTHING VALUE CHAIN ROADMAP2016-2020

TEXTILE & CLOTHING VALUE CHAIN ROADMAP OF KENYA

This value chain roadmap was developed on the basis of the process, methodology and technical assistance of the International Trade Centre ( ITC ). The views expressed herein do not reflect the official opinion of ITC. Mention of firms, products and product brands does not imply the endorsement of ITC. This document has not been formally edited by ITC.

The value chain roadmap was elaborated within the framework of ITC’s SITA project, a South-South trade and investment initiative that aims to improve the competitiveness of select value chains through the provisions of partnerships from institutions and business from India. SITA is funded by the U.K. Department of International Development ( DFID ).

ITC is the joint agency of the World Trade Organization and the United Nations. As part of ITC’s mandate of fostering sustainable development through increased trade opportunities, the Export Strategy section offers a suite of trade-related strategy solutions to maximize the development payoffs from trade. ITC-facilitated trade development strategies and roadmaps are oriented to the trade objectives of a country or region and can be tailored to high-level economic goals, specific development targets or particular sectors, allowing policymakers to choose their preferred level of engagement.

The International Trade Centre ( ITC )

Street address : ITC, 54-56, rue de Montbrillant, 1202 Geneva, SwitzerlandPostal address : ITC Palais des Nations 1211 Geneva, SwitzerlandTelephone : + 41- 22 730 0111Postal address : ITC, Palais des Nations, 1211 Geneva, SwitzerlandEmail : [email protected] : http :// www.intracen.org

Layout: Jesús Alés – www.sputnix.es

v

ACKNOWLEDGMENTS

This value chain roadmap was elaborated as a component of the ITC Supporting Indian Trade and Investment in Africa ( SITA ) project, a south-south trade and in-vestment initiative that aims to improve the competitiveness of select value chains through the provision of partnerships by institutions and businesses from India. SITA is funded by the United Kingdom Department for International Development ( DFID ).

The formulation of the value chain roadmap was led by the Ministry of Industrialization and Enterprise Development ( MoIED ) with the technical assistance of ITC. This document represents the ambitions of the private and public sector stakeholders for the development of the sector. Stakeholders’ commitment and comprehensive collaboration have helped build consensus around a common vision that reflects the realities and limitations of the private sector, as well as of policymakers and trade-related institutions.

The document benefited particularly from the inputs and guidance provided by the members of the sector team.

Name Organization

� Mr. Rajeev Arora Ministry of Industrialisation and Enterprise Development

� Mr. Joseph Nyagari African Cotton & Textile Industries Federation

� Prof. Githiri Mwangi Jomo Kenyatta University of Agriculture & Technology

� Ms. Alice Waithaka Kenya Industrial Research and Development Institute

� Mr. Thomas Puthoor Kapric Apparels EPZ Ltd � Prof. Dorothy McCormick University of Nairobi � Ms. Lucie Njoroge Association of Fashion Designers ( AFAD ) � Mr. Joseph Wairiuko Kenya Association of Manufacturers � Ms. Mary Nyayieka Technical University of Kenya � Ms. Lucy Wambugu Technology Development Centre � Mr. Sargar Alpha Knits Limited � Ms. Margaret Waithaka Export Processing Zones Authority � Mr. Herman Bigham Tosheka Textiles � Mr. Thomas Puthoor ( Mombasa ) Kapric Apparels Ltd � Amb. Dr. Joseph K. Kiplagat Ministry of Industrialization and Enterprise

Development � Ms. Rose Mwathi Handloom Weavers Marketing Cooperative

Society � Prof Josphat Igadwa Mwasiagi

( Eldoret ) Moi University

Technical support and guidance from ITC was rendered through Eric Buchot, Alexandra Golovko, Olivier Marty, Hanna Bucher, Varun Vaid, Robert Kafafian, Carla Vaca and Carlos Griffin. Nzuki Waita provided valuable support as the national SITA coordinator.

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CONTENTS

Acknowledgments v

CONTENTS vi

EXECUTIVE SUMMARY XII

VALUE CHAIN ROADMAP ILLUSTRATION XIV

GLOBAL TRENDS 2025– LIVING THROUGH A TRANSFORMATIVE PERIOD 1

KENYA’S T&C SECTOR IS AT A CROSSROADS 7

THE VALUE CHAIN IS STUNTED BY LIMITED INTEGRATION AND SUBOPTIMAL VALUE ADDITION 11

STRATEGIC ISSUES AND COMPETITIVE CONSTRAINTS 21

Supply side issues 23

Business environment issues 28

Market entry issues 32

Socio-economic and environment issues 33

STRATEGIC IMPLICATIONS FOR THE VALUE CHAIN ROADMAP 34

THE WAY FORWARD 35

THE STRATEGIC OBJECTIVES 35

LEVERAGING MARKET OPPORTUNITIES 39

FDI IS THE KEY TO USHERING IN A NEW ERA OF GROWTH 40

FUTURE VALUE CHAIN 43

I. Development of the textile production segment 45

II. Further development of EPZs and establishment of textile cities to facilitate access to utilities 45

III. Development of the garment production segment and integration with the textile segment 46

IV. Enhanced support services, particularly in the areas of TVET, sector coordination, finance, Customs and logistics� 46

MOVING TO ACTION 47

VALUE CHAIN ROADMAP PLAN OF ACTION 49

APPENDICES 69

REFERENCES 79

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FIGURES

Figure 1 : Trend towards greater value addition 2

Figure 2 : Production trends in the garment sector 9

Figure 3 : Kenya’s T&C value chain 10

Figure 4 : Kenyan cotton production 1940 / 41-2010 / 11 11

Figure 5 : Investment and exports in the EPZ garment sector ( 2008-2014 ) ( US $ millions ) 16

Figure 6 : Kenya’s T&C export trends, by segment, 2004-2013 ( US $ thousands ) 18

Figure 7 : Kenyan exports of clothing to selected markets, 2003-2013 ( US $ thousands ) 19

Figure 8 : Kenyan textiles exports by region 2004-2013 ( US $ thousands ) 19

Figure 9 : Kenya’s apparel export growth ambitions 38

Figure 10 : Kenya’s T&C future value chain diagram 44

APPENDICESFigure 1: Decomposition of Kenya’s T&C export growth, 2004–2013 71

Figure 2 : Kenya T&C, Normalized Revealed Comparative Advantage ( NRCA ) ANNEX 72

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TABLES

Table 1 : Top exporters of clothing, 2003-2013 4

Table 2 : Top exporters of textiles, 2003-2013 4

Table 3 : Comparison of costs and competitive factors between Kenya and major T&C competitors 8

APPENDICESTable 1: International business rankings of Kenya and its competitors 70

Table 2 : Kenya’s exported garments with value equal to or above US $ 10 million in 2013 ( US $ thousands ) 72

Table 3 : Kenya’s textiles exports >= US $ 0.1 million in at least two years between 2004 and 2013 73

Table 4: Time and cost to trade across borders in Kenya, Ethiopia and the United Republic of Tanzania 74

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ACRONYMS

The following abbreviations are used :

ACTIF African Cotton and Textiles Industries Federation

AGOA African Growth and Opportunity ActCAGR Compound Annual Growth RateCMT Cut, Make & TrimCOMESA Common Market for Eastern and Southern

AfricaCSR Corporate Social ResponsibilityEAC East African CommunityEBAP Export Business Accelerator ProgrammeEPC Export Promotion CouncilEPZ Export Processing ZoneEPZA Export Processing Zones AuthorityEU European UnionFDI Foreign Direct InvestmentFOB Free on BoardGDS Global Development SolutionsHS Harmonized SystemICAC International Cotton Advisory CommitteeIIHT Indian Institute of Hardware TechnologyIL&FS Infrastructure Leasing and Financial

Services ( India )ISO International Organization for

StandardizationITC International Trade CentreKAM Kenya Association of ManufacturersKAMEA Kenya Apparel Manufacturers and

Exporters AssociationKEBS Kenya Bureau of StandardsKenInvest Kenya Investment AuthorityKNCCI Kenya National Chamber of Commerce

and IndustryKRA Kenya Revenue AuthorityKTTI Kenya Textile Training InstitutekWh Kilowatt-hourMFA Multi-Fibre Arrangement

MLS-SCM Modular Learning System – Supply Chain Management

MoEST Ministry of Education, Science and Technology

MoIED Ministry of Industrialization and Enterprise Development

MoU Memorandum of UnderstandingMSEA Micro and Small Enterprise AuthorityMSME Micro, Small and Medium-Sized EnterpriseNRCA Normalized Revealed Comparative

AdvantageNID National Institute of Design ( India )NIFT National Institute of Fashion Technology

( India )NITA National Industrial Training AuthorityPoA Plan of ActionREACH Registration, Evaluation, Authorization

and Restriction of ChemicalsSADC Southern African Development CommunitySITA Supporting Indian Trade and Investment

in AfricaSME Small and Medium-Sized EnterpriseT&C Textile & ClothingTISI Trade and Investment Support InstitutionTMEA TradeMark East AfricaTNC Transnational CorporationTVET Technical and Vocational Education

and TrainingTVETA Technical and Vocational Education

and Training AuthorityUAE United Arab EmiratesUNIDO United Nations Industrial Development

OrganizationVAT Value Added TaxWEAMACO Handloom Weavers’ Marketing Cooperative

SocietyWTO World Trade Organization

x

FOREWORDS

HON. ADAN MOHAMED CABINET SECRETARY

– MINISTRY OF INDUSTRY INVESTMENT & TRADE ( MOIIT)

At this important point in time for Kenya’s Textile and Clothing ( T&C ) sector, the Ministry of Industrialization and Enterprise Development ( MoIED ) takes particular pleasure in welcoming this Strategy Roadmap and its detailed Plan of Action.

After 10 years of consistent growth, thanks in part to the African Growth and Opportunity Act ( AGOA ), Kenya’s T&C sector stands at a crossroads. In order to remain competitive, the sector must move gradually from contract manufac-turing and begin to provide fully integrated services including input sourcing, value-added product development and design. The sector is also well aware that Kenya has to maintain its efforts in attracting foreign direct investment ( FDI ), specifically for benefiting from technology and knowledge transfer, updating inventory management and enterprise resource systems.

The T&C Roadmap has exceeded our expectations, not only in the successful mobilization of sector stakeholders, but also in facilitating extensive and fruitful discussions between public and private sectors. Some 65 representatives at-tended two successive consultations, allowing for a realistic evaluation of the challenges and opportunities the sector currently faces and extensive debates as to define the best way forward. The dedicated work of sector stakeholders outlines in this Roadmap a five-year Plan of Action to upgrade skills and improve the business environment, a Plan that the Ministry is proudly endorsing and into Kenya’s Industrial Strategy, where T&C comprises one of the priority sectors.

The T&C road map defined Kenya’s thread to achieve export success building around four strategic objectives : 1. Maximize productivity and uphold quality requirements through skills development ; 2. Improve the business environment to further support the development of the T&C industry ; 3. Expand the benefits of investment throughout the T&C value chain and 4. Enable market penetration and product development through trade intelligence.

In order to maintain the momentum sparked by the consultations, the Ministry is taking steps towards collaborating with the Apex Body for Textiles and Clothing established under the Kenya Association of Manufacturers ( KAM ) and support the implementation of the operational objectives defined in the Plan of Action. Moreover, the Ministry is looking forward to the imminent operationalization of Kenya’s T&C Apex body as a formalization of the public-private discussions underpinning the Roadmap.

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FOREWORDS

MR. JASWINDER BEDI CHAIRMAN, AFRICAN COTTON & TEXTILE

INDUSTRIES FEDERATION ( ACTIF ) VICE PRESIDENT, INTERNATIONAL TEXTILE

MANUFACTURERS FEDERATION ( ITMF )

A Great Oppor tunity for the Textile & Clothing Sectors in EAC

The African Cotton and Textile Industries Federation ( ACTIF’s ) mission is to pro-mote and facilitate both international and inter-regional trade and investment of the cotton value chain in Africa.

South-south trade and investment opportunities have been expanding rapidly in recent years. South-south trade constituted just 10 % of world trade 20 years ago and rising to almost 1 / 3 today. India is one major player driving this trend, and is creating new opportunities in East African countries for trade and investment-led economic growth and job creation.

With global FDI in the Textile & Clothing market estimated to be worth US $ 24 billion in 2013, a 100 % increase from 2012 and with rising costs and growing do-mestic consumption in emerging Asia, Indian businesses are increasingly looking at new destinations like East Africa for investment and trade opportunities.

The Kenya textile and clothing value chain roadmap, complete with a detailed 5 year action plan is the product of extensive public-private sector stakeholders’ consultations. Along with the technical guidance of ITC, the roadmap offers the best chance to facilitate business transactions, technology transfer and knowl-edge exchange between India and East Africa.

In addition to Kenya, similar endeavours were conducted across the East African region covering Ethiopia, Uganda, and Tanzania. There is no doubt that the East African region can only grow its textile and clothing industries by strengthening its competitive advantage on all fronts including product, quality, productivity and competitiveness.

ACTIF will continue to work closely with ITC along with all key stakeholders in the region to ensure seamless implementation of the roadmap, cross sharing of information and leverage on strategic linkages with India – a great power house in the textile and clothing business.

Photo: Carmina Campus Production Kenya (c) Louis Nderi & ITC Ethical Fashion Initiative (11).jpg

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EXECUTIVE SUMMARY

The goal of Kenya’s

The goal of Kenya’s Textile and Clothing ( T&C ) Value Chain Roadmap is to set the sector on the course of strategic development by addressing constraints in a comprehensive manner and defining concrete opportunities that can be real-ized through the specific steps detailed in its Plan of Action ( PoA ). Kenya’s current model has performed well, yielding strong economic and social returns. However, a progressive shift to a new strategic model is required to remain competi-tive. The industry must unite and evolve in order to leapfrog into higher growth and value addition.

The sector’s strategic orientation should follow a two-pronged approach. Firstly, Kenya has to build on its assembly and cut, make and trim ( CMT ) prowess. Secondly, the sector

has to move up the global value chain, shifting from basic items to superior products in order to capture greater value and penetrate premium market segments. The PoA responds to these two visions by setting four strategic objectives to support their implementation :

1. Maximize productivity and uphold quality requirements through skills development.

2. Improve the business environment to further support the development of the T&C industry.

3. Expand the benefits of investment throughout the T&C value chain.

4. Enable market penetration and product development through trade intelligence.

The global T&C sector has been in a constant state of change since the turn of the century, characterized by a continual evolution in the location of both the most significant producing and exporting countries and regions as well as the main end markets. Demand surged in developing countries, production was consolidated in Asia, and new countries emerged as fast-growing exporters of T&C products. Buyers are looking to shift more activities to their suppliers while at the same time demanding larger volumes and quicker turnaround times ; consumers are pres-suring the industry to adhere to corporate social responsibility ( CSR ) standards ; information and communications technology ( ICT ) is becoming critical to modern production and inventory management ; and man-made fibres have become the sector’s preferred material.

Kenya’s T&C sector enjoyed strong growth over the past 10 years, spurred largely by the market access provided under the American Growth and Opportunity Act ( AGOA ). The sector’s advances were supported by a number of internal factors including internationally competitive wages, a supply of skilled workers in garment making, relatively high worker retention, significant water supplies, decreases in electricity costs, recent infrastructure investments, improved port efficiency and relative proximity to Europe. Kenya also benefited from growing concerns about CSR, which caused Western buyers to look for new suppliers outside low-cost Asia.


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Nevertheless, Kenya has been unable to keep pace with the global industry’s dynamism. Despite being active throughout the entire value

chain, meaningful integration has remained elusive. Nearly all the sector’s gains since 2001 have been realized in the apparel

segment, which accounts for nearly 90 % of Kenya’s total T&C exports. The textile subsector remains uncompetitive : limited

investment downstream has led to capacity imbalances and relatively weak productivity and quality in the spin-

ning, weaving and fabric finishing segments. It is telling that 93 % of the garment segment’s textile inputs are imported.

Yet even in the apparel subsector growth has stag-nated and there has been a recent trend towards value attrition : whereas other countries are mov-ing up the value chain, integrating and providing a greater breadth of services to buyers, Kenya has focused increasingly on CMT activities. It is also noteworthy that the vast majority of the sector’s goods are exported to the United States of America. The limited level of market diversification is evidence

that the sector has yet to achieve the levels of pro-ductivity, quality and service provision needed to be

truly competitive.

Kenya’s T&C sector stands at a crossroads. While its current growth model has yielded positive returns, trends

in the global market make it clear that Kenya will be unable to compete sustainably. A new, strategic orientation can follow a

two-pronged approach. Firstly, Kenya can foster its current posi-tion and build on its assembly and CMT offerings through improved

process efficiency, workforce development and the formation of con-ducive policies. In order to remain truly competitive, however – particularly

given the rise of low-cost centres of production such as Ethiopia and Myanmar – Kenya must shift from contract manufacturing and begin to provide fully integrated services including input sourcing, product development and design. Both scenarios will require workforce development, skills acquisition, foreign direct investment ( FDI ), an enhanced policy and business environment, and a strong business association.

This value chain roadmap was the result of extensive consultations with public and private sector stakeholders, leading to unprecedented levels of cooperation among sector operators. Key private sector stakeholders and leading institutions facilitated an exhaustive analysis of the sector. Market-led strategic orientations, prioritized by stakeholders and embedded into a detailed implementation plan, provide a clear roadmap that can be leveraged to address constraints to trade, maximize value addition and support regional integration. In addition, the inclusive approach ensured that all stakeholders were committed to the process and left with a clear understanding of each actor’s role.

The value chain roadmap provides Kenya with a detailed PoA to achieve growth in the sector within the next five years. It is built around four strategic objectives.

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VALUE CHAIN ROADMAP ILLUSTRATION

Export of textile and garmentto increase annually by 25%in 5 years to US$1.5 billion

>100 firms have acquirednew equipment and related

technical capacities

100% of companies complyingwith international standardsrelated to working conditions,

quality management

450 new production linesdeveloped by Kenyan firms

in yarn, textile and apparel production

Improve the business environment support the developmentof the T&C industry

Expand the benefits of investment throughout the T&C value chain

Enable market penetrationand product developmentthrough trade intelligence

Develop specific skillsfor the Handloom sub-sector,designers as well as for MSMEs

1.4

Enhance quality management skills in linewith international standards

1.3

Improve technical and supervisory skills

1.2

Strengthen the sectorcoordination to supportskills development

1.1

Expand and modernizethe financial services

2.4

Improve the legaland regulatory frameworkrelevant to the T&C industry

2.3

Increase the capacity of the por tcommunities to enforce T&Crelated regulation

2.2

Improve compliance asa way to increase productivityand competitiveness

2.1

Enable equipmentupgrading through investment

3.4

Fur ther promote Kenyaas the main FDI destinationfor T&C

3.3

Increase capacity of TISIsto target and attractthe appropriate investments

3.2

Pursue effor tsto establish idealconditions for investors

3.1

Provide assistance to handloomfirms on trade promotion

4.4

Increase firms’ capacityto comply with key markets’requirements

4.3

Expand market accessand promote Kenya’sT&C products

4.2

Ensure timely accessto strategic trade intelligencefor T&C firms

4.1

50 100100

100

50

100

100

100

icons Designed by Freepik

Photo: MIMCO x EFI 2nd collection © Louis Nderi & ITC Ethical Fashion Initiative (59).jpg

[ GLOBAL TRENDS 2025 – LIVING THROUGH A TRANSFORMATIVE PERIOD ]

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GLOBAL TRENDS 2025 – LIVING THROUGH

A TRANSFORMATIVE PERIOD

THE ONLY CONSTANT IS CHANGE

While the global T&C industry has always been a fast-evolv-ing sector, over the past 15 years the structure of sector has been constantly redefined by significant changes. These changes have been characterized by a continual evolution in the location of both the most significant producing and exporting countries and regions as well as the main end markets. While disjointed production was consolidated in Asia and China grew to dominate the market, new players including Viet Nam, Myanmar and Cambodia have emerged as some of the fastest-growing exporters of T&C products. Changing demographics and economic performance, meanwhile, have resulted in a proliferation of demand in new and fast-progressing markets such as South Africa, the Russian Federation, the United Arab Emirates ( UAE ), China and India.

One of the key drivers behind these transformations is the ever-changing policy environment : while the dismantling of the Multi-Fibre Arrangement ( MFA ) facilitated a consolida-tion of production in Asia, the introduction of AGOA catalysed renewed competitiveness in Africa. In turn, the Trans-Pacific Partnership ( should it come to fruition ) will surely redefine the competitive landscape once again and therefore requires continued advocacy with the United States Government by the Ministry of Industrialization and Enterprise Development ( MoIED ) to ensure some safeguards are established within the Trans-Pacific Partnership mechanism. Changes in the policy environment have been complemented by techno-logical evolutions that have stimulated remarkable gains in productivity, product diversity and quality, thereby allowing polyester and blended fabrics to become preferred materials. Together with advancements in logistics and supply chain management that allow for greater and more flexible speed to market, these technical improvements have contributed to the increasingly rapid rotation of collections.

For now, Western countries have retained much of the higher value added portions of the value chain, including research, design, marketing and financial services. More tangible ac-tivities, which are frequently labour intensive, continue to be

concentrated in developing markets. Yet even this has been subject to the pressures of change in recent years. Given the low profit margins in the manufacturing segment of the value chain, one of the few ways for retailers to reduce costs, and for producers to add more value, is to shift more of the design and development work to the manufacturing country. This has stimulated a shift in developing countries, where suppliers who were once engaged only in CMT activities are being entrusted with larger portions of the value chain and increased responsibility in delivering Landed Duty Paid orders, which may include form development of styles to final delivery in the buyers’ stores.

[ KENYA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]

2

Figure 1 : Trend towards greater value addition

Cut, Makeand Trim (CMT)

Assembly, payment base on a processing fee and fabric sourced and owned by the buyer.

The contractor is trusted with the whole manufacturing process (from sourcing fabric to delivering to the retail outlet (FOB).

Includes design and whole production of a garment and may include distribution to the final customer.

Coordinate supply chain, contract manufacturing or invest in production in foreign markets.

Post production capabilities, product dev., the focus is on branding, marketing, retailing and consumer research.

OriginalEquipmentManufacturing(OEM)

Original DesignManufacturing(ODM)

Full PackegeService Provider

Original BrandManufacturing(OBM)

Source : Based on Gereffi, G. and Frederick, S. ( 2010 ) ; and Staritz, Cornelia ( 2012 ).

Large international retailers ( transnational corporations ( TNCs ) ) have grown to dominate the T&C value chain. They have gained significant influence over the choice of pro-duction locations and enjoy considerable bargaining power. These companies, which are generally based in the United States, European Union ( EU ) and Japan, purchase large quantities of goods. Following the elimination of the MFA, they have been consolidating production in fewer and fewer countries. Where they exist, foreign affiliates of TNCs often account for the majority of T&C exports from developing countries.

While acceptable price levels are a condition that poten-tial suppliers must meet, the world’s leading buyers consider a number of fast-evolving criteria to be key success factors, including :

� Quality production and assurance ( product testing ) � Timely delivery � Competitive pricing � Product development capacities � Social compliance ( health and safety, workers’ rights,

environment ) � Adequate distribution capacities � Vendor-managed inventory capacities.1

From a macro perspective, buyers often take care to miti-gate the following risks :

� Inflation � Poor energy and water provision � Wage increases � Unstable currency exchange rates � Weak rule of law � Barriers to trade � Political instability � Weak intellectual property protection � Difficult physical access to markets and unattractive

credit environments.

1.– Price Waterhouse Coopers ( 2008 ). Global Sourcing : Shifting Strategies.

This highlights the role of the Government in ensuring a stable and attractive overall business environment. More specific to the T&C sector, suppliers such as Kenya wishing to secure their place in the global value chain must be able to adapt to the following trends and market requirements.2

Volumes

Another important trend is the increased volumes required by retailers. Retailers are growing in size and they require significant quantities of product. While these volumes used to be sourced from a variety of locations during the MFA era, retailers want to streamline their production by reduc-ing the number of countries / suppliers that they source from. Suppliers must therefore be able to meet buyer volume requirements, either alone or in partnership through con-solidation, if they are to enter some of the most attractive supply chains.

Speed to market

Fast fashion brands such as Zara have revolutionized sup-ply chain management. Point-of-sale technologies now al-low retailers to analyse trends. This analysis is then used to quickly produce and stock goods according to the latest market dynamics. This has resulted in fast turnover where products have short life spans and suppliers need the ca-pacity to respond to variable orders. Upstream and down-stream service providers ( and material suppliers ) must also support clothing manufactures in their efforts to turn around and deliver finished products in such a short time frame.

Consumer pressures

Consumers have become increasingly concerned about the treatment of workers in the T&C sector. This has put pressure

2.– Information for Development Programme ( 2008 ). The Global Textile and Garments Industry : The Role of Information and Communication Technologies ( ICTs ) in Exploiting the Value Chain.

[ GLOBAL TRENDS 2025– LIVING THROUGH A TRANSFORMATIVE PERIOD ]

3

on the industry to begin adhering to CSR programmes and Codes of Conduct. These schemes, which also cover sup-pliers and subcontractors, require that firms be audited in order to ensure compliance with various health, safety and environmental issues. While this can result in higher costs, better social and working conditions may also lead to in-creases in productivity, thereby fostering increased profit-ability. Some buyers based in the United States and the EU have begun excluding suppliers that do not meet such criteria.

Man-made materials

The past decade has seen a marked shift away from natu-ral fibres towards man-made materials. In 2013 man-made fibres accounted for 70 % of fibre production worldwide, compared with just 55.5 %3 in 2007.4 Spurred in part by technological advancements that allowed for enhanced productivity, increased quality, lower costs and greater diversity, a turning point came with the financial crisis of 2008. At this time, retailers turned to synthetic materials as a means of cutting costs in an effort to survive.5 The trend was reinforced when cotton prices spiked considerably in 2011. Consumers have also developed a preference for syn-thetic or blended materials. In light of these trends, it is of the utmost importance that Kenya expands its multi-fibre expertise, particularly given that Kenya enjoys a higher pref-

3.– Food and Agriculture Organization of the United Nations and International Cotton Advisory Committee ( 2013 ). World Apparel Fiber Consumption Survey. Washington D.C. : ICAC. 4.– Leonie Barrie ( 2015 ). Man-made fibres climb to 70 % of total production. Just-Style, 14 January. Available from http : / / www.just-style.com / news / man- made-fibres-climb-to-70-of-total-production_id124084.aspx.5.– Alexandra Wexler ( 2014 ). Cotton’s crown threatened by man-made fibers. The Wall Street Journal, 25 April. Available from http : / / www.wsj.com / articles / SB10001424052702304049904579516282130809074.

erential margin for man-made fibres under AGOA. This will require improved sourcing practices or the development of a parallel chemical industry for the production of synthetic materials.

Lean retailing

Retailers increasingly want to focus on sales while trans-ferring all other supply chain activities to their suppliers. Retailers are also beginning to engage more directly with producers, removing the middlemen of the past. As a result, they are requiring suppliers to act as ‘full package’ service providers. Suppliers are expected to provide more services than before, from the sourcing of materials to logistics and delivery. While the ability to provide such full package ser-vices requires integration and significant management skills, it does present an opportunity for low-cost manufacturers to capture greater value.

ICT

The growing role of ICT is a direct response to some of the other trends. Disaggregated production and fast fashion both require efficient and timely information sharing. ICT also allows suppliers to vertically integrate and provide full package services to lean retailers. Technologies such as computer-aided design are required for modern produc-tion. ICT can aid the communication between supplier and buyer, allowing for the automated checking of orders, stocks and prices, while enterprise resource planning integrates orders, sourcing, manufacturing, account handling and lo-gistics, thereby helping companies optimize operations. In addition, modern ICT tools can allow manufacturers to track units throughout the production line in real time, facilitating more effective monitoring.

Box 1 : Key takeaways for the Kenyan T&C sector

In light of these trends, Kenyan stakeholders must build capacities in a strategic manner so that their enterprises are enabled to meet the rig-orous demands of today’s buyers. Growth must be consumer-oriented and ICT integration will be crucial. To this end, efforts must be made to attract FDI to specific domains that require investment, technology and knowledge transfer, including online inventory management and enterprise resource planning. While technical skills must be enhanced in order to allow for greater productivity, improved managerial skills will be required to engage in complex, full package service delivery.

In addition, stakeholders must increase coordination so that they can supply adequate volume through consolidation and advocate for necessary policy support. It is particularly important that enterprises improve compliance with CSR principles and standards throughout the value chain so as to improve productivity and meet the requirements of an increasingly large portion of buyers. The Government meanwhile must address policy constraints ( particularly on CSR issues and electricity provision ), facilitate the upgrading of infrastructure and remove other trade hurdles.


4

RESILIENT TRADE IN THE FACE OF GLOBAL UNCERTAINTY

Global T&C exports have grown by 6 % annually since the turn of the century, despite the 2008 financial crisis. Indeed, exports of clothing fell by only 12 % in 2009, whereas total exports declined by 23 %. This resilience is one of the rea-sons that the sector continues to attract investment. The steady demand for T&C products makes it a relatively stable source of foreign exchange earnings for many countries.

Valued at US $ 781 billion in 2013, sectoral exports cur-rently account for 4 % of international trade. The most im-portant product categories include knitted apparel ( US $ 192 billion ), woven apparel ( US $ 187 billion ), cotton fibre and tex-tiles ( US $ 55 billion ), made-ups ( US $ 50 billion ), man-made filaments and textiles ( US $ 38 billion ), and man-made staple fibre and textiles ( US $ 36 billion ).

Apparel accounts for 57 % of the global T&C sector. The largest markets for clothing imports are the United States ( 21.2 % ), Germany ( 9 % ), Japan ( 8 % ) and the United Kingdom of Great Britain and Northern Ireland ( 6.3 % ). A number of markets, including the Russian Federation, the UAE, Viet Nam, Korea, Australia and China, have been growing at a very fast pace. The top 10 markets account for 65.5 % of total imports today, down from 77.3 % in 2003, highlighting the growing consumer base in developing and frontier markets.

Clothing exports have concentrated significantly over the past decade : whereas the top 10 exporters accounted for 59 % of global exports in 2003, that share had grown to 73 % in 2013. This period saw China solidify its position as

a market leader, its share of exports having nearly doubled from 20 % in 2003 to 38.8 % today. In addition to China, ex-port growth in Bangladesh, Viet Nam and India has been notable : the former two have gained relative market share with respect to China.

Production has shifted steadily towards Asia. The region now accounts for 65 % of world exports, compared with 32 % in 2004. This shift was stimulated by the dismantling of the MFA, after which producers sought to consolidate production in low-cost locations throughout Asia. In addi-tion, international buyers have been steadily shifting greater responsibility to their suppliers. By moving away from simple CMT, larger portions of the value chain are now concentrat-ed in supplier countries. It should be noted that despite the shift to Asia, a variety of countries still maintain competitive advantages based on factors such as proximity to markets ( for example Turkey to the EU ) or access to specific markets under preferential trade agreements.

Textiles account for the remaining 43 % of sectoral trade. The structure of textile imports has remained fairly static over the last 10 years and the United States and China have continued to be the top two importers. Even so, a number of new markets have begun to grow in importance. These include Viet Nam, whose imports had a CAGR of 18.1 %, Bangladesh ( 15.9 % ), Indonesia ( 22.9 % ), the Russian Federation ( 15.9 % ) and the UAE. Markets meanwhile have become slightly less concentrated : the top 10 importers now account for 46.7 % of the market, down from 53.5 % in 2003.

Table 1 : Top exporters of clothing, 2003-2013 Table 2 : Top exporters of textiles, 2003-2013

No. ExportersExported

value in 2003 ( US $ )

Exported value in 2013 ( US $ )

CAGR * Share ExportersExported

value in 2003 ( US $ )

Exported value in

2013 ( US $ )CAGR Share

1 China 45 757 114 165 044 601 13.7 % 38.8 % China 27 454 487 108 898 007 14.8 % 33.4 %

2 Bangladesh 5 040 792 26 258 818 17.9 % 6.2 % India 6 521 615 19 854 948 11.8 % 6.1 %

3 Italy 15 449 056 21 625 743 3.4 % 5.1 % Germany 13 973 846 16 493 995 1.7 % 5.1 %

4 Viet Nam 3 386 376 18 496 564 18.5 % 4.3 %United States 11 888 902 16 080 252 3.1 % 4.9 %

5 Germany 9 127 940 18 320 287 7.2 % 4.3 % Italy 14 008 743 13 926 994 -0.1 % 4.3 %

6 India 5 916 206 15 702 657 10.3 % 3.7 %Republic of Korea 11 579 132 13 782 165 1.8 % 4.2 %

7 Turkey 9 546 445 14 961 774 4.6 % 3.5 % Turkey 5 430 513 12 560 332 8.7 % 3.9 %

8 Spain 3 384 396 11 065 848 12.6 % 2.6 %Chinese Taipei 10 052 788 10 920 608 0.8 % 3.3 %

9 France 6 580 732 10 079 791 4.4 % 2.4 % Pakistan 5 862 994 9 398 146 4.8 % 2.9 %

10 Belgium 5 167 839 8 678 581 5.3 % 2.0 % Japan 7 139 211 8 209 987 1.4 % 2.5 %

Source : International Trade Centre ( 2015 ). *Compound Annual Growth Rate.

[ GLOBAL TRENDS 2025– LIVING THROUGH A TRANSFORMATIVE PERIOD ]

5

As with apparel, the largest exporter is China, which en-joys a 33.4 % market share. The textile supplier base has also grown more concentrated : the top 10 exporters now account for 70.6 % of total exports, compared with 63 % in 2003. As textile production requires more technology and skill than apparel production, it is generally less flexible. It

requires significant financial resources as well as time, and most developing countries are only engaged in textile pro-duction to a limited extent. Nevertheless a number of such countries, including China, India, Turkey and Viet Nam, have registered considerable growth over the past 10 years.

Box 2 : Room for emerging producers

Trade statistics highlight the fact that the sector continues to favour developing countries with competitive cost structures. It should also be noted that while a significant portion of the market is dominated by the largest exporters, smaller countries have recently succeeded in capturing greater market share. This, in conjunction with the sector’s continued growth even in times of crisis, indicates that there is ample

space for exporters with attractive cost structures, such as Kenya, to expand their participation.

Today, Africa contributes only 2.3 % to global apparel exports, down from 3.7 % at the turn of the century. Even so, renewed interest in Africa may present Kenya with an opportunity to capitalize on its competitors’ diminishing advantages.

THE DECADE AHEAD

Experts indicate that these market trends are likely to con-tinue, helping to shape the sector throughout the next dec-ade. The apparel market is expected to grow to US $ 2.1 trillion in 2025, up from US $ 1.1 trillion today. This will be driven largely by the growing consumption of T&C products in developing countries. Per capita spending on clothing will likely grow at the fastest pace in India ( 11 % ), China ( 10 % ), the Russian Federation ( 8 % ) and Brazil ( 4 % ). It should be noted that despite slower growth in developed countries, per capita spending on clothing will still be higher in the West. Nevertheless, the quicker per capita expansion, together with strong population growth, will help the developing world overtake the West as the main market for T&C products.6

6.– Wazir Management Consultants. Investment Opportunity for Textile Machinery Manufacturing in India : Tapping a US $ 75 billion textile machinery market by 2020.

The two fastest-growing markets will be China and India. This growth will be supported by the following trends in the two countries :

� Economic expansion and growth of disposable income � Population growth � Growing preference among Chinese consumers to buy

for fashion rather than utility � Increased exposure to organized retail and branded

clothing in India � Expansion of domestic brands � Growth of online retail.

Box 3 : Changing dynamics in China will lead to a US $ 100 billion trade gap

While China currently accounts for nearly 35 % of the sector’s total exports, its economy is at a crossroads in which private consumption will begin to overtake investment as the main driver of economic growth. This shift will likely result in structural changes to export-oriented sectors such as T&C.

As domestic demand for apparel grows, Chinese firms will become more oriented towards the local market, thereby reducing their ex-ports. In addition, supply-side shifts are expected to reduce garment

production. As a result of increasing costs and a greater focus on service providers, T&C output growth is expected to drop from 7 % to a more moderated 5 %–6 % per year. The combination of these demand-and supply-side shifts will result in a global trade gap : worldwide clothing exports are expected to grow to US $ 1,700 billion by 2025 ( CAGR of 6.5 % ), whereas China’s T&C exports will only grow by a CAGR of 6 %. The net result of this lag will be a US $ 108 billion market gap that represents an opportunity for other countries wishing to increase their share of the global market.

Source : Wazir Management Consultants ( 2013 )


6

By 2025, China will account for 27 % of the total market for apparel products and the combined market size of China and India will surpass that of the EU and the United States.

Experts also note that the sector will require significant investment in the coming years. The T&C sector is relatively capital intensive : the investment to turnover ratio is 1 :1 for spinning, 1 :1.5 for fabric production and 1 :4 for clothing production. As such, an investment of US $ 85 million ( land, building, equipment and other fixed assets ) is required to produce a US $ 100 million value of production at the gar-ment stage of the value chain. Enterprises must make in-vestments in order to both increase capacity and replace existing machinery. Experts calculate that the growth in

global apparel demand will require an additional US $ 165 billion of value of production by 2025.7 Given the investment turnover ratios, this will require US $ 142 billion of investments throughout the value chain. The replacement / upgrading cost of current equipment is expected to be roughly US $ 210 billion during the same period. The total required investment in the sector is therefore expected to be US $ 350 billion.

7.– Apparel demand is expected to grow by a value of US $ 1 trillion ( from US $ 1.1 trillion toUS $ 2.1 trillion ). Given that this increase will be due to both price and volume growth, and assuming an average of 3 % price inflation, demand will grow by US $ 410 billion ( retail ) or US $ 165 billion ( value of production ). ( Wazir Management Consultants ( 2013 ). The Road to 2025 : 5 Market, Trade, and Investment Trends That Will Define the Course of Textile and Apparel Industry, p. 22. )

Box 4 : Implications for Kenya

The developments in the sector have a number of implications for Kenya as it seeks to secure its place in the global value chain.

• Consumers are putting increased pressure on the T&C sector to improve social responsibility : suppliers are required to comply with CSR.

• The demand for full package services from lean retailers requires suppliers to expand their service offerings and create strategic partnerships with vendors rather than purely transaction-based relationships ; this presents an opportunity for low-cost manu-factures to capture greater value.

• Firms must increase volume capacity, either internally or through consolidation / partnership agreements, to meet large and often unpredictable buyer requirements.

• Firms must increase their ability to quickly supply the market in response to fast fashion demands.

• Companies are highly encouraged to invest in quality, increase their product development competency and develop their multi-fibre expertise.

• Increased management and ICT capacities will be required to satisfy buyer demands.

• So far, Asian countries have emerged as winners in global trade. In the next few years some of them will become important markets as well. China’s increasing focus on the domestic market and value added production will result in multibillion dollar trade op-portunities for suppliers in competing nations. Trade intelligence will be essential to tap into these opportunities.

Photo: Mimco Kenya Visit - (c) Louis Nderi & ITC Ethical Fashion Initiative (5).jpg

[ KENYA’S T&C SECTOR IS AT A CROSSROADS ]

7

KENYA’S T&C SECTOR IS AT A CROSSROADS

A rich history

The historical roots of Kenya’s T&C sector date back to the early 1900s, when cotton cultivation was introduced to the country. It was not until the 1960s, however, that concerted efforts were made to develop the sec-tor. The newly independent Government quick-ly recognized the potential offered by cotton and its affiliated industries and significant measures were introduced through the adoption of the Import Substitution Policy. The goal of this policy was to encourage integration of textile mills with cotton producers. In addition, the Government invested in textile mills. Other interventions included controlling margins throughout the value chain. Moreover, the Government protected the do-mestic textile sector through the application of onerous tariffs. The policy served its intended purpose and the textile industry expanded. By the 1980s it was the most impor-tant manufacturing sector in Kenya: it accounted for roughly 30 % of employ-ment in the manufacturing sector and relied on over 200,000 household farms.

The sector began to decline in the late 1980s with the large-scale introduction of second-hand clothing, or ‘mitumba’. This cloth-ing was sold at low prices and severely undercut those of domestic goods. The decline was further complicated by an influx of cheap imports spurred by the sector’s liberalization in the 1990s. As a result, the average capacity utilization at textile mills throughout the country fell to only 50 %.

Prospects for Kenya’s T&C sector changed dramati-cally, however, at the turn of the century. The catalyst for this change in fortune was the adoption of two trade agree-ments: AGOA and the African, Caribbean and Pacific–EU Cotonou Agreement in 2000. The new market access con-ditions spurred an interest in the Kenyan T&C sector and in the years following the adoption of AGOA both investment and employment jumped significantly.

The past 10 years have witnessed a marked expansion in demand for Kenya’s T&C products : T&C exports now account for 7 % of Kenya’s total exports ( 2013 ), compared with only 2 % in 2003, having grown by a CAGR of 48 % between 2003 and 2013. This growth has been driven entirely by an expan-sion in apparel exports through the performance of Export Processing Zone ( EPZ ) firms. Textile exports were flat, while home textile exports have been declining by 5 % per year.


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The need for a new paradigm?

Despite significant growth over recent years, Kenya’s T&C industry is still relatively small. Valued at US $ 330 million, it represents only 0.6 % of gross domestic product and 6 % of the total manufacturing sector.8 In addition, there is a sig-nificant disconnect between the progress achieved in the textile and clothing subsectors. The garment subsector has outperformed in recent years, due largely to the preferential market access granted under AGOA and, in particular, the third-country fabric provision which allows Kenya to produce apparel with fabric imported from Asia.9 Today the United States market buys the vast majority of Kenya’s T&C exports. The textiles segment meanwhile continues to underperform : because the American-led growth of apparel production used imported materials, the textile sector participated little in this expansion.

According to the Kenya National Bureau of Statistics ( 2015 ), the growth in textile production in 2014 was driven by increased production of knitting wool ( 25.5 % ), woven fabric ( 16.4 % ) and blankets ( 4.3 % ). In contrast, the production of goods such as twine, cordage and rope declined by more than 25 %. For apparel, the leading products in 2014 were cardigans ( increase of 13.4 % ), T-shirts ( increase of 5.2 % ) and shirts ( increase of 1.4 % ).10

8.– Katrina Manson ( 2014 ). Investing in Kenya : textiles sector in Kenya gears up to take a larger share of world market. Financial Times, 2 December. Available from http : / / www.ft.com / cms / s / 0 / 75b7273e-6040-11e4-88d1-00144feabdc0.html#axzz3ZBq7tNDC.9.– African Cotton and Textile Industries Federation ( 2013 ). Policy Research on the Kenyan Textile Industry : Findings and Recommendations, p. vi. Nairobi : ACTIF. 10.– Kenya National Bureau of Statistics ( 2015 ). Economic Survey 2015. Nairobi : KNBS.

The sector’s recent advances have been driven by a number of factors. Firstly, Kenya benefits from preferential market access to the United States and Europe, and regionally has a Free Trade Agreement with the East African Community ( EAC ) and the Common Market for Eastern and Southern Africa ( COMESA ). In addition, wages in Asia have been rising : whereas salaries in Kenya’s T&C sector range from US $ 120 to US $ 150 per month, they are US $ 500 per month along China’s coast and US $ 250 per month in China’s inte-rior.11 While regional neighbours including Ethiopia certainly offer competition, Kenya’s workforce has an advantage : workers are quite skilled in garment making and worker re-tention tends to be higher in Kenya than in neighbouring Ethiopia, which suffers from greater turnover. In addition to the labour supply, Kenya’s water supply, decreases in elec-tricity cost, recent infrastructure investments, port efficiency, relative proximity to Europe and green energy potential have made it attractive for greenfield investment.

Western buyers are also re-evaluating their sourcing strategies in light of ethical concerns such as the unsafe working conditions in many low-cost production centres. For example, although wages in Bangladesh are quite low at US $ 67 per month, growing concerns over CSR have left Western buyers looking elsewhere for new suppliers.

11.– Katrina Manson ( 2014 ). Investing in Kenya : textiles sector in Kenya gears up to take a larger share of world market. Financial Times, 2 December. Available from http : / / www.ft.com / cms / s / 0 / 75b7273e-6040-11e4-88d1-00144feabdc0.html#axzz3ZBq7tNDC.

Table 3 : Comparison of costs and competitive factors between Kenya and major T&C competitors

Estimated values Kenya EthiopiaUnited Republic

of TanzaniaIndia China Viet Nam

T&C export value ( US $ millions, 2013 ) 377 94 248 40 192 273 959 21 534

Cotton production ( thousands of 480 lb. bales ) 32 175 375 30 000 30 000 17

Cost of labour ( US $ per month ) 110 -150 50 -60 70 175 550 180 -200

Labour skills Low–medium Low Low High Very high High

Cost of electricity ( US¢ / kilowatt-hour [ kWh ] ), estimated average 16 -18 2 -5 12 7 -12 9–15 8

Percentage of annual sales lost to electrical outages 5.6 2.6 5.5 2.0 0.1 1.1

Cost of construction ( US $ per ft2 ) 21 40 34 18 -20 15 -20 20 -25

Lending rates ( Annual Percentage Rates, estimated ) 14 -18 8.5 19 7 -13 7 6 -7

Time to clear Customs, inputs + exports ( days ) 31 37 44 12 17 15


9

Box 5 : Growing concerns over CSR

In April 2013, an eight-storey building collapsed in Dhaka, Bangladesh, resulting in the deaths of 1,129 people and the injury of an additional 2,500. As the building was being used for the manu-facture of ready-made garments, the tragedy brought new focus onto the dangerous working conditions in the T&C sector. In the years following the collapse, the sector has been subject to increasing

consumer pressures for social responsibility and both the Government and international retailers have pledged to improve working conditions. Other multinational buyers have stopped dealing with factories in Bangladesh due to the lack of CSR standards, while some countries are paying off the damaged reputation of Bangladesh in their efforts to attract socially aware buyers.

Despite the significant potential offered by Kenya’s compar-ative advantages, there are signs that these factors may not be enough to ensure long-term success unless the sector takes a more strategic approach to its development.

A major concern is the worrisome trend in Kenya towards lesser value addition.12 Many competitors in Asia and Africa are increasing their efforts to integrate local inputs through farm-to-fashion production models. While Kenya made simi-lar efforts to increase the availability of local materials, they were relatively unsuccessful and the sector was forced to continue relying on imported materials. Not only this but many factories in Kenya, particularly subsidiaries of foreign companies, are moving away from value addition : they have stopped sourcing their own materials and are moving to-wards a CMT model, serving as simple contractors for buy-ers who supply all necessary designs and materials. This

12.– Global Development Solutions ( 2014 ). Value Chain Analysis of Priority Industrial Sub-Sectors in Kenya, Part I : Textiles and Garments, p 6.

reduces the value created within the country and diminishes pressures for input production.

Recent trends indicate that Kenya’s T&C sector has not achieved a level of competitiveness and value addition that can stand the tests of time. While competitors are moving up the value chain, integrating and providing a greater breadth of services to buyers, Kenyan producers have been reduc-ing the value content of their services. This not only reduces the income and employment generated but it also diminish-es spillover effects. In addition, although leveraging a CMT niche has worked so far, it is unlikely to be a sustainable business model given the global trends in production and buyer requirements. Another concern is the sector’s concen-trated reliance on AGOA. While market access under AGOA has been a key driver for Kenya’s T&C export success, many producers have come to believe that their goods are more competitive than they truly are. Indeed there are signs that, in the absence of AGOA, the garment sector might not be able to survive regional and global competition.

Figure 2 : Production trends in the garment sector

Current Production Trend in Asia and Africa (Incl. Ethiopia and Uganda)

Current Production Trend in Kenya’s Garment

• Labor (low skill)

• Electricity

• Imported fabric supply

by buyer

CM• Labor (low-semi skill)

• Electricity

• Imported / Local fabricFOB

• Labor (low-semi-

specialized skill)

• Electricity

• Imported / Local fabric

OriginalDesign

• Labor (low-semi-

specialized skill)

• Electricity

• Imported / Local fabric

• Local yarn / thread

Farm-to-Fashion

Source : Global Development Solutions ( 2014 ), p. 6.


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Figure 3 : Kenya’s T&C value chain


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THE VALUE CHAIN IS STUNTED BY LIMITED INTEGRATION AND SUBOPTIMAL VALUE ADDITION

Enterprises in Kenya cover the entire T&C value chain, from input production to textile manufacturing and cloth-ing assembly. In general, the garment section is the most advanced part of the value chain and limited investment downstream has led to capacity imbalances and relatively weak performance in the cotton, ginning, spinning, weaving and fabric finishing segments.13

The sector is characterized by a general lack of coor-dination between segments, which leads to inefficiencies and gaps in quality. In addition, international buyers and procurement agents control the value chain. They dictate factors such as price, quality and delivery time. This has put pressure on the sector to shift towards high volume, low margin production.

Inputs

One of the T&C sector’s main inputs is cotton. It should be noted that despite domestic cultivation, Kenya is a net im-porter of cotton ; only 7,000 tons of domestically produced cotton fibre is used in the T&C value chain and this figure is in decline. These levels are not enough to meet the de-mand from spinning mills. Most of Kenya’s imported cotton is purchased from Uganda. Cotton is currently cultivated in every province of the country with the exception of Nairobi.

13.– Regional Agricultural Trade Expansion Support Programme ( 2003 ). Cotton-Textile and Apparel Value Chain Report for Kenya. Nairobi.

Production is dominated by between 30,000 and 45,000 smallholder farmers who grow under rain-fed conditions on areas averaging below one hectare and with minimal use of inputs. All of the cotton, of which two varieties are grown ( HART 89 M and KSA 81 M 14 ), is handpicked and roller-ginned. Most farmers have remained unorganized following the sector’s liberalization. As such, access to extension ser-vices, inputs and credit is difficult. In addition, there is little collective bargaining or marketing. In total, Kenya contains 385,000 hectares of land that is suitable for cotton ( 350,000 rain-fed and 35,000 irrigated ). Total production potential exceeds 300,000 tons of cotton seed. Nevertheless, only 40,000 hectares are currently being used for cotton.

Production has been volatile, reaching a peak of 39,300 tons of lint in 1984 / 85. Most recently, the International Cotton Advisory Committee ( ICAC ) estimates that production was 6,000 tons of lint in 2013 / 14. As such, Kenya ranks 21 among cotton-producing countries in Africa.

Yields are 185 kg / hectare ( 2013 / 14, ICAC ), making them among the lowest in both Africa and the world. This is due to a variety of factors including limited farming skills, inad-equate extension services, limited access to credit, variable rainfall, limited uptake of fertilizers, inadequate pest control and crop management techniques, and unstable market prices for cotton seed.

14.– African Cotton & Textile Industries Federation ( 2011 ). Competitive Supply-Side Analysis of Cotton, Textile & Apparel Sectors in East Africa : Kenya, Sudan, United Republic of Tanzania and Uganda.

Figure 4 : Kenyan cotton production 1940 / 41-2010 / 11

Source : ICAC.


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The ginning segment operates significantly below its capac-ity, which is estimated to be roughly 200,000 bales ( ~37,000 tons ) of lint. In comparison, the maximum historic output was only a third of this amount. Only eight of the 20 ginner-ies in Kenya are operational and most are using outdated equipment. Kenya’s ginning outturn of 33.3 % is the lowest in Africa ( 21 % lower than the levels achieved in West and Central African countries of the franc zone ). The low utiliza-tion rate leads to significantly reduced productivity, thereby inflating processing costs. Ginning overcapacity also harms the quality of Kenyan lint by fostering competition for in-puts between ginners : although Kenyan cotton seeds are of good quality, the dearth of supply when compared to ginning capacity leads buyers to purchase any seed they can, without giving due consideration to quality. This results in high levels of contamination and limited value addition. Increasing profitability in the cotton segment will therefore require increased productivity at both the production and ginning levels.

Other inputs, including agrichemicals, man-made fi-bres, machinery, dyes for yarn and a large portion of fab-rics, are imported from abroad. Although labour is sourced domestically, the sector suffers from a lack of appropriately qualified human resources including managers, operators and designers. Expensive electricity is another detriment to profitability, particularly in the more capital-intensive textiles segment.

Yarn spinning

Kenya’s spinning mills tend to be large and characterized by low levels of productivity, and they all operate well below capacity. Production costs vary significantly, depending on such factors as the quality and origin of cotton. It should be noted that, despite limited production in the spinning seg-ment, the cotton sector does not produce enough lint to meet mill demand. Kenya continues to import cotton lint in order to meet this deficit. It should also be noted that export-oriented enterprises tend to use imported materials.

Enterprises in Kenya’s yarn spinning segment have a capacity of roughly 140,000 spindles, of which they utilize 40 %–50 %. The main product for domestic and regional markets is acrylic yarn, whereas exports are dominated by organic cotton yarn, blended yarns and sewing thread.15

There is just one stand-alone spinning mill ( Rupa Mills ) in Kenya’s T&C value chain. This mill produces cotton yarns, blended yarn and 100 % polyester and acrylic sew-ing threads. The remainder of spinning activity is undertaken by integrated and semi-integrated mills with the following specialties :

15.– Ibid. : p. 32.

� One blanket production company : Spinners & Spinners. This company produces blankets, and yarn and fabrics for Maasai clothing.

� Two semi-integrated mills oriented towards knitting : Midco EA and Fine Spinners.

� Four semi-integrated mills oriented towards weaving : Rivatex, Thika Cloth Mils, TSS Mills, UTI.

� One semi-integrated mill with no orientation : Sunflag Kenya.

Of the yarn produced, 10 %–20 % is exported, mainly to Uganda, Rwanda, the United Republic of Tanzania and Nigeria. The remaining 80 %–90 % continues along the do-mestic value chain to the weaving and knitting segment.

Weaving, knitting, dyeing and finishing

As with the spinning segment, enterprises in this segment of the value chain tend to be quite large and operate well below capacity. They suffer from poor levels of productivity, high input costs ( both labour and electricity ), outdated technol-ogy, limited transport, limited access to finance, low quality, limited market outlets, and price unpredictability. Enterprises producing fabrics for export tend to rely on imported materi-als. The main product for the domestic and regional markets is woven fabric, while organic cotton knit fabric and fabric of cotton / man-made-fibre blends are exported.

The segment is operating at roughly 40 %–50 % of to-tal capacity and it relies on imported yarns from India, Indonesia, China and Chinese Taipei. In total there are 15 enterprises engaged in the weaving, knitting, dyeing and finishing space. In addition to the eight semi-integrated mills detailed under the yarn overview, there is one stand-alone textile company ( Alpha Knits ). Kenya also has four stand-alone knitting companies ( Ken Knit, Kayn, Spin Knit and Bubco ) that produce T-shirts, undergarments and jersey. The sector’s two stand-alone weaving companies ( Bedi and Supra Textiles ) produce suiting fabric, kikoyi, school uni-forms, corporate uniforms, African printing, bed sheets and covers, home textiles and shirting. It should be noted that there are no stand-alone dyeing / finishing plants and that all such activities, to the extent that they are present in Kenya, are performed in textile mills.

Fabrics are then exported to Uganda, the United Republic of Tanzania, Zimbabwe, Rwanda and Nigeria. While a portion is purchased by local garment producers, it is only 7 % of the fabric demanded by the sector.

Design and sewing

With the opening up of the American market through AGOA, Kenyan apparel firms have shifted production away from the manufacture of African print garments meant for the


13

domestic and regional markets.16 Instead, enterprises are now producing a wide range of apparel for export includ-ing jeans, trousers, shorts, shirts, nightwear, blouses and dresses. However, they do continue to produce trousers, uniforms, overalls, vests and inner garments for local and regional markets.17

Enterprises are currently operating at 100 % of capac-ity, and capacity is continuously being expanded through investment. Kenya imports roughly 93 % of its fabric supply, mainly from China, Hong Kong, Chinese Taipei, Pakistan and India. The necessary trims, machinery and spare parts are also imported. It should also be noted that despite the existence of some accessories producers in EPZs, the ma-jority of accessories are imported.

The design and sewing segment includes 170 medium and large garment companies as well as nearly 75,000 small

16.– Mangierie, Tina ( 2006 ). African Cloth, Export Production, and Secondhand Clothing in Kenya, p. 10. Chapel Hill, N.C. : University of North Carolina at Chapel Hill.17.– African Cotton & Textile Industries Federation ( 2011 ). Competitive Supply-Side Analysis of Cotton, Textile & Apparel Sectors in East Africa : Kenya, Sudan, United Republic of Tanzania and Uganda, p. 32.

and micro enterprises. These companies produce a wide range of goods for both the domestic and foreign markets. Products include shirts, trousers, uniforms, overalls, vests, inner garments, décor, rugs / carpets and handloom goods. Many of these companies ( including KikoRomeo, Loulou Creations, Sandstorm, Panah Project, Mefa Creations and Kimila Afrika ) add significant value by designing their own products.

The sector also includes roughly 22 foreign-owned companies in the EPZs. Owned mainly by Asian TNCs, they engage largely in CMT activities, producing towels, T-shirts, fleece jackets and trousers, woven pants, jeans, tops, shorts, cardigans, pullovers, 100 % polyester sports-wear, and children’s’ wear. Nine foreign-owned accessories producers also operate out of the EPZs. Lastly, a small num-ber of locally-owned micro garment companies are being incubated through Kenya’s Export Business Accelerator Programme ( EBAP ) within the Athi River EPZ in order to facilitate transfer of capacities from lead firms. The initia-tive has yielded good results, improving local ownership of EPZ companies, and is in the process of being replicated in other EPZs. Kenya’s garment enterprises are supported by domestic packaging companies.

Box 6 : Kenya’s EBAP

The majority of companies benefiting from EPZs tend to be both large and foreign-owned. A feasibility study performed in 2003 noted that the following challenges have historically hindered greater micro, small and medium-sized enterprise (MSME) participation in EPZs: lack of export market information, lack of suitable business premises, high rental costs of EPZ facilities, lack of credit facilitation, lack of suitable export facilitation for SME exporters and lack of provision of business development services.1

1.– Kenya Export Processing Zones Authority (2013). The Export Business Accelerator Programme. Available from http://www.epzakenya.com/index.php/investment-information/ epz-business-incubator.html.

EBAP was launched in an attempt to help MSMEs overcome these constraints and benefit from Kenya’s EPZ initiative. To this end, EBAP serves as an incubator that helps to accelerate growth of MSMEs wishing to operate within EPZs so that they can grow into medium- and large-scale exporters.

Source : Export Processing Zones Authority ( 2013 ).

Distribution

Most local garment manufacturers sell their products on the domestic market to consumers, tourists and hotels. Domestic sales include home textiles, conference materials and various types of clothing, including trousers, uniforms, overalls, vests and inner garments.

About 15 local companies engage in export. The compa-nies operating out of EPZs meanwhile export 100 % of their products. Almost all ( 95.4 % ( 2013 ) ) goods are exported to the United States under AGOA, where they are sold through

mass merchandizing chains, department stores, specialty stores, factory outlets, and off-price or mail order outlets. Canada is the second-largest market, receiving 1.1 % of Kenya’s garment exports. Other important markets include the United Republic of Tanzania ( 0.5 % ), Uganda ( 0.5 % ) and the Netherlands ( 0.3 % ), where Kenyan goods are sold through local retail markets.


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Primary suppor t services

Overall policy support is provided by the MoIED, which is tasked with leading Kenya’s economic development efforts. In addition, it oversees the Export Processing Zones Authority ( EPZA ), whose role is to promote export-oriented investment through its management of the EPZs. Various services are provided by both governmental and private sector organizations including the Kenya National Chamber of Commerce and Industry ( KNCCI ), the Kenya Bureau of Standards ( KEBS ), EPZA, the Kenya Investment Authority ( KenInvest ) and the Kenya Revenue Authority ( KRA ). The Export Promotion Council ( EPC ) is Kenya’s trade promotion organization and it provides trade infor-mation services, technical assistance, policy advice, and

marketing and sales services. The T&C sector meanwhile is represented by a number of associations : the Kenya Association of Manufacturers ( KAM ), covering textile manufacturing activity ; the Kenya Apparel Manufacturers and Exporters Association ( KAMEA ) ; the Association of Fashion Designers ; and the Handloom Weavers’ Marketing Cooperative Society ( WEAMACO ). The East Africa Trade Hub and African Cotton and Textiles Industries Federation ( ACTIF ) also provide support to the sector.

Education and training is provided by a range of univer-sities and technical and vocational education and training (TVET) institutions (such as the Evelyn College of Design or, Vera Beauty and Fashion College) and are complemented by the various training institutions (such as the Technology Development Centre or Kenya Textile Training Institute).

Box 7 : Salient issues of the current value chain

Given the state of the cotton and textile segment, it is unlikely that the value chain will achieve full integration in the short-to-medium term. Indeed, the quantity of cotton produced is so low that it is unrealistic to expect a significant revival in the provision of domestic raw materials. Similarly, there are only a few yarn and fabric producers, and none of them are located in EPZs. The goods that these enterprises do produce are of low quality and only a small portion is used by the garment segment. Improvements in the textile segment will require significant investment in both equipment and skills upgrading. Furthermore, foreign investors are discouraged by the very high electricity costs

that make textile production uncompetitive. As such, the Government must make concerted efforts to lower these costs.

The garment segment has experienced greater success, as evidenced by the proliferation of local enterprises. Nevertheless, foreign invest-ment has been targeted towards CMT activities. Increasing value addi-tion will require the targeted attraction of more ‘productive’ investment. As a prerequisite, technical, design and management skills must be enhanced so that investors are confident in Kenya’s ability to provide a wider range of services to modern buyers, including lean retailers.

BUSINESS-ORIENTED POLICIES HAVE BEEN WELCOMED BY THE PRIVATE SECTORIndustrial policy

Kenya has been implementing strategies to promote private sector-led growth since the early 2000s. In this framework, it has been actively reviewing and amending its industrial poli-cies to reflect the fast-changing landscape of international competition. The country’s overall economic strategy has been formulated in the Government’s Vision 2030, a ‘long-term development blueprint to create a globally competitive and prosperous nation with a high quality of life by 2030’.18 The economic pillar of the vision seeks to foster a 10 % an-nual growth rate by focusing on intermediate objectives. The current intermediate objectives include improvements in the areas of tourism, agriculture, wholesale and retail trade, manufacturing, information technology, financial services, and infrastructure.

18.– Kenya Vision 2030 ( 2015 ). Website. Available from: http : / / www.vision2030.go.ke / .

Twenty-five flagship projects are currently being imple-mented to address constraints in these focus areas, some of which may impact the T&C sector, directly or indirectly. These include projects that seek to establish small and me-dium-sized enterprise ( SME ) parks and Special Economic Zones ; improve infrastructure through the construction of the Dongo Kundu port ; stimulate the creation of producer business groups ; and develop wholesale market hubs. The Government has also extended a number of incentives to investors in its efforts to stimulate export growth ( detailed further in the following section ).

The Government will soon be launching the Industrial Transformation Programme in support of Vision 2030’s eco-nomic pillar. With the overall goal of making Kenya an indus-trial hub, it seeks to increase manufacturing to more than 15 % of gross domestic product, create 1 million jobs, increase FDI by a factor of five, improve the ease of doing business and support the development of Kenyan SMEs. The T&C sector has been identified as a priority industry and it will be the focus of the following sector-specific flagship projects :19

19.– Kenya Ministry of Industrialization and Enterprise Development ( 2015 ). Kenya’s Industrial Transformation Programme, pp. 44–45.


15

1. Construction of a green industrial park and textile city in Naivasha

2. Attract one to two large, integrated anchor deals3. Encourage textile manufacturers to create fabric distribu-

tion hubs4. Increase support to existing textile and apparel players

through performance contracts5. Attract three to five sourcing companies to establish a

local presence6. Increase local cotton growth through attracting an an-

chor investor.

Trade policy

A member of the WTO since 1995, Kenya has participated in all major WTO trade talks and it maintains a negotiat-ing team in Geneva. The country is an active member of the organization and it has presented position papers on a number of issues. Kenya does, however, continue to face a number of challenges with regards to its participation.20 The goal of Kenya’s current trade policy is to enhance regional integration, notably through the EAC, as a step towards becoming a more globally competitive country. Kenya is a founding member of the EAC and it is implementing the EAC Development Strategy, which aims to consolidate the Customs union, move towards a common market, estab-lish a monetary union and lay the foundations for a political federation. The strategy also promotes the development of economic infrastructure ( including energy ) that would sup-port and spur economic growth in the member states, while it calls for the monitoring and elimination of non-tariff barri-ers that hamper intra-EAC trade.21

Kenya is also a member of COMESA. As such, it receives and applies preferential tariffs to 19 countries, 14 of which ( including Kenya ) have entered into a Free Trade Area. The country is currently undertaking negotiations to conclude the tripartite agreement between COMESA–EAC–Southern African Development Community ( SADC ) ( which will grant Kenya preferential access to the fast-growing South African market ) and finalize the Economic Partnership Agreement with the EU as part of the EAC region.

It should be noted that India recently offered free mar-ket access for African least developed countries. However, Kenya was recently reclassified as a developing country so it will not benefit from this duty-free, quota-free agreement. Nevertheless, EAC countries are preparing a white paper to advocate for the agreement to be extended to the en-tire EAC region. The white paper also seeks to expand the scope of the agreement so that it includes non-accumulated products : at the moment, the agreement only applies to

20.– Odhiambo, W., Kamau, P. and McCormick, D. ( 2015 ). Managing the challenges of WTO participation : case study 20 : Kenya’s participation in the WTO : lessons learned. Available from https : / / www.wto.org / english / res_e / booksp_e / casestudies_e / case20_e.htm.21.– World Trade Organization ( 2012 ). Trade Policy Review Report by the Secretariat, East African Community, WT / TPR / S / 271.

products that are 100 % made within the beneficiary country, from fibre to garment.

While not a trade policy per se, particular mention should be made of Kenya’s trade relations with the United States. AGOA was recently extended for 10 years, to 30 September 2025. As this extension includes the continuation of the third-country fabric programme for the same period, it will ensure that Kenyan apparel products continue to have duty-free ac-cess to the American market. The renewal is of great impor-tance, as the previous series of short-term extensions had deterred investors by compounding the risks already inherent in investing in Africa. Indeed, most investors require at least a 10 year horizon to amortize a major investment, such as those necessary to build a new textile factory. The fact that Congress had never extended AGOA for 10 years or more is one of the main reasons that the upstream textile production originally envisioned by the creators of AGOA has yet to materialize.

Kenya has also taken a number of unilateral steps to-wards improving its trade environment. The Tax Remission for Export Office, for example, remits duty and value added tax ( VAT ) on raw materials used in the manufacture of goods for export. This is applicable as long as the commodity is transformed in some way through assembling, packag-ing, bottling, repacking, mixing, blending, grinding, cut-ting, bending, twisting, joining or any other similar activity. However, the remission is not granted for the importation of plant, machinery, equipment, fuels or lubricants. Various modernization projects and reforms are also being imple-mented in an effort to facilitate trade through enhancement of Customs, Road Transportation, Business Automation and other relevant services .

The Government has made great strides in improving the business environment through its industrial and policy re-forms. The sector now enjoys enviable market access and a supportive policy framework. Nevertheless, the capacities of Government officials to formulate effective trade policies must be improved and mechanisms for stakeholder coor-dination and consultation when pursuing trade objectives need reinforcing. This will allow for trade policies to be modi-fied in line with the dynamic needs of the T&C sector.


16

Box 8 : Non-reciprocal preferential market access

In addition to the United States ( through AGOA ), Kenya receives non-reciprocal preferential tariffs from most other developed markets, including : Australia, Canada, the EU, Japan, New Zealand, Norway and Switzerland. It receives similar concessions from some emerging and frontier markets such as Turkey and some Commonwealth of Independent States countries ( namely Belarus, Kazakhstan and the

Russian Federation ). It would be important that such information is dis-seminated in a more efficient manner in order to stimulate T&C market diversification. Indeed, several studies on non-reciprocal preferential arrangements find that limited awareness among the private sector, and sometimes even among the public sector, is one of the main reasons that preferential duties are not leveraged to their full extent.

Figure 5 : Investment and exports in the EPZ garment sector ( 2008-2014 ) ( US $ millions )22

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5

10

15

20

25

30

35

40

-

50

100

150

200

250

300

350

400

2008 2009 2010 2011 2012 2013 2014 Employment

Thou

sand

s

Mill

ions

Investment (USD million) Exports (USD million) Employment

Source : Kenya Export Processing Zones Authority ( 2012 ).

22.– Kenya National Bureau of Statistics ( 2015 ). Economic Survey 2015, p. 202. Nairobi : KNBS. Direct data ( reported by Kenya ) and mirror data ( reported by trading partners, in this case the United States ) differ significantly between 2001 and 2004 ; mirror data shows that garment exports increased from 2001 onwards, whereas the increase is evidenced from 2005 onward in direct data. In this graph, the data reported by the United States provides greater clarity on the impact of AGOA.

FDI HAS CARRIED THE GARMENT SEGMENT BUT LEFT THE TEXTILE SEGMENT BEHIND

Kenya is a promising investment destination for garment manufacturing in East Africa. It is one of the few countries that have successfully capitalized on the United States mar-ket access advantage provided by AGOA. In 2014, Kenya replaced Lesotho as the largest garment exporter to the United States under AGOA. Indeed, AGOA has been an im-portant driver of growth for Kenya’s garment manufacturing industry. Prior to 2000, the year that AGOA came into force, Kenya’s T&C exports were negligible. However, exports started to grow steadily following the initiation of preferential market access.

Kenya FDI attractiveness

Kenya fares well in various international business rankings compared with regional competitors (see Appendice sec-tion A). Its rankings, however, are significantly lower than those of large Asian T&C producing nations. Despite hav-ing a low-cost manufacturing country (Ethiopia) and a large cotton-fibre-producing nation (United Republic of Tanzania) as neighbours, Kenya has been able to continuously attract FDI in the garment sector. In 2013, the Government licensed 46 new garment factories, a historic high. Over the years, Kenya has developed a garment manufacturing industry which is far more evolved than that of its neighbours, hav-ing fostered effective market linkages and raw material and garment trade networks. Large buyers have established footholds that they use to capitalize on Kenya’s advantages. Meanwhile in competing countries the sector is at the begin-ning of its growth cycle.


17

It should be noted that input costs (power, wages, etc.) in Kenya are high when compared with other global T&C producing nations. While the Government is taking steps to make them more competitive, Kenya’s strategy is not to make itself the cheapest manufacturing destination. In one of the SITA consultations, Jas Bedi, Chair of KAM said, ‘We do not want to be the Bangladesh of Africa’, referencing that country’s low-cost manufacturing model. ‘We want to be the Sri Lanka of Africa’, implying the need to produce value added garments and improve productivity in order to compensate for higher costs.

Government support

The Kenyan Government is keen to promote the T&C sector’s development, having recognized that it has the potential to contribute substantially to employment and in-come generation. It has thus begun a series of initiatives aimed at attracting foreign investors. Kenya’s EPZ and Manufacturing under Bond frameworks are well-established (see Appendice section A). More than 80% of T&C goods produced in Kenya come from enterprises located in EPZs and the sector represents a third of all economic activity within these zones, employing over 37,000 people. Much of the investment in EPZs is coming from Asia. In 2012, half of all EPZ enterprises were foreign-owned, one-fourth were joint ventures and the rest were wholly Kenyan.

Kenya meets the fundamental needs of FDI projects in that FDI is given national treatment. There are standard guarantees against expropriation, no foreign exchange con-trols and profits may be remitted freely. Although foreigners and foreign-controlled companies may not own land, 99-year leases are available. Bilateral investment treaties with 14 countries (five in force with EU countries; nine ratified but not yet in force, such as with China) and Kenya’s membership in the International Centre for the Settlement of Investment

Disputes provide investors with additional confidence that they will be treated fairly by the Kenyan Government.

FDI concentrated in CMT activities located in EPZA major challenge that remains, however, is the lack of up-stream capacities in the garment manufacturing portion of the value chain. The garment industry works mostly with im-ported fabrics and other inputs. Foreign investors in Kenya take a hands-off approach to investing in the country. They generally perform simple and stand-alone CMT activities and their interaction with the wider sector (and economy) is negligible. This limits spillover effects and has diminished the stimulation of value added production. This might also be due to the fact that investment promotion intermediaries (IPIs) relationships with investors have tended to be devel-oped very little beyond the provision of EPZ space and ser-vices; or the issuance of permits, certificates and licences; or the provision of industrial park space and services. A priority in the future will be to ensure more integrated in-volvement of existing domestic and foreign investors. The construction of ‘textile cities’, such as the Naivasha project in Athi River, could contribute to solving this problem and attracting investment in the textile segment, thereby ensur-ing constant input supply to local garment manufacturers.

Moving forward, the Government must make efforts to direct investment towards areas of the value chain where it is most needed. To this end, investment should be targeted at non-CMT garment activities as well as the textile segment. One of the key reasons for the lack of FDI in textiles is the high cost of electricity, which makes the segment uncom-petitive. Given the current state of the textile segment, this need is urgent: if the Government does not act now to make the necessary reforms and improve the business environ-ment, the segment may perish for good.

Box 9: Textile cities as a solution to spur vertical integration

Textile cities are industrial zones dedicated to textile processing and related input supply, ensuring common water treatment, Effluent Treatment Plants ( ETPs ), dormitories, sheds, uninterrupted power

and water supply, expressway connectivity to ports and main cities, etc. Various leading countries in the sector have used such industrial arrangements to facilitate vertical integration of the T&C value chain.


18

Figure 6 : Kenya’s T&C export trends, by segment, 2004-2013 ( US $ thousands )

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50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Fiber / Filament

Yarn

Others

Fabric

Home Textiles

Headgear

Woven Apparel

Knitted Apparel

Total Exports

Source : International Trade Centre ( 2015 ).

STAGNATING TRADE REFLECTS DIMINISHED COMPETITIVENESS 23

Following sustained growth since the turn of the century, Kenyan exports of T&C goods levelled off from 2006 to 2008 in the face of increasing competition from Asia, only to fall by 25 % in 2009 in the aftermath of the 2008 finan-cial crisis. Exports began to rebound in 2010 in line with the global economy, reaching US $ 384 million in 2013. The best-performing segment over the past decade was woven bottoms and knitted apparel. Its share in the country’s sec-toral exports rose from 30 % in 2009 to 48 % in 2013, and its CAGR over the past five years was 8 %. Despite the quick rebound from the lows of 2009, it should be noted that an-nual growth of Kenyan T&C exports since 2006 has been a meagre 2.7 %. This is well below the 5 % global growth in T&C exports during the same period.

Data suggests that growth over the past 10 years has been driven by the continued penetration of existing prod-ucts to old markets (116 % of growth). This is in stark con-trast to regional competition. In Ethiopia, for example, 53 % of growth was due to market expansion, in which Ethiopia introduced existing products to new markets.24

23.– Note on data sources : There is a divergence between trade statistics reported by Kenya ( direct data ) and the statistics reported by trade partners ( mirror data ) from 2001 through 2004. Mirror data shows that the biggest gains in clothing exports occurred between 2001 and 2004, whereas direct data show that such gains were realized between 2004 and 2005. Despite these temporal differences, the overall trends within the sector are evidenced in both sets of data. Where possible, the analysis in this Roadmap uses direct data as reported by Kenya. Kenya has not yet reported its trade statistics for the full period under review and trade figures for 2012 and 2013 are based on mirror statistics.24.– As illustrated in Appendice section B, such expansion has been non-existent in the case of Kenya.

Clothing

Clothing exports ( including Harmonized System ( HS ) cat-egories 61, 62, and 63 ) reached a record high of US $ 318 million in 2013 following annual growth of 10.9 % between 2009 and 2013. The subsector has become an increasingly important source of foreign currency and a number of key segments, notably woven apparel and knitted apparel, are escalating their share in world exports. The share of Kenyan garment exports as a proportion of total world garment ex-ports rose to 0.07 % in 2013, after remaining flat at 0.06 % from 2006 to 2012.

Clothing exports as a share of Kenya’s total exports have been increasing as well, growing from 4.7 % in 2009 to reach 5.7 % in 2013. However, it should be noted that the trade balance over the past two years is negative ; the most imported product is ‘worn clothing and other worn articles – HS 630900’, which in 2013 accounted for 50 % of total gar-ment imports. Indeed, imports of used clothing have been a persistent challenge that the Government has battled for many years. The data make clear that both international and domestic demand is adequate. Kenya’s challenges lie on the supply side. Addressing the trade deficit through devel-oping local segments and capacities of the value chain will help the sector reach the necessary scale and capacities to meet international requirements.

While Kenya exports clothing ( valued at over US $ 100,000 ) to 22 countries, 81 % of exports are destined for the United States. Whereas exports to the United States accounted for only 11 % of the sector’s exports in 2004, they surged in 2005 ( the United States market received 70 % of total garment ex-ports between 2005 and 2008 ). This uptick was largely the result of preferential access granted under AGOA, and in


19

particular the third-country fabric provision, as well as the investment incentives provided by the Kenyan Government, notably in EPZs.

Stakeholders must not lose sight of the dangers associ-ated with such heavy market concentrations : when garment exports to the United States fell by 31 % in 2009, foreign sales dropped by 27 % because firms were unable to find new markets for their products. Even though sales to the

United States reached record highs in 2013, the continued reliance upon a single market may prove to be unsustain-able. Despite the fact that Kenya receives preferential market access in the neighbouring countries of the EAC, exports to these countries represented only 7.2 % of total export in value in 2013. The United Republic of Tanzania is the sec-ond export destination with 3.5 % in 2013.

Figure 7 : Kenyan exports of clothing to selected markets, 2003-2013 ( US $ thousands )25

0

50000

100000

150000

200000

250000

300000

350000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

World

USA

East African Community Rest of Africa

Rest of the World


Figure 8 : Kenyan textiles exports by region 2004-2013 ( US $ thousands )

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60.000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

World

Asia

Africa

Europe

GCC*

Oceania

Americas

CIS**


Note : For clarity purpose Turkey was excluded from the graphic presenting partner countries. Turkey was included in the region Asia.

* Gulf Cooperation Council members are Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain and Oman.

** The Commonwealth of Independent States are Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, the Russian Federation,

Tajikistan, Turkmenistan, Uzbekistan and Ukraine.

25.– Note on data sources : There is a divergence between trade statistics reported by Kenya ( direct data ) and the statistics reported by trade partners ( mirror data ) from 2001 through 2004. Mirror data shows that the biggest gains in clothing exports occurred between 2001 and 2004, whereas direct data show that such gains were realized between 2004 and 2005. Despite these temporal differences, the overall trends within the sector are evidenced in both sets of data. Where possible, the analysis in this Roadmap uses direct data as reported by Kenya. Kenya has not yet reported its trade statistics for the full period under review and trade figures for 2012 and 2013 are based on mirror statistics.



20

Textiles

The needs in textile supplies for the ex-panding apparel sector have been met by growing imports. The textile sector’s trade deficit has been worsening since 2009, doubling to a record high of US $ 181 million in 2014. The deficit is most notable vis-à-vis China ( the average deficit for the period from 2011 to 2013 was US $ 254 million ) and India ( US $ 57 million ), Kenya’s two most impor-tant trade partners in the textile space. The sector reached its peak export value of US $ 54 million in 2011 following two years of significant gains ( 37 % in 2010 and 18 % in 2011 ). Even so, exports declined by an average of -17 % be-tween 2011 and 2013. One of the chief reasons behind these mixed results is the limited ex-port survival rate and the inability of firms to maintain market share.

A worrisome trend over recent years has been the increased concen-tration of exports. Between 2009 and 2011 there were 40 markets to which Kenyan firms exported at least US $ 100,000 of textile products. By 2013, it had dropped to just 28 markets. The past five years saw a significant shift in concentration towards China and India, which accounted for 21 % and 13 % of Kenyan textile exports respectively in 2012-2013. The shift towards China and India has been stimulated by the rise of FDI originating from these countries. Several Chinese and Indian firms have relocated their plants or invested in Kenyan textiles as they look to reduce production costs by benefit-ing from the preferential tariffs granted to least developed countries. While concentrations have shifted towards Asia, exports to Gulf Cooperation Council members and Africa have been volatile, falling dramatically from their peaks over the past few years.

Though there has been a reshuffling of dominant prod-ucts, the sector continues to be characterized by signifi-cant product concentration and signs of diversification are slim. Between 2009 and 2013 three product groups ac-counted, respectively, for 78.2 % ( in 2009 ) and 64 % ( in 2013 ) of the country’s textiles exports. The best-performing product group between 2009 and 2013 has been ‘Coconut fibres, abacá, Manila hemp and other vegetable textile fi-bre ( HS 530500 ), accounting for 43.9 % of sectoral exports.

Its exports grew by a CAGR of 412 % between 2009 and 2013, reaching US $ 22.1 million. This highlights the fact that the sector finds it difficult to export fabrics (Appendice section B).

Trade data sheds light on a number of worrisome trends. The gap between the textile and clothing segments of the value chain continues to widen as the garment segment pushes forward with imported materials. Textile exports have fallen significantly and the segment’s limited competitive-ness raises concerns for its continued survival. The over-whelming concentration of clothing exports to the United States is also cause for concern, as the reliance on a single market is likely to prove unsustainable over the long run. The limited level of market diversification, indicating that en-terprises have been unable to capitalize on the preferential market access provided to Kenya by many of the world’s major markets, is evidence that the sector requires increas-es in productivity, quality and service provision in order to be truly competitive.



21

STRATEGIC ISSUES AND COMPETITIVE CONSTRAINTS

The sectoral analysis sheds light on a number of issues that seem to be inhibiting greater competitiveness and stronger growth. Skills are often unaligned to the demands of the industry, value addition and integration are lacking, and institutional support is limited. With regards to policy, the Government has made positive strides. Even so, a number of issues, particularly related to electricity provision, contin-ue to constrain the business environment. It is necessary to analyse these competitive issues in more depth, using evi-dence from the field. A greater analysis of these challenges will allow stakeholders to develop an effective roadmap that can adequately tackle the key constraints.

Traditionally, the scope of export strategies has been de-fined in terms of market entry, such as market access, trade promotion and export development. This ignores several important factors in a country’s competitiveness. For a roadmap to be effective it must address a wider set of constraints, including any factor that limits the ability of firms to supply export goods and services, the quality of the business environment, and the development impact of the country’s trade, which is important to its sustainability. This integrated approach is illustrated by the four gears frame-work schematic above.

To increase the specificity of constraint analysis for the T&C sector, a detailed constraint overview is provided for each subsector of the industry, namely : textiles and clothing. In cases where constraints are shared, they will be detailed under the subheading ‘across the value chain’.

Supply-side issues affect production capacity and include challenges in areas such as availability of appropriate skills and competencies, diversification capacity, technology and low value addition in the sector’s products.

Business environment constraints are those that influence transaction costs, such as regulatory environment, admin-istrative procedures and documentation, infrastructure bot-tlenecks, certification costs, Internet access and cost of support services.

Market entry constraints are essentially external to the coun-try ( but may also be manifested internally ), such as market access, market development, market diversification and export promotion.

Social and economic concerns include poverty reduction, gender equity, youth development, environmental sustain-ability and regional integration.

Border IssuesBorder-In Issues

Border-Out IssuesDevelopment Issues

CapacityDevelopment

Cost ofDoing Business

Developinig skills

and Entrepreneurship

Capac

ity

Diversi

ficati

on

Infrastructure and

Regulatory Reform

Trad

eFa

cilita

tion

Market Accessand Policy Reform

National Promotion

and Branding Trad

e Su

ppor

t

Serv

ices

Poverty Alleviationand Gender Issues

Regional Development

and Integration

Envir

onm

enta

l

Sust

aina

bilit

y and

Clim

ate

Chan

ge


22

Box 10 : Competitive constraints affecting Kenya’s T&C sector

Border-in ( supply-side )

CapacityDevelopment

Developinig skills


Capac

ity

Diversi

ficati

on

Across the value chain

Skill gap :

• Limited availability of skilled specialists hinders productivity, quality and value addition• Inadequate TVET system affects the development of a qualified labour supply• Insufficient in-company training hinders the development of a qualified labour supply• Inadequate human resource management leads to higher turnover and lower productivity• Limited availability of competent managers limits operational, systems and process efficiency• Inadequate educational networks for management training• Limited exposure to best practices and open mindset• Limited ability to register intellectual property hinders value addition• SMEs find it difficult to adapt to quickly evolving market demands• Difficulties adhering to quality standards reduce competitiveness on international markets

Machinery : Outdated equipment limits productivity and quality

Textiles Input supply :

• Limited availability of local cotton increases procurement costs• Poor quality yarn reduces competiveness along the value chain

Lack of economies of scale : Low capacity utilization prevents economies of scale

Clothing Input supply : Lack of backward linkages hinders opportunities for value addition and speed to market

Border ( business environment )


Infrastructure and

Regulatory Reform

Trad

eFa

cilita

tion


Trade facilitation issues :

• There is room to improve Customs services to match international benchmarks• Porous borders create unfair competition in the local market

Organization :

• Limited communication and coordination within the sector hinders growth• There are difficulties engaging enterprises in the informal sector• Weak quality management infrastructure hinders compliance with international requirements• An inadequate regulatory environment hinders overall business development and discourages investment in the

sector• Mitumba imports limit the potential for domestic market expansion

Infrastructure :

• The high cost of power diminishes profitability• Limited access to ICT services hinders business development

Cost of doing business :

• A burdensome tax and duty system diminishes profitability and reduces access to working capital• Expensive and unreliable transportation reduces price competitiveness and hinders the ability of enterprises to

deliver goods in a timely fashion• Unpredictable wage increases make it difficult for enterprises to budget expenditures

Textiles Access to finance : Limited access to finance hinders investment

Border-out ( market access )


National Promotion

and Branding Trad

e Su

ppor

t

Serv

ices


Trade information : Lack of trade intelligence diminishes capacities for market expansion and hinders the develop-ment of products that are aligned with target market requirements

Trade promotion :

• Lack of an effective national branding strategy and coordinated promotion hinders market development• There is limited assistance to handloom firms and designers on trade promotion

Market access policies : The export quota reduces profitability

Development issues



and Integration

Envir

onm

enta

l

Sust

aina

bilit

y and

Clim

ate

Chan

ge


CSR : Environmentally and socially responsible practices are not an integral part of doing business in the sector, threatening negative social impacts and ineligibility to supply socially concerned buyers

Textiles Water pollution : Outdated dyeing methods pollute waterways


23

SUPPLY SIDE ISSUES

Box 11 : Supply-side constraints in Kenya’s T&C sector

Border-in ( supply-side )

CapacityDevelopment

Developinig skills


Capac

ity

Diversi

ficati

on


Skill gap :

• Limited availability of skilled specialists hinders productivity, quality and value addition• Inadequate TVET system affects the development of a qualified labour supply• Insufficient in-company training hinders the development of a qualified labour supply• Inadequate human resource management leads to higher turnover and lower productivity• Limited availability of competent managers limits operational, systems and process efficiency• Inadequate educational networks for management training• Limited exposure to best practices and open mindset• Limited ability to register intellectual property hinders value addition• SMEs find it difficult to adapt to quickly evolving market demands• Difficulties adhering to quality standards reduce competitiveness on international marketsMachinery : Outdated equipment limits productivity and quality

Textiles Input supply :

• Limited availability of local cotton increases procurement costs• Poor quality yarn reduces competiveness along the value chainLack of economies of scale : Low capacity utilization prevents economies of scale

Clothing Input supply : Lack of backward linkages hinders opportunities for value addition and speed to market


Skill gap

Limited availability of skilled specialists hinders productivity, quality and value addition

Kenya’s T&C sector lacks an adequate supply of sufficiently trained workers, leading directly to lower productivity and quality. One of the key deficits is the lack of workers spe-cialized in operating and maintaining machinery. Although some companies within the sector have modernized their plants and invested in new machinery, workers are not able to adequately operate and maintain the new equipment. As a result, productivity suffers and the new, expensive ma-chinery is not being used to its full capacity. Employees are also unable to operate multiple types of machinery. Other deficits include a lack of floor supervisors and administra-tive workers.

The lack of adequate skill sets is particularly concerning given that wages for Kenyan workers are relatively high com-pared with neighbouring countries. The average wage for a sewing operator in Kenya ( US $ 165 per month, although three structures exist – urban, municipal and rural ) is 3.7 times higher than it is in Ethiopia ( US $ 48 per month ). While in general higher wages would be disbursed to compen-sate for higher productivity, this is not the case in Kenya ( although Kenya’s production is higher by 45 % - 50 % com-pared with Ethiopia, this doesn’t justify the wage difference ). Unless skill sets can be improved, enterprises are at risk of spending more money to hire less qualified workers vis-à-vis their competition. This results in lower productivity and reduced competitiveness.

Inadequate TVET system affects the development of a quali-fied labour supply

Kenya’s TVET system is constrained by a lack of quality staff, inadequate access to training equipment and materi-als, the misalignment of curricula with industry needs, and inadequate funding for both programmes and students.26 It should also be noted that few TNCs and foreign investors collaborate with local training institutions to enhance skills at SMEs.

‘As I hire new workers for my textile firm, I know that they have some basic knowledge regarding machin-ery usage as they most likely were trained at Rivatex. However, I already know that I will need to retrain them, because Rivatex does not provide an overview of the latest machinery.’

Industry opinion

The sector relies on a number of technical training institu-tions under the Government’s technical training programme, as well as a number of middle-level colleges. However, the programmes offered do not provide a sufficient level of tech-nical specialization. Most graduates have to be retrained by the factories in order to achieve the necessary level of

26.– Global Development Solutions ( 2014 ). Value Chain Analysis of Priority Industrial Sub-Sectors in Kenya, Part I : Textiles and Garments, p. 23.


24

productivity, adding to the cost of production. Even where courses may have been adequate, the fast pace of change within the industry means that once trainees graduate, their skills may soon be obsolete. This highlights the need for better post-graduation follow-up. Short, targeted courses and continuing education classes might help alleviate this problem.

First and foremost, training staff must be better prepared and given greater exposure to international best practices and industry needs. Universities and TVET institutions are not synchronized with the needs of the industry. The private sector is not involved in the definition of curricula (which are outdated) and there are no mechanisms to monitor the alignment of curricula to industry needs. Most universities and TVET institutions place a particular emphasis on fashion and design within their curricula due to the popularity of the subject among students. The industry, however, requires skills associated with production technology and processes, equipment maintenance and multi-skilling. This is particu-larly so considering that buyers, not Kenyan garment pro-ducers, are responsible for providing the designs.

The situation is such that many companies do not acknowledge universities as a relevant source of skills. Research efforts, like curricula, are also misaligned with the industry. A lack of interaction between students and industry, through internships for example, also contributes to the lack of preparedness among graduates ; there are some intern-ships but they remain largely academic. Other problems include the lack of a handloom weaving school in Kenya.

It should also be noted that training institutions lack access to adequate machinery on which to train their stu-dents.27 Asian institutions, by comparison, replace training equipment at most every four years. Adequate upgrading is constrained largely by a lack of financing.

In the PoA, activities 1.5.3, 1.5.5 and 1.5.6 respond to this issue.

Insufficient in-company training hinders the development of a qualified labour supply

In the absence of an adequate TVET system, it is essential that enterprises are able to adequately train their own em-ployees. Nevertheless, only a few mills ( the largest ) have an internal training school / human resource development facilities, due mainly to the high cost of providing such tech-nical training. Moreover, enterprises lack appropriate facili-ties to train workers. Most companies are simply trying to survive and training is not a priority in terms of investment. Increasing awareness of the costs and benefits of providing adequate training could go a long way towards improving skill sets within the sector.

In the PoA, activities 1.2.1 to 1.2.3 respond to this issue.

27.– Ibid. : p. 21.

Inadequate human resource management leads to higher turnover and lower productivity

‘People are being trained at our factories when they start to work, but there is a high turnover rate because of seasonal contracts and other reasons. Nobody can guarantee that the employee will stay after training and contribute to the productivity of the enterprise’.

Industry opinion

Poor management of human resources also contributes to the lack of adequately skilled workers. First and foremost, the use of seasonal contracts leads to high levels of labour turnover. This constant brain drain makes it difficult for firms to capitalize on acquired skill sets after providing the neces-sary in-house training. Productivity is also constrained by weak incentives systems that do little to stimulate and re-ward performance. Lastly, some companies hire foreigners to work as machinery specialists in the absence of quali-fied locals. However, the expense of this is extravagant. Processing an expat work permit costs roughly US $ 2,200 in Kenya ( while it is only US $ 68 in Ethiopia ). A longer-term approach that incorporates better in-house training for lo-cals would likely prove to be more cost-effective.

In the PoA, activity 1.2.6 responds to this issue.

Limited availability of competent managers limits opera-tional, systems and process efficiency

‘The best way to bridge the management knowledge gap in my company is to use international exper-tise. I cannot wait for the educational system to be improved to hire the required line managers. But I struggle to get the appropriate work permits for em-ployees from abroad. The system should be facili-tated and streamlined.’

Industry opinion

Middle and high-level management lack appropriate mana-gerial skills with regards to various areas of sourcing and production, including supply chain management, planning, cost optimization and floor management. As a result, man-agers are unable to organize their production processes in the most cost-efficient and productive manner, hindering overall productivity and profitability.


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Another area of concern is human resource management ; managers may not appreciate the qualifications that are re-quired for different positions. Indeed, they frequently hire people with the wrong set of qualifications to operate ma-chinery or manage various aspects of the business. In ad-dition, they do little to provide adequate incentives to their workers : replacing flat wages with piecemeal rates to reward fast adaptability, for example, would help workers to become more efficient and productive.

The decision not to expand in-company training often leaves companies needing to import skilled labour at quite a high cost. The reliance on foreign workers results in both higher wages and high-cost visas. A better human resource and skills development policy overall would go a long way, not only to improving access to adequately skilled labour but also to reducing employment costs in the long term.

‘Our manager at the factory is a very kind person but he lacks some managerial competencies and has little experience with new technology. When new equipment was installed, he didn’t know how to use it. So when we have a technical problem, he cannot advise us on it.’

Industry opinion

Furthermore, there is a lack of familiarity with the newest technology. As managers are generally unaware of the lat-est machinery due to a lack of exposure, they are slow to make technical upgrades that would improve productivity and quality in line with international best practices. In a simi-lar vein, management generally lacks competencies with regards to information technology. This hinders the develop-ment of more integrated systems that would allow Kenyan SMEs to provide integrated services, as required by modern lean retailer and fast fashion TNCs.

As a result of inadequate skills among local managers, manufacturers have come to rely on high-cost foreign work-ers to fill their managerial positions. Not only are salaries well above what would be demanded by local managers, the necessary work permits are also very expensive.

Inadequate educational networks for management training

One of the key factors behind the lack of adequate manage-ment capacities is the limited sector-specific management training provided by universities and other educational in-stitutions. Even where such training does exist, disconnects between academic curricula and the needs of the industry result in suboptimal skill development. Greater collaboration between academia and industry, as well as the development

of short, targeted training courses, could go a long way to improving management skill sets.


Limited exposure to best management practices and latest modern production processes and technologies

The lack of adequate exposure to international markets re-sults in limited awareness of best management practices and trends in modern technology. Participation in foreign events, including trade fairs ( both T&C and machinery ), sourcing missions and visits to successful companies abroad, would help managers stay abreast of the lat-est developments and gain a better understanding of the factors that result in a successfully managed company. Furthermore, companies that hire foreign managers could make efforts to ensure knowledge transfer between the manager and his or her subordinates. In some cases, a strong resistance to change among managers reinforces the status quo in production and technology levels.

In the PoA, activities 1.2.4 to 1.2.6, 1.2.8, 1.3.2 to 1.3.4, 1.4.5 to 1.4.7, 1.5.2, 3.3.2 to 3.3.5 and 4.3.2 respond to this issue.

Limited ability to register intellectual property hinders value addition

‘I am a designer from Kenya. I have some original designs that my workshop produces. But I have seen a number of times copies of my products in the mitu-mba markets. This is very harmful for my small busi-ness since I do not have an intention to export in the short term and my main focus is to sell locally. I would like to learn more about intellectual property and how to protect my original designs.’

Industry opinion

Although many exporters have been shifting towards lower value added CMT activities, the ability of the sector to add value through design may lie at the core of its long-term suc-cess. Students take great interest in design and there are already a number of very capable designers adding value within the sector. Fashion designers must be able to register the intellectual property of their designs in order to protect themselves. Even so, most designers do not know how to do so, nor are they aware of the costs involved. Efforts will be required to promote awareness of the intellectual prop-erty registration process.



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SMEs find it difficult to adapt to quickly evolving market demands

The global T&C sector is characterized by fast-paced changes with regards to market demand, buyers’ needs, design and quality requirements. Enterprises that wish to partake in the global value chain successfully must be able to understand and respond to these changes in a timely manner but Kenyan SMEs find such adaptations difficult. One of the key constraints is weak linkages with the value chain, which make it difficult for the sector’s stakeholders to work together in order to respond to evolving market de-mands. The prevalence of outdated machinery also makes it difficult for companies to adjust production according to the latest trends, while expansion is hindered by difficult access to industrial land and limited access to finance.

Of particular concern is the lack of strategies for SMEs to reduce costs so as to meet foreign market demands. The disconnect between SME capacities (and knowledge) and market demands contributes greatly to the inability of com-panies to adequately adapt to the market.


Difficulties adhering to quality standards reduce competi-tiveness in international markets

Firms find it difficult to meet the certification requirements of international buyers. This is due to both a lack of knowledge and a lack of capacities. In general, firms are unfamiliar with international quality standards and are unaware of the ben-efits of compliance for exports. There is poor understanding among businesses of the importance of establishing control systems within their production structures. This is particu-larly problematic in the spinning and weaving subsegments of the chain.

Due to the experience gained in exporting under AGOA, medium-sized and large firms have developed a better un-derstanding of standardization issues. However, a very large number of MSMEs evolve in the informal sector. As such, they have not been sensitized to quality management sys-tems as they mostly trade at the national and regional level, generally selling through informal channels. The lack of un-derstanding about international standards and certification prevents them from reaching larger players in the industry and creates a disconnect between them and faster-growing, FDI-backed garment companies operating out of EPZs.


Machinery

Outdated equipment limits productivity and quality

The T&C sector, and in particular the textile segment, relies on complex machinery that can provide a significant cost advantage. Such equipment should be retooled every 10

to 15 years given the rapid pace of technological advance-ments. Nevertheless, many companies do not regularly retool their facilities. In addition, the purchasing practices of companies within the sector are driven mainly by price, as opposed to long-term strategic considerations. As such, companies often buy models one or two generations old because of the large discounts. This results in equipment that is less productive than that of international competitors.

Moreover, the older equipment may not be able to pro-duce the product varieties or quality demanded by modern markets. Upgrading is hindered by the difficult procure-ment procedures for importing equipment, the high cost of modern equipment and credit. With rates reaching 18%, it can be difficult for enterprises to purchase new machinery. Replacing spare parts of old equipment is also expensive and sometimes unfeasible. It should also be noted that the purchase of new equipment is not accompanied by the ap-propriate training of staff. Thus the new equipment often operates under capacity.


Textiles

Input supply

Limited availability of local cotton increases procurement costs

Cotton production in Kenya has been declining and is con-strained by a number of factors. Yields have been suffering because of a lack of extension services, which hinders the uptake of best practices and new technologies. In addition, irrigation facilities are inadequate. High input costs that discourage best practices, the limited availability of quality seeds and the presence of substandard agrichemicals have also contributed to lower output. Lower yields, in turn, have encouraged farmers to switch to more profitable food crops. The sector also lacks an updated quality assurance protocol and adequate testing equipment. As a result, cotton that is produced is often of questionable quality. Lastly, the internal market is disorganized and lacks an efficient mechanism for price definition. As a result of declining output, Kenya’s textile sector has come to rely on Uganda and the United Republic of Tanzania for almost all of its cotton fibre require-ments. The reliance on imports leads directly to higher costs and lower competitiveness.

In the PoA, activities 1.2.3 and 1.2.5 respond to this issue.

Poor quality yarn reduces competiveness along the value chain

The spinning segment of Kenya’s T&C value chain gene-rally produces low-quality yarn. The reasons for this are numerous and include inadequate machinery, weak skills and know-how, poor materials and limited awareness of quality requirements and international quality standards. In


27

addition, some spinning companies do not have the labora-tory instruments needed to measure their yarn quality.

The prevalence of lower quality yarn makes it difficult for fabric producers to produce higher value-added products with local inputs. Downstream manufacturers are required to either produce lower quality goods with less value addition or import better materials at a higher cost, thereby reduc-ing profitability and / or price competitiveness. Reliance on imported materials can also reduce the flexibility with which producers can respond, significantly hindering their ability to engage with modern value chains where the ability to fill orders with a quick turnaround is a key component for success.


Lack of economies of scale

Low capacity utilization prevents economies of scale

Kenya’s textile sector is characterized by a level of ca-pacity utilization that hovers between 40% and 50%. Underutilization of capacity perpetuates production of goods at non-competitive prices. The inability of textile pro-ducers to lower their prices is particularly worrisome given

that the segment produces goods for the low end of the market. It also makes it difficult for enterprises to realize the benefits of machinery upgrades and it may even threaten the financial viability of loans taken out to acquire such equipment. Higher rates of utilization, therefore, could go a long way towards ensuring that producers can afford capital upgrades.

While problems such as the lack of qualified specialists, outdated equipment and poor management practices all play a part in keeping capacity utilization low, the lack of suf-ficient orders also plays a role. Kenya’s electricity costs and wages are high and its lead times are long. These issues reduce competitiveness and prevent Kenya from attracting a greater amount of orders. In addition, power outages are common, leading to frequent interruptions. It should be not-ed that companies located within EPZs have fewer problems with electricity provision because EPZs are equipped with their own generators.

In the PoA, activities 1.2.1 to 1.2.5, 1.4.6, 3.4.1, 4.3.2 and 4.3.3 respond to this issue.

Clothing

Input supply

Lack of backward linkages hinders opportunities for value addition and speed to market

‘Almost all large competing countries have local yarn and fabric production, sometimes integrated in apparel firms. They are able to minimize their costs that way, since they are not required to import as we do. We are hoping that the upcoming reforms will attract investment in this segment so that we are able to source domestically.’

Industry opinion

There are few backward linkages in the T&C sector and it is estimated that Kenya’s garment segment imports 93 % of its fabric and yarn requirements. This is one of the reasons why the textile segment has not shared in the overall success of the sector over the last few years.

As the cost of production for local materials is very high, it is often cheaper to import inputs.The quality of yarn is generally not adequate for companies looking to produce clothing for export. Even so, importing materials comes with its own set of disadvantages: taking delivery of inputs from Asia is time-consuming and the reliance on imports puts Kenyan garments at a price disadvantage compared with most Asian competitors.

Photo: Make it Kenya, 2015


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Increasing integration throughout the value chain was one of the priorities of Kenya’s T&C sector, as it is for many of its competitors in the region. Nevertheless, these efforts have met with little success. In fact, many producers are moving back towards a CMT model with very little value addition. Efforts must be made not only to improve the qual-ity and price competitiveness of domestic textiles, but also

to ensure that the textile segment is producing goods in accordance with the demands of the clothing segment. To this end, greater collaboration, networking and knowledge-sharing between textile companies and clothing companies could go a long way towards setting the sector back on a path towards integration and value addition.


BUSINESS ENVIRONMENT ISSUES

Box 12: Business environment constraints in Kenya’s T&C sector

Border ( business environment )


Infrastructure and

Regulatory Reform

Trad

eFa

cilita

tion


Trade facilitation issues :

• There is room to improve Customs services to match international benchmarks• Porous borders create unfair competition in the local marketOrganization :

• Limited communication and coordination within the sector hinders growth• There are difficulties engaging enterprises in the informal sector• Weak quality management infrastructure hinders compliance with international requirements• An inadequate regulatory environment hinders overall business development and discourages investment in the sector• Mitumba imports limit the potential for domestic market expansionInfrastructure :

• The high cost of power diminishes profitability• Limited access to ICT services hinders business developmentCost of doing business :

• A burdensome tax and duty system diminishes profitability and reduces access to working capital• Expensive and unreliable transportation reduces price competitiveness and hinders the ability of enterprises to deliver

goods in a timely fashion• Unpredictable wage increases make it difficult for enterprises to budget expenditures

Textiles Access to finance : Limited access to finance hinders investment


Trade facilitation issues

There is room to improve Customs services to match inter-national benchmarks

Although much progress has been achieved over recent years, the Customs system continues to operate at subop-timal efficiency.

While administrative reforms are being implement-ed, including the creation of the National Single Window Community-Based Project, trading across borders is still a time-consuming process (see Appendice section C). Of particular concern to the T&C sector is the fact that Less Container Load containers (which are shared by several owners) take much more time to clear through Customs. As a result, these containers can take up to 10 days to clear, as opposed to three days for normal containers. While Customs must clear each owner, this does not fully explain the differ-ence in clearance times. This is a particular problem for the

T&C sector because companies are often too small to justify using their own containers.

A key problem is also the limited capacities of Customs agents; although efforts have been made lately to improve the situation, they are still not sufficiently trained on textile products and classifications, leading to frequent delays at the point of verification. In addition, there is limited inter-action between firms and Customs for handling common complaints. There is also no streamlined process (fast track for reputable exporters with long track records).

The introduction of improved information technology systems would greatly enhance Customs efficiency, as bar-codes could contain all information about a product and significantly cut down on verification and clearing times. While the Tradex system is currently used to process import and export documentation online, the capacities of the sys-tem are limited in scope and it frequently breaks down. It is noteworthy that Kenya is taking an active role in integrating the upcoming Trade Facilitation Agreement, as it has sub-mitted a Category A notification, which states that provisions of the Agreement will be implemented by the time it enters into force.


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Moreover, Kenyan Customs works with four-digit Harmonized System (HS) codes. The industry would be better-served if six-digit HS codes were used instead, as it would ensure a more appropriate classification for import-ed products that compete with local goods in the domestic market.

In the PoA, activities 2.2.1, 2.2.2, 2.3.1 and 2.3.2 respond to this issue.

Porous borders create unfair competition in the local market

Kenyan clothing producers must compete with both coun-terfeit products and smuggled goods. Black markets, particularly in Eldoret, are a huge problem due to the im-portation of counterfeit goods. After being produced in China and Turkey, counterfeits are outfitted with Kenyan labels and sold at discounts of 20 % – 30 % of the price of the real product. In addition, second-hand clothing is often imported disguised as new clothing. It is another source of unfair competition for local producers because it reaches the market without being subject to the regular duties ap-plied to second-hand clothing ( Most Favoured Nation tar-iff is 35 % or US $ 200 / ton, whichever is greater ). Similarly, undervalued goods are imported into the country without paying the appropriate duties, as Customs agents do not set floor prices for containers.

Improvements will require enhancing the capacities of Customs officials to recognize counterfeit clothing and dis-tinguish between new and used clothing. They must also be trained to identify a floor price for containers so that mini-mum duties can be applied. Lastly, efforts must be made to minimize corruption with the border agencies so as to minimize smuggling activity.


Organization

Limited coordination and communication within the sector hinders growth

The sector is characterized by a lack of communication and coordination throughout the entire value chain. While today all subsegments of the industry are working mainly in isolation, value-chain-wide cooperation could play a role in helping stakeholders be better organized. Such a sys-tem would ensure adequate linkages throughout the value chain, though it would require an association of associations that could coordinate the cooperation. A common fund that could engage in simplified bulk input purchases would also be a welcome development.

Another issue is dispute resolution: while the indus-try is self-regulated, there are currently no dispute reso-lution mechanisms. Stakeholders have no other option than to take their disputes to the courts of law, which are much more time-consuming and expensive. The

delays caused by relying on the courts are especially troublesome during periods of high price fluctuation.

The lack of better coordination has a number of effects on the sector. First and foremost, the disconnect between different segments of the value chain leads to the failure of textile companies to produce inputs in accordance with gar-ment producers’ demands. As a result, the clothing segment largely relies on imported materials. In addition, limited coor-dination makes it difficult for stakeholders to purchase inputs in bulk or coordinate production in order to fill larger orders.


There are difficulties engaging enterprises in the informal sector

An important part of Kenya’s T&C sector is composed of micro enterprises (nearly 75,000) that are comprised of two to three people. As these enterprises tend to operate in the informal economy, they do not benefit from various Government services and capacity-building initiatives. There is no association that represents these enterprises. The Micro and Small Enterprise Authority (MSEA) was re-cently formed to provide trainings but its capacity to reach the large population of T&C micro and small enterprises is limited. Given the role that micro and small enterprises can play in poverty reduction, it is essential that greater efforts are made to extend appropriate opportunities to the micro and small enterprises working in the T&C sector.


Weak quality management infrastructure hinders compli-ance with international requirements

Kenya’s laboratories lack the necessary capacity to test in-puts ( fabrics, accessories ) to ensure their compliance with the quality requirements of international markets. In addi-tion, more laboratories must be created as the textile sec-tor develops. It should also be noted that there is a lack of consulting services for quality issues.


An inadequate regulatory environment hinders overall busi-ness development and discourages investment in the sector

Kenya’s regulatory framework is complex and burdensome. Regulations often overlap and business owners find them-selves governed by competing sets of rules. This leads to cases where, for example, multiple and redundant business-related licences are required. This affects both the ease and cost of doing business, thereby reducing profitability for business owners, creating headaches and discourag-ing investment. The complex operating environment is one reason that investment has been predominately targeting low-risk projects such as CMT operations.

Another challenge is the weak enforcement of standards and tax laws. This has led to the dumping of substandard

Photo: Pashminu.


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imports and counterfeit goods into the domestic market, creating unfair competition for local manufacturers. While many countries use the domestic market as a springboard from which industry can build capacities until it is ready to enter foreign markets, Kenyan firms have thus far been de-prived of such opportunities.

In the PoA, activities 2.1.1 to 2.1.10, 2.3.1 and 2.3.2 re-spond to this issue.

Mitumba imports limit the potential for domestic market expansion

The decline of the T&C sector in the 1980s and 1990s was due in part to the influx of mitumba, which undercut domestically produced clothing in retail markets. Today, the import of mitumba is a huge business and it is growing : second-hand clothes are distributed through-out the region, entering the country mainly through Nairobi. In addition, many major industries dump their rejects on the local market and call them second-hand. Kenya has no regulations in place that seek to control im-ports of second-hand clothing and duties on such clothing are very low. More recently, there have even been instances of second-hand fabric imports, a development that could threaten textile producers. As a result, mitumba continues to limit the size of the internal market for SMEs in the garment segment. This not only makes it difficult for firms to achieve financial viability, it also deprives them of a market that they can use as a springboard for export.

It should be noted that despite the threats posed to the T&C sector, the mitumba sector is a major source of income in the country. Some stakeholders argue that the problem is not so much the unfair competition from mitumba but the lack of competition from unproductive domestic producers.28

In the PoA, activity 2.3.1 ( 1 ) responds to this issue.

Infrastructure

The high cost of power diminishes profitability

‘A very big part of input costs is due to energy. If we compare ourselves to our neighbours, they probably have lower prices; but we have to spend much more for electricity.’

Industry opinion

Although power supply in Kenya is relatively reliable, energy costs are quite high : power costs US $ 0.15 / kWh in Kenya,

28.– Portia Crowe ( 2014 ). The global business of second-hand clothes thrives in Kenya. Reuters, 15 October. Available from http : / / www.reuters.com / article / 2014 / 10 / 15 / us-kenya-textiles-idUSKCN0I41DS20141015.

as opposed to US $ 0.07 / kWh in China, US $ 0.04 / kWh in South Africa, and US $ 0.04 / kWh in Ethiopia. These costs significantly reduce the price competitiveness of Kenya’s T&C products, particularly in the capital-intensive spinning and textiles segments of the value chain. It is estimated that energy accounts for 40 % of the total production cost when manufacturing textiles in Kenya.

However, the Government is making efforts to relieve these price pressures through an incentive programme that began in 2014 : firms that increase their production capac-ity by 20 % will see their energy costs drop to US $ 0.09 / kWh through a subsidy.29 Generation capacity is also being up-graded ; the Government hopes that capacity will be ex-panded by 5,000 megawatts by 2016. While an ambitious goal, progress is being made, as illustrated by the recent addition of 500 megawatts in geothermal energy capacity.30

29.– Yarns and Fibres News Bureau ( 2014 ). Kenyan textiles industry set to grab bigger share of global market. Available from http : / / www.yarnsandfibers.com / news / textile-news / kenyan-textiles-industry-set-grab-bigger-share-global-market#.VXe-KPlViko.30.– CNBC Africa ( 2015 ). KENGEN to boost Kenya’s power output. Available from http : / / www.cnbcafrica.com / news / east-africa / 2014 / 10 / 15 / kengen-increase-power / .

Photo: Pashminu.


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In addition, authorities hope to spend US $ 2 billion in the coming years to upgrade power distribution systems.

In the PoA, activities 2.5.1 to 2.5.3 will contribute to re-sponding to this issue.

Limited access to ICT services hinders business development

Access to high speed Internet and mobile communications networks is poor in some of the regions where textile mills are located. Effective ICT infrastructure is needed for T&C companies to cater to the demands of modern TNC buy-ers. Suppliers must be able to seamlessly integrate their production chain with a variety of other services, neces-sitating adequate connectivity, and enterprises wishing to engage in fast fashion must be connected so that they can partake in the rapid information exchange and analysis that lies at the root of the new fashion cycle.

In the PoA, activities 2.6.1 and 4.3.2 will contribute to responding to this issue.

Cost of doing business

A burdensome tax and duty system diminishes profitability and reduces access to working capital 31

Heavy taxes are levied on imports, including excise taxes, general sales taxes, and taxes and charges for sensitive product categories. This reduces the profitability and price competitiveness of the majority of exporters, who rely upon imported materials. In addition, exporting firms are required to pay VAT upfront. It can take up to a year for companies to receive these VAT refunds. In the meantime, enterprises suf-fering from cash shortages may be unable to access ade-quate working capital to fund their operations. It should also be noted that the KRA often disputes the value of goods declared by importers. As such, it often demands the pay-ment of higher tariffs. In addition to increasing costs, this also causes significant delays as firms attempt to negotiate with the KRA.

In the PoA, activity 2.2.3 will contribute to responding to this issue.

Expensive and unreliable transportation reduces price com-petitiveness and hinders the ability of enterprises to deliver goods in a timely fashion

Kenya’s logistics are characterized by both long delays and high prices. The tariff for transport along Kenyan roads is KES 4/kg/km, well above the KES 1/kg/km rate that is considered to be competitive throughout the world. One of the factors behind high trucking costs is the frequency with which trucks return empty. In order to alleviate this problem,

31.– International Trade Centre ( 2011 ). Non-Tariff Measures Business Survey in Kenya.

a campaign called GS1 is currently being designed. The project will help to coordinate truck loads so that trucks do not return empty. As they will be able to charge for both the outgoing and return legs of a journey, this project should help to reduce costs by up to 20%. The project will also work to improve traceability of goods throughout the transport network.


Unpredictable wage increases make it difficult for enter-prises to budget expenditures

The Government increases the minimum wage during its yearly Labour Day celebrations. While beneficial for work-ers, the value of these increases is unpredictable. In 2015, the minimum wage was increased by 12 %, while in 2014 no increase was announced. In 2013, the minimum wage was increased by 14 %. Not knowing the expected increase, firms are forced to make guesses when estimating their expenses for the year. It is essential that the sector is able to accurately estimate its cost structure throughout the year in order to engage in effective planning and pursue responsible busi-ness development.

In the PoA, activities 2.1.1 to 2.1.10 will contribute to re-sponding to this issue.

Textiles

Limited access to finance hinders investment

‘It is extremely expensive and also very difficult to get credit from a bank to buy new equipment. Banks do not trust us and we do not trust them. It is hard to do business in such conditions.’

Industry opinion

Improvements in productivity are currently being hampered by continued reliance on outdated or poorly maintained machinery. Limited access to finance is one of the key chal-lenges for SMEs wishing to purchase spare parts or up-grade their equipment. Credit is very expensive and lending conditions can be onerous. Interest rates can range from 16 % to 18 %. In addition, banks require collateral that firms often cannot provide. Compounding these problems, com-mercial banks are generally not interested in engaging with the spinning and textile subsectors. Having remembered the losses that were incurred by lending to the sector during the downturn of the 1990s, banks are reluctant to extend credit. When finance is provided, borrowing costs tend to be set even higher.



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MARKET ENTRY ISSUES

Box 13 : Market entry constraints in Kenya’s T&C sector

Border-out ( market access )


National Promotion

and Branding Trad

e Su

ppor

t

Serv

ices


Trade information : Lack of trade intelligence diminishes capacities for market expansion and hinders the development of products that are aligned with target market requirementsTrade promotion :

• Lack of an effective national branding strategy and coordinated promotion hinders market development• There is limited assistance to handloom firms and designers on trade promotionMarket access policies : The export quota reduces profitability


Trade information

Lack of trade intelligence diminishes capacities for market expansion and hinders the development of products that are aligned with target market requirements

Kenyan firms lack access to reliable and timely sources of trade intelligence on market characteristics and buyer requirements on preferred distribution channels, etc. Of particular concern, exporters lack information about com-pulsory market access requirements in new markets (such as technical regulations, product standards and conformity assessment). Furthermore, some trade agreements remain underexploited due to the lack of understanding of rules of origin and the necessary verification of value added in-puts in order to determine preferential treatment. Building awareness of the opportunities offered by such agreements, together with specific trade intelligence on market require-ments, would go a long way towards increasing export op-portunities, especially as CMT firms progressively build their service base and move up the value added ladder.

The primary source of market intelligence for non-CMT T&C companies is personal contacts. Specific trade infor-mation and market intelligence is unavailable, outdated or too general. While some good information exists, it is very costly. The lack of market intelligence is compounded by poor research capacities within firms as well as limited ex-posure to target markets. Companies have little interaction in their target markets, while trade representatives do little to assist enterprises in understanding market dynamics. Greater exposure to events such as trade fairs and buyer–seller meetings would help firms gain a better understanding of market requirements.

The lack of trade intelligence is a key factor behind the continued reliance on AGOA and third-country fabric provi-sion. Without a better understanding of market dynamics, firms are unable to produce goods that meet market re-quirements. As noted by a representative of the Handloom

Weavers Association, ‘we can produce, but we do not know the market’.

In the PoA, activities 4.1.1 to 4.1.5, and 4.2.1 respond to this issue.

Trade promotion

‘We must capitalize on the renewal of AGOA and the upcoming Tripartite Agreement. In order to do this, reinforcing the image of Kenyan products will be key! We must work on a common brand to make ourselves visible and attractive to foreign markets.’

Industry opinion

Lack of an effective national branding strategy and coordi-nated promotion hinders market development

Kenya suffers from limited name recognition. Although the Government has tasked the Brand Kenya Board with cre-ating and promoting an integrated national brand, its ca-pacities are weak and it has been relatively ineffective in achieving its mandate. Indeed, T&C stakeholders seem to be unaware of its existence. Moreover, there is no national brand for T&C products. In the absence of an effective na-tional branding strategy, both generic and sector-specific, the country’s reputation is sometimes overshadowed by its historical challenges. If Kenya is to overcome its constraints and become a chief competitor among its regional peers, it must develop a unique country image. This is especially true considering the lack of capacities for branding among individual enterprises.

Furthermore, the sector must engage in more persistent trade promotion efforts through regular participation in in-ternational trade fairs and buyer–seller events. In addition to


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helping enterprises gain exposure to international markets and offering them opportunities to pursue new commercial opportunities, consistent participation will provide a venue through which stakeholders can reinforce the new national brand.


There is limited assistance to handloom firms and designers on trade promotion

The needs of handloom firms and designers are often dif-ferent from those of the sector’s larger companies. This segment of the value chain finds it difficult to access trade support services that are targeted to their specific needs. This is a concern because internal human and financial re-sources are often insufficient to undertake the necessary trade promotion activities. Trade promotion assistance must be extended to these enterprises in order to ensure that they

participate in the sector’s export growth and value chain integration.

In the PoA, activities 1.4.1, 4.3.1, 4.4.1, 4.4.1 and 4.4.2 respond to this issue.

Market access policies

The export quota reduces profitability

The Kenyan Government places an export quota of 80 % of production on clothing companies. This rule was created in order to ensure that the local market had access to an adequate supply of clothing. However, there is insufficient demand for new, Kenyan clothing in the local market. As such, it cannot absorb 20 % of the sector’s production. As they are not able to export the excess supply, enterprises therefore end up losing out on significant revenues.


SOCIO-ECONOMIC AND ENVIRONMENT ISSUES

Box 14 : Social and economic constraints in Kenya’s T&C sector

Development issues



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CSR : Environmentally and socially responsible practices are not an integral part of doing business in the sector, threat-ening negative social impacts and ineligibility to supply socially concerned buyers

Textiles Water pollution : Outdated dyeing methods pollute waterways


CSR

Environmentally and socially responsible practices are not an integral part of doing business in the sector, threatening negative social impacts and ineligibility to supply socially concerned buyers

Few Kenyan factories are certified under ( or aware of ) the EU’s Business Social Compliance Initiative or the United States’ Worldwide Responsible Accredited Production. Factory workers frequently exceed the maximum number of working hours allowed per week and are sometimes subjected to unhealthy breathing environments. Machinery used is often technologically outmoded and environmentally

dirty. Obtaining Business Social Compliance Initiative and Worldwide Responsible Accredited Production certifications can be useful in accessing European and North American markets, which are increasingly conscious of the negative environmental and social spillovers of textile and garment production. Certification would also help ensure a healthy and happy workforce. Moreover, as garments represent one of the country’s most important industries, the sector’s envi-ronmental and social practices will set important precedents for the country as its economy grows.


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Textiles

Water pollution

Outdated dyeing methods pollute waterways

As a water-scarce country, Kenya’s demand for water surpasses its re-serves of renewable fresh water.32 It is therefore important that its water resources are neither polluted nor wasted. The textile industry con-sumes a considerable amount of wa-ter in dyeing and finishing processes. In addition, outdated dyeing methods re-lease chemical waste, including persistent organic pollutants, into the water.

New methods exist that would allow textile companies to use less water and minimize pollu-tion. Such methods include optimization of the dye-ing process itself ( i.e. using air dyeing techniques ) and improved wastewater treatment. However, stakeholders do not consider the issue to be a major concern and they lack awareness of the benefits that might result from transitioning to a more sustainable process. Not only would improve-ments lead to environmental preservation, they could also be leveraged as marketing tools in order to add value to final products. As an example, the EU market restricts the use of azo dyes for any imported T&C product. In order to penetrate this market, Kenyan firms must gradually replace these dyes with alternatives.

In the PoA, activity 2.3.1 ( 4 ) responds to this issue.

32.– Encyclopaedia of the Earth ( 2008 ). Water profile of Kenya. Available from http : / / www.eoearth.org / view / article / 156956.

The need for coordinated action

The analysis of the competitive constraints makes it clear that the sector’s sustainable development will require an integrated set of interventions that holistically address chal-lenges across the entire value chain. Roadblocks are not limited simply to enterprise capacities or government policy, and many challenges are the result of a combination of fac-tors that require wide-ranging remediation. It is for this rea-son that a comprehensive roadmap becomes all the more necessary ; individual stakeholders, and even small groups of stakeholders, will not be able to deal with the constraints on their own. It is only through strategic cooperation that the most effective results will be achieved.

STRATEGIC IMPLICATIONS FOR THE VALUE CHAIN ROADMAP

Having been granted preferential access to the world’s ma-jor markets, Kenya’s T&C sector has grown considerably since the turn of the century. Its comparative advantages, in-cluding an affordable labour supply and proximity to impor-tant markets, allowed the sector to thrive with the support of a conducive policy environment. Nevertheless, the sector’s expansion has stagnated in recent years and a divergence has been noted between the growing clothing segment and the struggling textile segment.

In addition, and unlike its global competitors, Kenyan clothing companies have been moving away from value

added activities and returning to a simple CMT model. These worrisome trends are compounded by significant market concentrations that are characterized by a near-total reliance on the American market and AGOA. Not only do these concentrations make the sector quite vulnerable to shifts in demand as well as black swan events, but the fact that Kenya has found it difficult to sustain its growth and en-ter other markets is evidence that it lacks competitiveness. Failure to maintain market share and penetrate new markets is especially worrisome given the relative age of the sector in Kenya when compared to its regional competitors.

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THE WAY FORWARD

The sector’s current model has performed well, yielding strong economic and social returns. Despite signs of low productivity and an excessive concentration on a narrow set of products and markets, the overall approach remains relevant. Even so, a new strategic model driven by com-petitiveness is needed : the industry must unite and evolve in order to leapfrog into higher growth and value addition. Kenya cannot compete with other low-cost manufacturers.

The sector’s strategic orientation should follow a two-pronged approach. Firstly, Kenya can foster its current posi-tion and build on its assembly and CMT offerings through improved process efficiency, workforce development and the formation of conducive policies. This will lead to enhanced productivity and quality, which will serve to balance out higher lead costs. In the meantime, efforts can be made to increase exports through AGOA while looking to target new markets.

In order to remain truly competitive, however – particularly given the rise of low-cost centres of production such as Ethiopia and Myanmar – Kenya must shift from contract manufacturing and begin to provide fully integrated services including input sourcing, product development and design. By moving up the global value chain and shifting from basic items to superior products, this second strategic orientation will allow Kenya to capture greater value and penetrate pre-mium market segments.

To realize these goals, structural deficiencies along the four gears ( supply side, business environment, market entry and development ) will be addressed and identified opportu-nities will be leveraged. The following is a delineation of the proposed vision and strategic approach.

THE STRATEGIC OBJECTIVES

This value chain road map’s PoA will respond to these two key visions as both scenarios will require workforce de-velopment, skills acquisition, increased FDI attraction, an enhanced policy and business environment, and strong business associations.

Strategic objective 1: Maximize productivity and uphold quality requirements through skills development.

Based on the constraints analysis, the remaining skill gap is an essential break for sector development, limiting pro-ductivity and quality increase, preventing the integration of service provision beyond CMT and preventing further value addition throughout the value chain. The issue is therefore of utmost priority and will require immediate action on a variety of fronts, including the Government, institutions and enter-prises themselves. The first strategic objective is therefore: maximize productivity and uphold quality requirements through skills development.

Skills development will be a priority, particularly for increas-ing productivity, quality, service provision and the capacity for value addition throughout the value chain. At the insti-tutional level, efforts must be made to improve trade and

investment support institution (TISI) coordination and align training and educational offerings with the industry’s needs. At the enterprise level, improvements are required in key technical, supervisory and quality assurance skills, as well as MSME-specific skills related to weaving and design.

The following operational objectives have been defined to achieve the first strategic objective:

1.1. Strengthen sector coordination to support skills development.

1.2. Improve technical and supervisory skills as well as supply chain performance.

1.3. Enhance quality management skills in line with inter-national standards.

1.4. Develop specific skills for the handloom subsector, for designers as well as for MSMEs.

1.5. Improve existing training and educational offerings in line with industry needs.

1.6. Ensure that national quality management infrastruc-ture responds to the industry’s needs and interna-tional ambitions.


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Strategic objective 2: Improve the business environment to fur ther support the development of the T&C industry.

The current lack of sector coordination is another aspect currently preventing integrated development of the value chain. Advocacy and policy support for the sector are un-coordinated. The remaining constraints in the business en-vironment, such as trade facilitation issues, the cost of doing business, lack of access to finance, and infrastructure, pre-vent the leap towards greater competitiveness (particularly in the textile segment). These issues constitute the second strategic objective which is to improve the business envi-ronment to further support the development of the T&C industry.

Policy support will also constitute an important pillar of reform, particularly with regards to CSR issues, as modern buyers will require that the sector complies with ethical prac-tices. Similarly, the Government must work to remove the re-maining constraints in the business environment in order to allow for greater competitiveness and attract foreign capital (particularly in the textile segment). This includes increasing the capacities of Customs officers to clear T&C products in a more efficient and effective manner, modernizing financial services, improving the overall legal framework, decreasing electricity pricing and fostering change within the transporta-tion system.

The following operational objectives have been defined to achieve the second strategic objective:

2.1. Improve compliance as a way to increase productiv-ity and competitiveness.

2.2. Increase the capacity of port communities to enforce T&C-related regulations.

2.3. Improve the legal and regulatory framework relevant to the T&C industry.

2.4. Expand and modernize the financial services avail-able to the industry.

2.5. Support competitiveness through improved electric-ity pricing and quality.

2.6. Improve the efficiency and cost competitiveness of transportation and logistics.

Strategic objective 3: Expand the benefits of investment throughout the T&C value chain.The benefits of FDI and south–south cooperation have not yet reached the most capital-intensive segments of the value chain, namely spinning and textiles. Also, Kenyan firms’ in-tegration in global value chains remains very limited due to the lack of a coordinated and targeted approach by the Government. To ensure capital, technology and know-how inflows in the sector, while also helping to open up new markets for Kenyan producers, a better approach towards investment is required for the sector. Thus the third strategic

objective of the road map is to expand the benefits of in-vestment throughout the T&C value chain.

FDI and south–south cooperation will serve as enablers, directing capital, technology and know-how to the under-served sections of the value chain, while also helping to open up new markets for Kenyan producers. For this to be achieved, the Government needs to continue improving the conditions for investment. TISI capacities will also need to be strengthened in order to identify and attract investors. In parallel, the investment promotion strategy needs to be updated and aligned with the goals of the country, with a particular view towards consolidating the missing links in the T&C value chain. In this regard, targeted investment into equipment upgrades will be of foremost importance. Finally, to ensure that investment creates synergies in the sector and fills its role as an enabler for smaller firms, collaboration schemes need to be systematically enforced within EPZs and the upcoming industrial zones.

The following operational objectives have been defined to achieve the third strategic objective.

3.1. Pursue efforts to establish ideal conditions for investors.

3.2. Increase capacity of TISIs to target and attract ap-propriate investments.

3.3. Further promote Kenya as the main FDI destination for T&C.

3.4. Enable equipment upgrading through investment.3.5. Increase collaboration between local SMEs and

foreign direct investors to ensure synergies.

Strategic objective 4: Enable market penetration and product development through trade intelligence.

Large Kenyan exporting firms focus primarily on produc-tion and do not manage export-related matters or promo-tional activities themselves. They mostly rely on information and a branding strategy provided directly by their business partners and parent companies. Another important part of the Kenyan T&C sector is MSMEs, including handloom and small designers, which may not be export-ready yet and focus mainly on the local and informal markets. As the sec-tor evolves and Kenyan firms build in additional services beyond CMT, they will increasingly need to receive and use relevant trade intelligence. Trade intelligence will also contribute to filling the gap of knowledge about preferential trade agreements, particularly among institutions that are as yet unable to initiate a proactive approach to promot-ing Kenyan T&C products within markets where Kenya has preferential access. The fourth strategic objective of this road map is therefore to enable market penetration and product development through trade intelligence.

All of these efforts must be market-led, taken with a view towards leveraging commercial opportunities through in-creased competitiveness. As such, the utilization of effective

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trade intelligence will play a vital role in the sector’s transfor-mation. The first step is to ensure that information is prop-erly generated and available to key stakeholders. A second aspect is to reinforce the capacity of Kenyan firms to use it in order to expand their market access beyond AGOA and to promote their products and savoir faire. In addition, prod-uct development must be in line with target markets’ needs. To this end, firms must build the capacity to identify these requirements and update their product designs according to the latest techniques and trends. Lastly, since MSMEs in Kenya do not target the same markets as larger firms, specific capacity reinforcement needs to be undertaken at their scale of operation to ensure that they are competitive in national and regional markets.

The following operational objectives have been defined to achieve the fourth strategic objective.

4.1. Improve access to strategic trade intelligence for T&C firms.

4.2. Expand market access and promote Kenya’s T&C products.

4.3. Increase firms’ capacity to align product develop-ment with key markets’ requirements.

4.4. Provide targeted assistance to handloom firms and designers on trade promotion.

Photo: Jai79@pixabay.


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Sector development targets

Figure 9 : Kenya’s apparel export growth ambitions

One of the main focus areas of this roadmap will be to build on the current conjuncture and benefit from the growing interest of international investors in T&C in the East Africa region. This potential investment in the region is estimated to reach US $ 1 billion according to MoIED.

The investment could come from multiple sources, such as the expansion of existing entrepreneurs, the entry of new local entrepreneurs, or FDI. However, of these options, FDI represents the most attractive source of investment capital. FDI not only brings capital, it also brings technical know-how, spreads good human resource management practices, and introduces new systems and procedures. In addition, foreign investors bring access to new markets while also facilitating moves into higher value added activities.

If all strategic steps outlined by this roadmap are taken and the conditions required for attracting investment are put in place, the country’s objective of reaching US $ 1 billion in exports of T&C by 2017, up from the current US $ 400 million, appears to be in reach. By continuing on this path over the next three years, the sector could reach export values up to US $ 1.5 billion by 2020.

An addition of US $ 1.1 billion export value through 2020 will have an impact on the entire value chain.

� Clothing : It will call for the production and export of another 220 to 250 million pieces of clothing. This will require an investment of US $ 300 million in garment pro-duction facilities alone : 50,000 sewing machines, 5 mil-lion square feet of built-up area and 100,000 workers.

� Textiles : On the textile front, it will mean an additional de-mand of approximately 500 million metres of fabric and 80 million to 90 million kg of yarn.

Based on this logic, the roadmap will aim to deliver the fol-lowing production, ex port-related and developmental targets by 2020 :

� More than 100 firms have acquired new equipment and related technical capacities

� Four hundred and fifty new production lines developed by Kenyan firms in yarn, textile and apparel production

� Exports of textiles and garments to increase by 25 % an-nually over the next five years to US $ 1.5 billion

� More than 100,000 new jobs in the T&C sector � All companies comply with international standards related

to working conditions, quality management and sustain-ability.

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LEVERAGING MARKET OPPORTUNITIES

Kenya’s T&C exports are highly concentrated in one import-ing market, the United States. Continued reliance on a single destination market may prove to be unsustainable. Kenya’s T&C export growth can be based initially on market penetra-tion, focusing its efforts on expanding apparel exports, and at the same time in market development, reaching new mar-kets by leveraging preferential market access conditions. At the same time enterprises can build capacities for more value added clothing products. At a later stage, upstream capacities should be developed in order to reduce import dependency.

Gaining market share in traditional markets

Kenya should focus its initial efforts on expanding apparel exports to its main importer and biggest world importer, the United States. Kenya has constantly gained market share in the American market over the last decade and could build on its success to increase its exports even further by broad-ening its product portfolio.

Leverage existing market linkages to build capacities for more value added garmentsWhen looking to sell new products, enterprises can lever-age existing market linkages and enter product categories that can be distributed either to existing buyers or along the same distribution network. At the same time, enterprises can build capacities for more value added clothing products. However, Kenya should take steps to develop upstream ca-pacities in order to reduce import dependency, generate more employment and drive domestic value addition.

Taking advantage of preferential market access to penetrate new large marketsThe sector can leverage the duty-free advantage that Kenya has been granted for garments in many larger markets, in par-ticular EU markets such as the United Kingdom, where Kenya is already exporting, or Spain. Stakeholders should focus on market segments that value cost competitiveness across the markets. To do this, enterprises must be able to provide larger orders. The recent signature of the tripartite agreement between COMESA–EAC–SADC is also an opportunity to en-ter the largest African importer of garments, South Africa.

Diversifying in intermediate products in regional markets and local supply of accessories and embellishments

With regards to its product basket, the sector could develop its exports of intermediate products ( yarn and fabrics ) in the regional market. The development of the textile industry in the region will increasingly require the provision of inputs. However, the main focus of developing intermediate prod-ucts should be indigenizing the entire value chain. These new fibre bases could be exported to new markets, in par-ticular EU markets.

As the Kenya T&C sector moves gradually from CMT to original design and manufacturing with its current buyers, valued added garments will integrate locally produced ac-cessories and embellishments. The following matrix sum-marizes the product and market opportunities available to Kenya’s T&C sector based on consultations with experts and feedback from leaders of the industry in the country.

Box 15 : Product and market opportunities

Existing products New productsExisting markets

Market penetration

• Garments in the United States• For textile mills, garment factories in Kenya and Ethiopia

Product development

• United States – Fibre diversity and value added garments requiring higher skill• Categories where United States imports exceed $1 billion, while Kenya’s exports to the United

States are < US $ 1 million• HS 621210 – intimate wear• HS 620443 – dresses of synthetic fibres• HS 620193 – men’s synthetic outerwear• HS 611596 – specialty hosiery of synthetics

New markets Market development

• Major EU markets e.g. United Kingdom or Spain• COMESA markets, especially South Africa• India

Diversification

• Yarn and fabrics ( shirting, bottom weight and denim ) – regional markets• Value added garments, diverse fibre base – other EU markets• Manufacturing of accessories and embellishments for garment factories in Kenya and regional

markets• Manufacturing of home textiles• Green markets for brand apparel companies in EU


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FDI IS THE KEY TO USHERING IN A NEW ERA OF GROWTH

FDI has long been a driver of growth in the T&C sector as in-vestors look to capture the comparative advantages offered by new destinations. Global greenfield FDI in the T&C sector reached US $ 24 billion in 2013, an all-time high and more than double the level achieved in 2012. Moreover, Africa is receiving a greater share of this investment as rising wages in China, compliance issues in Bangladesh and labour un-rest in Cambodia, together with other factors, have accel-erated a shift to new locations. Total FDI inflow to Africa in 2013 was valued at US $ 57 billion, of which US $ 1.75 billion was in the T&C sector.

Government measures to strengthen the garment and textile sectors and the infrastructure on which they rely ( including the standard gauge railway to Mombasa ), if completed on schedule in the next one to two years, will sig-nificantly boost Kenya’s investment attractiveness. Kenya’s manufacturers will be able to reduce inland transportation costs by about 80 %, making them cost competitive in a wider range of additional products.

As the Government nears completion of the Naivasha Textile City and electricity projects, attractive opportunities to mass produce fabrics for the regional garment industry will also emerge. With the ability to capitalize on low power and steam costs as well as the availability of well-planned infrastructure, Kenyan mass production of textiles should become internationally cost competitive for the first time in recent history. In the interim, companies experienced in sell-ing smaller, premium lots of ‘green’ or sustainable textiles may still be interested in investing in Kenya.

TARGET FDI SOURCE COUNTRIES

FDI in Kenya’s T&C sector has historically arrived from inves-tors in China, India, the UAE and South-East Asia. These countries and regions will continue to be future sources of FDI. In addition, FDI could be attracted from Germany, France, the Republic of Korea, the United States, Italy, Bangladesh and Israel. While attracting FDI from Japan may also be possible, it will require more time given the stringent quality, technical and product development orientation of Japanese companies. It should therefore be only a medium-to-long-term objective.

Special attention needs to be paid to attracting FDI from India. India is not only one of the largest T&C producing and exporting nations, it is also a large market that is growing in double digits. Right now, India’s T&C exports stand at ap-proximately US $ 40 billion, whereas its domestic consumption is estimated to be US $ 75 billion ( including apparel, home tex-tiles and technical textiles ). Continuous growth of con sumers’ disposable income has ensured high demand growth.

For Indian T&C investors, existing market linkages, duty-free access status and Kenya’s well-developed infrastruc-ture will be the biggest attractions. There are several large T&C companies in India willing to invest overseas in order to cater to their traditional buyer base while benefiting from duty advantages. It will be important and fruitful for Kenya’s investment promotion authorities to invest time and effort to identify and reach out to potential Indian investors and showcase the advantages of investing in Kenya. In addition, the Government must continue its negotiations as part of the EAC with India in order to ensure that Kenyan exporters are granted adequate market access.

Box 16 : Trade as a precursor to investment

Trade initiation is the first step towards investment. Consider an example of an Indian company buying certain inputs from East Africa for its production in India. If imports remain profitable, then with growth of its business, the company will weigh imports ( using trade intermediaries such as agents ) vis-à-vis establishing an East African affiliate to procure the material. Having its own office can reduce the bulk sourcing cost and give better supply chain control to the company. Over time, successful procurement operations in East Africa might evolve into a manufacturing facility and continue to add

other higher value functions over time, such as design, research and development, or regional sales and distribution.

In short, trade and FDI are very often part of the same continuum. As more and more Indian businesses evolve farther down that continuum, trade and investment linkages between India and East Africa will strengthen and there will be greater spillovers of technology and skill in East Africa. This will help East African businesses become more efficient, improve the marketability of their products and services, and deepen their participation in global value chains.

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Target part of T&C value chain Target products Target investors

Garment manufacturing – Free on Board ( FOB ) ( and, in the medium term, original design manufacturers )

Basic products with little design variation and / or demonstrated success in the United States market ( T-shirts, shirts, cardigans, trousers, skirts and blouses ) and slightly more complex garments ( suits, denims, women’s underwear )

Companies that are qualified suppliers to low- and mid-range retailers and brand apparel companies from the United States, EU, UAE and Japan

Textile mills and integrated textile / clothing factories ( once the Naivasha Textile City and electricity projects are completed )

Yarn and fabrics to feed into export-oriented garment production

Pool of existing investors, India, China, domestic firms, government ( public–private joint ventures )

T&C production branded for niche markets such as green, ethical or sustainable Garments, including ethnic ones Pool of existing investors and domestic firms

Manufacturing of accessoriesThread, labels, hangtags, buttons, zippers and elastics Domestic entrepreneurs, Chinese companies

Manufacturing of home textiles Bed and bath linen Mainly domestic textile firms

POTENTIAL VALUE CHAIN SEGMENTS

Kenya has already positioned itself as one of the leading garment exporters in Africa. Not only is Kenya in a position to increase its market penetration, it can also work towards gradually shifting to more value added garments. There is also an urgent need to indigenize the textile part of value chain – yarn and fabrics. While power cost has thus far been a major deterrent, investment will become viable as a result of new initiatives on the horizon that will address this chal-lenge. A similar scenario will play out for investment in the manufacturing of accessories and embellishments, such as thread, labels, hangtags, buttons, zippers and elastics. Export-quality set-ups to manufacture such items will find a ready market by offering the benefits of lower cost and shorter delivery time.

The most promising short- and medium-term opportuni-ties for private investment are listed below and are directly linked to T&C’s export growth strategy for products and markets. They are promising because cost data and the experiences of existing investors suggest that investment projects with similar products could operate not only profit-ably and securely, but more so than if the project were in a competing location.

ATTRACTING INVESTORS

Beyond creating a favourable business environment for the T&C sector, the Government of Kenya must broadcast the advantages of doing business in Kenya to those companies considering international expansion. Some companies will invest without any government information or assistance ; some will not invest under any circumstances ; and some are in between those two extremes, where they might be persuaded to choose Kenya over other locations if the right information and assistance is provided to them at the right time.

Identifying investors in this last group, securing meet-ings with them and persuasively making the case for one’s

country over others is known as investor targeting, and it is arguably the most difficult function for the typical investment promoter to perform. One of the main reasons for this is the difficulty in identifying high-potential investors. Before each investor is approached, the investment promoter should take the time to ‘qualify’ the investor. This means researching the company to see that its products and markets correspond to Kenya’s strengths and that it is at a strategic and financial point where international expansion is likely.

Existing investors

In developed economies, reinvestment from existing in-vestors is recognized as the largest source of new FDI. Moreover, significant reinvestment is the only path to large-scale sectoral development and economic diversification. Reinvestments represent growing commitments from foreign investors to doing business in a country, often increasing production volume or moving the company into new value chain segments. This can bring levels of local sourcing, ex-ports, technology, worker skills and general value added, which first-time investors might not. Also, from the perspec-tive of an investment-promoting body, it is much less expen-sive to court the community of existing investors than to find new investors among the scattered global pool of compa-nies with no demonstrated interest in the promoter’s country.

In Kenya, Government relationships with investors have tended to be developed very little beyond the provision of EPZ space and the issuance of permits and certificates. The Kenyan Government, KenInvest and EPZA should commit themselves to implementing a coordinated programme of in-vestor aftercare to maximize benefits from existing investors. This programme of investor aftercare could involve a range of investor services and business environment advocacy.

Kenya’s long-established base of existing investors will be at the core of any growth. Many of these investors are from India, China, Chinese Taipei and the UAE, which will be good candidate countries from which to seek additional investors. It should also be noted that, while they are not


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exactly existing investors, T&C companies in Ethiopia and the United Republic of Tanzania have demonstrated both the willingness and the ability to invest in the region. In ad-dition, they are cheaper to approach than others. Kenyan officials could therefore consider approaching them as they approach other existing investors.

Investors having expressed interest in the sector

This category of investor is the low-hanging fruit ; compa-nies that have been in contact with the Kenyan Government or business associations at their own initiative. KenInvest, EPZA, KAM, ACTIF and KNCCI are among the stakehold-ers that have likely received many inquiries from interested investors. These should be consolidated by this strategy’s implementing team for direct follow-up or for tracking the stakeholder’s follow-up, as appropriate.

Potential investors

Before potential investors can be ‘qualified,’ investment pro-moters need a ‘long list’ of investors in each of the countries where they think they might have success in targeting inves-tors. The following is an example from India (see Appendice Section D).

Similar lists can be obtained for each target country from their respective sector associations or independent sector research. As an example, the following list offers the names of three of the top clothing brands and retailers in some of Kenya’s most likely sources for T&C FDI. Investment promot-ers would investigate the top garment factories supplying such firms and target them for investment in Kenya.

ENHANCING THE BUSINESS ENVIRONMENT FOR INVESTMENTInvestment opportunities vary in the immediacy of their feasibility. New projects in ready-made garment manufac-turing, for example, continue to register with the Kenyan Government almost weekly, with little official intervention, while large-scale textile manufacturing will not occur without the Government effecting significant enhancements to the business environment. The following activities and reforms will help Kenya optimize the country’s competitiveness for sector-strengthening FDI and empower domestic investors to participate in global value chains at a high level of value added.1. Kenya has some advantage over its regional T&C compet-

itors in terms of established market channels, labour pro-ductivity and the skills to produce slightly more advanced

Photo: Make it Kenya, 2015

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products ( e.g. skirts and denim products ) than, say, Ethiopia ( e.g. uniforms, polo shirts ). Kenya should seek to widen this technical gap, considering its existing technical advantage, its relatively high labour costs and the growth trajectory of Ethiopia as a competitor. This requires :a. Upgrading machinery, much of which is 30 -40 years

old ;b. Making medium- and higher-skilled garment

manufacturing a Government priority ( garments are now relatively low on its long list of manufactur-ing sector priorities ) ;

c. Moving from industry-led workforce development to Government-led workforce development and tailor-ing TVET programmes to produce managers and workers for higher-skilled products, such as ladies fashion, sportswear and intimate apparel.

2. Ensure timely completion, in the next one to two years, of four key Government initiatives targeted at finally linking Kenya’s domestic textile producers with its foreign garment producers and fundamentally altering their collective competitiveness :a. The broad-gauge railway to Mombasab. The Naivasha electricity projectc. A textile city with the same infrastructure and incen-

tives enjoyed by EPZsd. The low-interest industrialization fund.

3. With an established production base for export-oriented garments, KenInvest and EPZA should encourage maximum reinvestment through a well-coordinated

programme of investor aftercare that supports smooth operations for the life of an investment project and that collaborates with existing garment manufacturers to identify and handle obstacles and opportunities for growth, linkages and sector development.

4. With a 10-year extension of AGOA, Kenya’s garment exports are likely to continue flowing overwhelmingly to the United States. However, this is being discussed as the last AGOA extension. If Kenya’s export markets are not diversified in the next 10 years the sector could wither. As part of a renewed Government commitment to higher-skilled garment production, KenInvest, KNCCI and EPZA should be given sector diversification targets and explicitly tasked by their boards to collaborate on investor-targeting campaigns in Asia.

5. If the Government and sector stakeholders are successful at growing the volume of textiles feeding into Kenya’s ex-port-oriented garment production, domestic production of export-quality cotton lint and yarn may be able to replace some of the cotton supply, most of which would presum-ably come from the United Republic of Tanzania and Ethiopia. Filling out this part of the value chain will require :a. Greater allocation of Government land to cotton

productionb. Deeper penetration of extension servicesc. A fund similar to the industrialization fund above but

dedicated to providing favourable financing terms for farm modernization, including machinery, irriga-tion, quality seeds, etc.

FUTURE VALUE CHAIN

Unlocking the potential of the T&C sector will require transformations throughout the value chain. These adjustments, as reflected in the future value chain schematic, are the result of targeted efforts to ad-dress the competitive constraints identified and capitalize on opportunities to add value. The fu-ture value chain will be characterized by :

I. Development of the textile production segment

II. Further development of EPZs and estab-lishment of textile cities to facilitate access to utilities

III. Development of the garment production seg-ment and integration with the textile produc-tion segment

IV. Enhanced support services, particularly in the ar-eas of TVET, sector coordination, finance, Customs and logistics.


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Figure 10 : Kenya’s T&C future value chain diagram

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port

s

Lege

nd:

Prim

ary

supp

ort s

ervi

ces

Cana

da

Net

herla

nds

Mos

t of t

he li

ntIs

impo

rted

Yarn

s

Expo

rts

30%

of l

ocal

dem

and

for

clot

hing

Expo

rts

Impo

rts

Fini

shed

cl

othi

ng fo

r lo

cal m

arke

t,se

cond

-han

d,sm

uggl

ed

Fabr

ics

Uni

ted

Stat

es o

f Am

eric

a

Depa

rtm

ent

stor

es

Impo

rts

Yarn

s

Inpu

ts

Mac

hine

ry

Dyes

for y

arn

and

fabr

ic

Wat

er,

elec

tric

ity, f

uel

Labo

ur fo

rce

Man

-mad

e fib

re

Cott

on fi

bre

Dyei

ng &

fini

shin

gDe

sign

and

sew

ing

Wea

ving

and

kni

ttin

gYa

rn sp

inni

ng

Expo

rt P

roce

ssin

g Zo

nes (

EPZs

)

(Nai

robi

, Alth

i Riv

er, M

omba

sa, n

ear K

ilifi,

Rift

Val

ey re

gion

)

UTI

LIZA

TIO

N: 9

0%U

TILI

ZATI

ON

: 90%

UTI

LIZA

TIO

N: 1

00%

(and

inve

stm

ent i

n ex

pans

ions

of c

apac

ity)

Keny

a In

vest

men

t Aut

horit

y, C

usto

ms a

nd R

even

ue A

utho

rity

: cap

acity

impr

oved

Min

istry

of I

ndus

tria

lizat

ion

and

Ente

rpris

e De

velo

pmen

t

Tech

nica

l cou

rses

: Eve

lyn

Colle

ge o

f Des

ign,

Ver

a Be

auty

and

Fas

hion

Col

lege

, Bur

u Bu

ru In

stitu

te o

f Fin

e Ar

t (BI

FA),

Mce

nsal

Sch

ool o

f Fas

hion

Des

ign

and

Nai

robi

Art

Aca

dem

y

Eger

ton

Uni

vers

ity, N

airo

bi U

nive

rsity

, Ken

yatt

a U

nive

rsity

, Mas

eno

Tech

nica

l U

nive

rsity

of K

enya

, Sou

th E

aste

rn U

nive

rsity

Col

lege

, Mac

hako

s Uni

vers

ity C

olle

ge

Tran

spor

tatio

n se

rvic

es: I

mpr

oved

effi

cien

cy a

nd m

onito

ring

syst

ems

Keny

a Bu

reau

of S

tand

ards

(KEB

S)Co

tton

Dev

elop

men

t Au

thor

ity (C

ODA

)

East

Afr

ica

Trad

e Hu

b (E

ATH)

, Afr

ican

Cot

ton

and

Text

ile In

dust

ries F

eder

atio

n (A

CTIF

)Expo

rt P

roce

ssin

g Zo

nes A

utho

rity

(EPZ

A)

Bank

s - F

inan

cial

serv

ices

: Cre

dit g

uara

ntee

trus

t fun

d

Asso

ciat

ions

: Ass

ocia

tion

of F

ashi

on D

esig

ners

, Afr

ican

Wom

en's

Entr

epre

neur

ship

Pro

gram

, Han

dloo

m W

eave

rs M

arke

ting

Coop

erat

ive

Soci

ety

Mas

s mer

chan

dize

ch

ains

Spec

ialty

st

ores

Fact

ory

outle

ts, o

ff-pr

ice

or m

ail o

rder

s

Rest

of t

he w

orld

Stan

dalo

ne sp

inni

ng m

ills

Blan

kets

pro

duct

ion

Stan

dalo

ne w

eavi

ng c

ompa

nies

Stan

dalo

ne k

nitt

ing

com

pani

es

Stan

dalo

ne te

xtile

com

pani

es

Stan

dalo

ne d

yein

g/fin

ishi

ng

plan

ts/s

ervi

ces

Loca

l/ret

ail

mar

kets

Moi

Uni

vers

ity

Nat

iona

l Cot

ton

Stak

ehol

ders

For

um

(NCS

F)

Keny

a Co

tton

Gro

wer

s As

soci

atio

n

Keny

a A

ppar

el M

anuf

actu

rers

and

Exp

orte

rs A

ssoc

iatio

n (K

AMEA

) Ke

nya

Asso

ciat

ion

of M

anuf

actu

rers

(KAM

) cov

erin

g te

xtile

man

ufac

turin

g ac

tivity

Keny

a Co

tton

Gin

ners

As

soci

atio

n

Keny

a Ag

ricul

tura

l Re

sear

ch In

stitu

te (K

ARI)

Smal

l/m

icro

ga

rmen

t co

mpa

nies

Garm

ent m

anuf

actu

ring–

FOB

(and

, in

the

med

ium

term

, or

igin

al d

esig

n m

anuf

actu

res)

. Ta

rget

inve

stor

s: C

ompa

nies

that

are

qua

lifie

d su

pplie

rs to

low

- an

d m

id-r

ange

reta

ilers

and

bra

nd a

ppar

el c

ompa

nies

from

U

nite

d St

ates

, EU

, Chi

na, I

ndia

, Ban

glad

esh,

UAE

, Jap

an, a

nd

Repu

blic

of K

orea

Pack

agin

g co

mpa

nies

Acce

ssor

ies p

rodu

cers

AGO

A (2

015-

2025

)

Fore

ign

inve

stm

ent c

ompa

nies

Loca

lde

sign

ers

Uni

ted

Repu

blic

of T

anza

nia

Loca

l/ret

ail

mar

kets

Uga

nda

Loca

l/ret

ail

mar

kets

Depa

rtm

ent

stor

esM

ass m

erch

andi

ze

chai

nsSp

ecia

lty

stor

esFa

ctor

y ou

tlets

, off-

pric

e or

mai

l ord

ers

Cott

on F

ibre

Dire

ctor

ate

Expo

rt P

rom

otio

n Co

unci

l, Vi

sion

2030

Sec

reta

riat

Oth

er tr

aini

ng in

stitu

tions

: Tec

hnol

ogy

Deve

lopm

ent C

entr

e, K

enya

Indu

stria

l Res

earc

h an

d De

velo

pmen

t Ins

titut

e (K

IRDI

), Ke

nya

Poly

tech

nic

Uni

vers

ity, r

eviv

ed K

enya

Tex

tile

Trai

ning

Inst

itute

Keny

a N

atio

nal C

ham

ber o

f Com

mer

ce a

nd In

dust

ry (K

NCC

I)

Sem

i-int

egra

ted

mill

sSp

inni

ngKn

ittin

g an

d w

eavi

ngDy

eing

Fini

shin

g

Text

ile m

ills a

nd in

tegr

ated

text

ile/c

loth

ing

fact

orie

s (on

ce th

e N

aiva

sha

elec

tric

ity a

nd T

extil

e Ci

ty p

roje

cts a

re c

ompl

eted

)Pr

oduc

ts: F

abric

s to

feed

into

exp

ort-

orie

nted

gar

men

t pro

duct

ion

Targ

et c

ompa

nies

: Poo

l of e

xist

ing

inve

stor

s, In

dia,

Chi

na, d

omes

tic fi

rms

Spec

ializ

ed tr

aini

ng

inst

itutio

ns fo

r T&

C m

achi

ne

oper

ator

s and

floo

r man

ager

s.Ta

rget

inve

stor

s: C

hine

se fi

rms

prov

idin

g te

chni

cal t

rain

ing

and

engi

neer

ing

serv

ices

Hom

e te

xtile

sTa

rget

inve

stor

s: M

ainl

y do

mes

tic te

xtile

firm

s

Yarn

-spi

nnin

g fa

ctor

ies (

once

the

Nai

vash

a el

ectr

icity

and

Tex

tile

City

pr

ojec

ts a

re c

ompl

eted

and

cot

ton

qual

ity is

impr

oved

. T

arge

t inv

esto

rs: M

ostly

dom

estic

fir

ms;

fore

ign

inve

stor

s and

the

Gove

rnm

ent f

or p

ublic

-priv

ate

join

t ve

ntur

es

A se

ctor

-spe

cific

ape

x bo

dy a

nd it

s sub

sidi

ary

orga

n

Impr

oved

soci

al a

nd e

nviro

nmen

tal c

ompl

ianc

e as

wel

l as H

R m

anag

emen

t in

firm

s Supp

ortin

g O

rgan

izat

ions

: (N

IFT,

NID

, IIH

T)

Esta

blis

h a

trai

ning

ce

ntre

in e

ach

Indu

stria

l zon

e

TVET

(str

uctu

re w

ith th

e re

quire

d tr

aini

ng e

quip

men

t)

Men

’s sy

nthe

tic

oute

rwea

r

Spec

ialty

hos

iery

of

synt

hetic

s

Nai

vash

a Te

xtile

City

Fina

lize

the

Nai

vash

a ge

othe

rmal

ele

ctric

ity p

roje

ct to

redu

ce e

lect

ricity

cos

ts fr

om U

S$0.

14-U

S$0.

15 p

er k

Wh

dow

n to

US$

0.05

;Bu

ild a

Tex

tile

City

at N

aiva

sha

with

the

sam

e in

fras

truc

ture

and

ince

ntiv

es e

njoy

ed b

y th

e EP

Zs

Esta

blis

h a

trai

ning

ce

ntre

Busi

ness

Acc

eler

ator

Impr

oved

con

trol

at

bord

ers,

spec

ifica

lly in

El

dore

t

Deni

m

Men

's an

d w

omen

's ca

sual

wea

r with

hi

gher

val

ue a

dded

(T-s

hirt

s, sk

irts,

ca

rdig

ans,

etc

.)

Gree

n fa

bric

s pro

duct

ion

Mar

kets

: EU

cou

ntrie

s whe

re n

iche

mar

kets

alre

ady

exist

, oth

er E

U c

ount

ries

Gree

n ap

pare

l pro

duct

ion

Mar

kets

: EU

cou

ntrie

s whe

re n

iche

mar

kets

alre

ady

exist

(PaC

T, D

ISHA

, The

Su

stai

nabl

e Cl

othi

ng A

ctio

n Pl

an, G

uilt

Free

Gar

men

ts, H

&M

Con

scio

us C

olle

ctio

n, e

tc.)

Expo

rt B

usin

ess

Acce

lera

tor (

EBA)

T&C-

spec

ific

and

spre

ad to

all

EPZs

Intim

ate

wea

r

Dres

ses o

f sy

nthe

tic fi

bres

Loca

l mar

ket

(loca

l hot

els,

co

nfer

ence

m

ater

ials,

ho

me

deco

r, to

urism

)

Nat

iona

l com

pone

ntIm

port

sEx

port

s

[ THE WAY FORWARD ]

45

I. DEVELOPMENT OF THE TEXTILE PRODUCTION SEGMENT1. Development of yarn spinning activities through domes-

tic investment.2. Overall compliance to CSR through, inter alia, improved

human resource management practices and implemen-tation of environmental standards.

3. Creation of stand-alone dyeing and finishing plants, act-ing as service providers to fabric producers.

4. Development of the home textile segment through local investment.

5. Development of a ‘green production line’, starting with green fabrics production and handing over to green national garment producers.

6. Thirty per cent of domestic fabric demand for the cloth-ing industry is provided by local textile firms.

II. FURTHER DEVELOPMENT OF EPZS AND ESTABLISHMENT OF TEXTILE CITIES TO FACILITATE ACCESS TO UTILITIES1. EPZ foreign investors to enter the textile segment and

spur development of integrated companies in EPZs.2. Each EPZ to be complemented by an EBAP specific to

the T&C sector.3. A training centre of excellence is established in each EPZ

and in each new textile city.

4. After the finalization of the Naivasha Textile City ( and in other textile cities that will be established ), attract local and foreign investors in the textile subsector, in line with local garment exporters’ yarn / fabric needs.

5. A scheme similar to EBAP, bringing in SMEs but not nec-essarily export-oriented, established in each textile city.


46

III. DEVELOPMENT OF THE GARMENT PRODUCTION SEGMENT AND INTEGRATION WITH THE TEXTILE SEGMENT 1. Reduction of imported fabrics to a proportion of 70 %

instead of the current figure of almost 90 %.2. Development of FOB garment manufacturers and origi-

nal design manufacturers.3. Product diversification to new products such as intimate

wear, men’s synthetic outerwear, men’s / women’s casual wear of higher quality, synthetic dresses, hosiery and denim.

4. Continuation of the ‘green production line’ with the development of green garment producers consuming national green fabrics production. Potential markets could be existing lead firms’ initiatives such as the H&M Conscious Collection.

IV. ENHANCED SUPPORT SERVICES, PARTICULARLY IN THE AREAS OF TVET, SECTOR COORDINATION, FINANCE, CUSTOMS AND LOGISTICS 1. Creation of a sector-specific apex body to represent the

interests of all industry stakeholders with the following key responsibilities :• Strengthen the interaction between the industry, aca-

demia, research institutions and public institutions• Conduct a skills gap assessment• Conduct an assessment of education offerings in

Kenya and assess their quality• Carry out the role of a think tank – produce sector-

specific publications and white papers• Improve the cost of doing business• Increase the ease of doing business• Promotion of Kenyan T&C products• Review of sector-specific governmental budgets• Dissemination and promotion of competitive

intelligence.

2. Capacities of KenInvest and the Customs Services Department are improved.

3. TVET institutions are equipped with the required training machinery, second-hand and miniature models ( through agreements with major machinery providers ).

4. KTTI revived.5. Industrialization fund set up to support the T&C sector.

[ THE WAY FORWARD ]

47

MOVING TO ACTION

The development of the future value chain for the T&C sector is a 5 year project defined through a consultative process between public and private sector stakeholders in Kenya.

Achieving the strategic objectives and realizing the future value chain of the T&C sector in Kenya depends heavily on the ability of sector stakeholders to start implementing and coordinating the activities defined in the Value Chain Roadmap’s Plan of Action. For this reason, a list of key pri-ority activities has been identified in order to kick-start the implementation of T&C Value Chain Roadmap.

The plan of priority actions to kick start implementation

Activity Target measures Leading national institution and possible implementing partners

Strategic objective 1: Maximise productivity and uphold quality requirements through skills development1.1. Strengthen the sector coordination to support skills development1.1.1. Set up a sector-specific Apex body to represent the interest of all industry’s stakeholders. Apex body is created

- Governance, rules of procedure and ToRs definedKAM/IFAD, EITH, support from MoIED, Regional Sup-port from ACTIF

1.1.2. The Apex body coordinates the development of a prioritized capacity-building pro-gramme curriculum based on the primary needs of the entire value chain, from workers up to managers, and define the training standards and infrastructure requirements. The capacity building programmes must be done in line with international standards and through bench-marking.

- Prioritized capacity-building programme curriculum is de-veloped - 1 Course curriculum for each area, assessment standards for certification agency and identification of ways to train (on-job, theory, mix)

Apex body

1.4. Develop specific skills for the Handloom sub-sector, designers as well as for MSMEs1.4.1. Strengthen Handloom Weavers’ Marketing Cooperative Society (WEAMACO) capacities to provide adequate support to its members and develop partnership agreements with MoIED, ACTIF and KAM. Provide guidance to improve the effectiveness and efficiency of the internal processes and results measurement of the support services provided by WEAMACO.

- 1 Handloom association strengthened and registered. - Governance, rules of procedure and ToRs defined

APEX body, MoIED, WEA-MACO, Regional Support from ACTIF

1.4.7. Establish and equip a pilot shared production facility regrouping small designers for them to share costs and benefit from common equipment. Connect with local partners and for-eign clothing manufacturers where possible (e.g. Rivatex and others).

- At least 1 production facility established over the 5 year period, grouping 100 designers. - At least 100 designers trained per year - At least 3 exchange programmes carried out.

New Handloom Association ,AFAD-K, MSEA , Regional Support from ACTIF, Equity Bank

1.6. Ensure that national quality management infrastructure responds to industry’s needs and international ambitions1.6.1. Support KEBS to bring up to date existing standards, establish which others are required, and publish national quality standards for garments and promote the use of those standards to members through circulars and seminars.

- Advisory service to KEBS on code of practices for the de-velopment of standards; 5 standards adopted; 2 sensitisation seminars conducted

KEBS, Regional Support from ACTIF

Strategic Objective 2: Improve the business environment to further support the development of the T&C industry2.1 Improve compliance as a way to increase productivity and competitiveness 2.1.1 Develop a reference book on existing social and environmental guidelines applied to the T&C sector in Kenya and their industry-wide applications, including the monitoring and report-ing mechanisms in place.

- Reference book on existing social and environmental guide-lines created

NEMA (National Environ-mental Management Au-thority), KEBS, Ministry of Labour, KIRDI

2.3. Improve the legal and regulatory framework relevant to the T&C industry to target export markets. 2.3.2. Kenya Revenue Authority to adjust (review) their regulations to improve ease of business especially in the T&C sector.

- 3 new regulations designed and submitted for approval MoEID, Trade Mark East Africa EPZA Mombasa KAM, KNCCI

Strategic objective 3: Expand the benefits of investment throughout the T&C value chain 3.3. Further promote Kenya as the main FDI destination for T&C3.3.4. Carry out investment promotion activities in target countries (particularly in India) - roadshows, facilitating direct interactions between Kenyan firms and targeted investors, helping foreign representatives to promote the sector.

- 1 roadshow each in 6 major textile cities - Ludhiana, Delhi, Ahmedabad, Mumbai, Bangalore and Tirupur - Meeting with 8-10 investors in each location. - Visits of interested investors (total 8 to 10) to Kenya

MOIED, KENIVEST, EPZA, KAM, Apex body Regional Support from ACTIF Indian Embassy

3.4. Enable equipment upgrading through investment3.4.1. Conduct audits and diagnostics of individual textile units and provide support first to a list of identified companies and then to a wider group of beneficiaries with the strategic tech-nology plan.

- At least 10 firms advised per year and technology plans developed

KAM, Apex body, Regional Support from ACTIF, Moi University

Strategic Objective 4: Enable market penetration and product development through trade intelligence 4.1. Improve access to strategic trade intelligence for T&C firms4.1.2. Improve the website of the Chamber of Commerce/KAM through web-based solutions for effective trade intelligence gathering and dissemination, and insure constant supply in timely market intelligence. Convert websites into mobile friendly formats. Keep track of the usage of websites with Google analytics.

- 2 websites revamped Chamber of Commerce, KAM


VALUE CHAIN ROADMAP PLAN OF ACTION


50

Stra

tegi

c ob

ject

ive

1 : M

axim

ize p

rodu

ctiv

ity a

nd u

phol

d qu

ality

requ

irem

ents

thro

ugh

skill

s de

velo

pmen

t.Op

erat

iona

l obj

ectiv

eAc

tivitie

sPr

iorit

y1=

high

3=

low

Impl

emen

tatio

n pe

riod

Targ

et m

easu

res

Lead

ing

natio

nal in

stitu

tion

and

poss

ible

impl

emen

ting

partn

ers

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

1.1

Stren

gthe

n se

ctor

coor

dina

tion

to su

ppor

t sk

ills d

evelo

pmen

t.

1.1.

1 Se

t up

a sec

tor-s

pecif

ic ap

ex b

ody t

o rep

resen

t the

inter

ests

of al

l ind

ustry

stak

ehol

ders.

The b

ody s

houl

d co

mpr

ise re

pres

entat

ives f

rom

:

• M

oIED

and

Mini

stry o

f Edu

catio

n, S

cienc

e and

Tech

nolo

gy (M

oEST

)

• EP

C, K

enInv

est,E

PZA,

Fibre

Crop

s Dire

ctorat

e (Ag

ricul

ture,

Fish

eries

an

d Fo

od A

utho

rity)

• KA

M, K

AMEA

, KNC

CI, A

ssoc

iatio

n of

Fas

hion

Desig

ners

– Ke

nya

(AFA

D (K

), W

EAM

ACO,

Keny

an N

ation

al Fa

rmer

s’ Fe

derat

ion

• Re

pres

entat

ives o

f lea

d fir

ms /

forei

gn b

uyer

s

• KT

TI, N

ation

al Ind

ustri

al Tra

ining

Aut

horit

y (NI

TA),

Tech

nical

and

Voca

tiona

l Edu

catio

n an

d Tra

ining

Aut

horit

y (TV

ETA)

, Tec

hnica

l sc

hool

s, Un

iversi

ties (

relev

ant t

echn

ical s

ectio

ns)K

enya

Indu

strial

Es

tates

Ltd

• Lo

gisti

cs co

mpa

nies

• Fin

ancia

l ins

titut

ions

• Tra

de &

priv

ate se

ctor d

onor

gro

ups

The f

ollo

wing

Gov

ernm

ent b

odies

can

be cl

ubbe

d to

geth

er : E

PZA,

EPC

, Fib

re Cr

ops D

irecto

rate,

MoE

ST, K

TT, N

ITA, K

eninv

es, M

oIED,

Ken

ya

Indus

trial

Estat

es Lt

d, TV

ETA.

A co

mm

ittee

form

ed fo

r im

plem

entat

ion

of th

e Cen

tre o

f Exc

ellen

ce

is a s

imila

r bod

y whic

h ca

n be

use

d as

a Im

plem

entat

ion

point

for t

he

apex

bod

y. Th

e ape

x bod

y will

be a

pub

lic–p

rivate

par

tner

ship

chair

ed

by M

oIED

and

co-c

haire

d by

the p

rivate

secto

r, an

d it

will

work

with

the

proj

ect i

mpl

emen

tatio

n tea

m u

nder

the C

hair.

The a

pex b

ody w

ill b

e star

ted as

a pu

blic-

priva

te pa

rtner

ship

, with

the

secr

etaria

t und

er th

e priv

ate se

ctor (

KAM

) and

the c

hair

publ

ic / c

o-ch

air p

rivate

. The

re wi

ll be

two

peop

le fro

m ea

ch in

dustr

y lev

el / s

ub-

secto

r – no

t mor

e tha

n 11

-13

mem

bers.

1X Q4

• Ap

ex b

ody i

s crea

ted•

Gove

rnan

ce, r

ules

of p

roce

dure

and

term

s of r

eferen

ce d

efine

d

KAM

/ Int

erna

tiona

l Fun

d fo

r Agr

i-cu

ltural

Dev

elopm

ent,

with

supp

ort

from

MoIE

D, re

gion

al su

ppor

t fro

m

ACTIF

[ VALUE CHAIN ROADMAP PLAN OF ACTION ]

51

Stra

tegi

c ob

ject

ive

1 : M

axim

ize p

rodu

ctiv

ity a

nd u

phol

d qu

ality

requ

irem

ents

thro

ugh

skill

s de

velo

pmen

t.Op

erat

iona

l obj

ectiv

eAc

tivitie

sPr

iorit

y1=

high

3=

low

Impl

emen

tatio

n pe

riod

Targ

et m

easu

res

Lead

ing

natio

nal in

stitu

tion

and

poss

ible

impl

emen

ting

partn

ers

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

1.1

Stren

gthe

n se

ctor

coor

dina

tion

to su

ppor

t sk

ills d

evelo

pmen

t.

The i

nstit

utio

ns fr

om w

hich

the p

artic

ipan

ts or

igina

te m

ust b

e will

ing to

sh

are th

e cos

ts.Fu

nding

requ

ired

for m

eetin

g fac

ilitie

s, su

ppor

ted b

y mem

bers.

Resp

onsib

ilitie

s of t

he ap

ex b

ody w

ill th

e fol

lowi

ng :

1. S

treng

then

inter

actio

n be

twee

n th

e ind

ustry

, aca

dem

ia, re

searc

h ins

titut

ions

and

publ

ic ins

titut

ions

.2.

Fac

ilitat

e the

iden

tifica

tion

of sk

ills g

ap u

sing

Traini

ng N

eeds

An

alysis

(TNA

)3.

3Su

ppor

t the

restr

uctu

ring

and

align

men

t of a

ll th

e trai

ning

instit

utes

/ u

niver

sity c

urric

ula a

nd re

porti

ng to

a sin

gle m

inistr

y :a.

Restr

uctu

ring

and

align

men

t of a

ll th

e trai

ning

instit

utes

/ univ

ersit

y cur

ricul

a for

them

to re

port

to a

singl

e m

inistr

y sho

uld

then

be a

dvoc

ated

base

d on

the r

esul

ts of

the

study

.4.

Esta

blish

a se

ctor t

hink t

ank w

hose

role

will

inclu

de se

ctor-s

pecif

ic pu

blica

tions

and

prod

uctio

n of

whit

e pap

ers.

5. C

ost o

f doi

ng b

usine

ss :

a. Tra

ining

levy

b. W

ork p

erm

itsc.

Elec

tricit

y pric

ingd.

Crea

tion

of a

secto

r-spe

cific

fund

.6.

Eas

e of d

oing

bus

iness

:a.

Influ

encin

g po

licies

that

affec

t the

secto

rb.

Tran

spor

tatio

n se

rvice

sc.

Restr

uctu

ring

of tr

aining

insti

tutio

ns.

7. P

rom

otio

n of

Ken

yan

T&C

prod

ucts :

a. Pu

blic

proc

urem

ent

b. ‘B

uy K

enya

, Buil

d Ke

nya’.

8. R

eview

of s

ecto

r-spe

cific

gove

rnm

ental

bud

gets.

9. D

issem

inatio

n an

d pr

omot

ion

of co

mpe

titive

intel

ligen

ce.

Build

the a

pex b

ody’s

capa

cities

:

• To

ensu

re eff

ectiv

e set

up an

d op

erati

on•

To ac

quire

the r

equir

ed co

nven

ing an

d ad

voca

cy p

ower

to in

fluen

ce

secto

r-rela

ted p

olici

es•

To ra

ise an

d m

obili

ze d

irect

publ

ic an

d do

nor a

ssist

ance

towa

rds t

he

secto

r’s p

riorit

ies.


52

Stra

tegi

c ob

ject

ive

1 : M

axim

ize p

rodu

ctiv

ity a

nd u

phol

d qu

ality

requ

irem

ents

thro

ugh

skill

s de

velo

pmen

t.Op

erat

iona

l obj

ectiv

eAc

tivitie

sPr

iorit

y1=

high

3=

low

Impl

emen

tatio

n pe

riod

Targ

et m

easu

res

Lead

ing

natio

nal in

stitu

tion

and

poss

ible

impl

emen

ting

partn

ers

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

1.1

Stren

gthe

n se

ctor

coor

dina

tion

to su

ppor

t sk

ills d

evelo

pmen

t.

1.1.

2 Th

e ape

x bod

y coo

rdina

tes a

skill

gap

and

need

s ass

essm

ent

study

cove

ring

the e

ntire

valu

e cha

in, fr

om w

orke

rs up

to m

anag

ers,

and

deve

lops

cour

se cu

rricu

la, as

sess

men

t stan

dard

s and

infra

struc

ture

requir

emen

ts fo

r trai

ning

prog

ramm

es, c

oord

inated

by M

oIED.

The s

kill g

ap as

sess

men

t mus

t be c

ondu

cted

with

cons

ider

ation

of i

n-ter

natio

nal s

tanda

rds a

nd th

roug

h be

nchm

arking

.

1X Q4

• Sk

ill g

ap as

sess

men

t stu

dy re

ports

ind

icatin

g sp

ecifi

c num

bers

to b

e tra

ined

for v

ariou

s acti

vities

• On

e cou

rse cu

rricu

lum

for e

ach

area,

asse

ssm

ent s

tanda

rds

for c

ertif

icatio

n ag

ency

and

iden

tifica

tion

of w

ays t

o tra

in ( o

n-jo

b, th

eory,

mixe

d )

Apex

bod

yInt

erna

tiona

l trai

ning

agen

cies s

uch

as

Waz

ir an

d Inf

rastru

cture

Leas

ing an

d Fin

ancia

l Ser

vices

( IL&

FS ) f

rom

Indi

a, reg

iona

l sup

port

from

ACT

IF, ad

ditio

nal

supp

ort f

rom

loca

l trai

ning

instit

utio

ns,

e.g. u

niver

sities

1.1.

3 W

ith th

e help

of r

esul

ts un

der 1

.1.2

, the

apex

bod

y play

s a le

ad-

ersh

ip ro

le in

the d

esig

n of

a fac

tory-

base

d pr

oduc

tivity

and

quali

ty en

hanc

emen

t pro

gram

me t

o im

prov

e pro

ducti

vity w

ithin

the e

xistin

g m

anuf

actu

ring

syste

m. T

he p

rogr

amm

e will

help

com

panie

s to

impl

e-m

ent l

ean

man

ufac

turin

g an

d ot

her t

echn

ique

s for

pro

ducti

vity a

nd

quali

ty im

prov

emen

t.Un

der t

he le

ader

ship

of M

oIED,

the a

pex b

ody m

obili

zes a

nd se

cures

res

ourc

es fo

r pro

gram

me i

mpl

emen

tatio

n an

d pu

ts in

plac

e the

pro

per

mec

hanis

m to

mon

itor a

nd au

dit i

ts ex

ecut

ion.

1X Q4

• Pr

oduc

tivity

and

quali

ty en

hanc

emen

t pro

gram

me r

eview

ed

and

valid

ated

• Re

sour

ces m

obili

zed

for t

he

prog

ramm

e•

Impl

emen

tatio

n m

anag

emen

t m

echa

nism

in p

lace

Apex

bod

yM

oIED

supp

orts

the i

nitiat

ive, r

e-gi

onal

supp

ort f

rom

ACT

IF

1.1.

4 Th

e ape

x bod

y buil

ds a

com

mon

pos

ition

on

key i

ssue

s affe

ct-ing

the s

ecto

r and

buil

ds th

e nec

essa

ry ad

voca

cy to

supp

ort r

equir

ed

polic

y or r

egul

ation

chan

ges,

e.g. :

• On

the

train

ing

levy :

Dev

elop

a pro

posa

l / wh

ite p

aper

on

how

to im

prov

e effi

cienc

y of t

he tr

aining

levy

, par

ticul

arly t

o red

efine

co

nditi

ons f

or ap

prov

al an

d tim

ing o

f reb

ates ;

defi

ne a

range

of

spec

ific t

rainin

g to

be c

overe

d by

the t

rainin

g lev

y ; an

d pr

epare

rec

omm

enda

tions

to N

ITA th

roug

h M

oIED.

• On

wor

k pe

rmits

: The

apex

bod

y : ( 1

) ide

ntifi

es a

range

of s

pecif

ic sk

ills n

ot av

ailab

le th

roug

h th

e Ken

ya la

bour

mark

et an

d pr

ovid

es

evid

ence

of t

he la

ck o

r abs

ence

of t

he sk

ill b

ase i

n Ke

nya ;

( 2 )

prep

ares a

reco

mm

ende

d lis

t of l

abou

r skil

ls th

at req

uire r

ecru

itmen

t of

expa

triate

s for

the s

ecto

rs ; (

3 ) th

roug

h M

oIED

nego

tiates

with

th

e Dep

artm

ent o

f Im

mig

ratio

n Se

rvice

s to

reduc

e the

cost

and

time

requir

ed to

issu

e wor

k per

mits

for t

he id

entif

ied sk

ills c

atego

ries.

• On

pub

lic p

rocu

rem

ent :

The a

pex b

ody,

toge

ther

with

MoIE

D an

d th

e Trea

sury,

draf

ts a p

ositi

on p

aper

on

the m

odali

ties o

f a p

ossib

le ‘B

uy K

enya

n’ pr

ogram

me.

• On

elec

tricit

y pr

icing

: The

apex

bod

y con

tribu

tes to

the

deve

lopm

ent o

f a su

itabl

e exit

strat

egy f

or th

e tem

porar

y elec

tricit

y su

bsid

y pro

gram

me.

1X Q4

• On

e whit

e pap

er o

n th

e trai

ning

levy

• Co

mm

on p

ositi

on o

n wo

rk pe

rmit

issue

pres

ented

to th

e Dep

artm

ent

of Im

mig

ratio

n Se

rvice

s•

One p

ositi

on p

aper

on

a ‘Bu

y Ke

nyan

’ pro

gram

me

• Ex

it str

ategy

for t

he te

mpo

rary

electr

icity

subs

idy p

rogr

amm

e dr

afted

Apex

bod

y, M

oIED

Wor

ld B

ank /

Glo

bal D

evelo

pmen

t Sol

u-tio

ns ( G

DS )

Trade

Mark

Eas

t Afri

ca ( T

MEA

), Ea

st Af

rica T

rade H

ub


53

Stra

tegi

c ob

ject

ive

1 : M

axim

ize p

rodu

ctiv

ity a

nd u

phol

d qu

ality

requ

irem

ents

thro

ugh

skill

s de

velo

pmen

t.Op

erat

iona

l obj

ectiv

eAc

tivitie

sPr

iorit

y1=

high

3=

low

Impl

emen

tatio

n pe

riod

Targ

et m

easu

res

Lead

ing

natio

nal in

stitu

tion

and

poss

ible

impl

emen

ting

partn

ers

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

1.2

Impr

ove t

echn

ical a

nd

supe

rviso

ry sk

ills a

s well

as

supp

ly ch

ain p

erfo

rman

ce.

1.2.

1 Ca

rry o

ut fa

ctory-

base

d tra

ining

s acr

oss t

he va

lue c

hain

to in

-cr

ease

tech

nical

and

supe

rviso

ry sk

ills o

f :

• Sh

ift w

orke

rs / m

achin

e ope

rator

s, fro

m sp

inning

up

to g

armen

ting

• Lin

e lea

ders

and

prod

uctio

n flo

w su

pervi

sors

• M

iddl

e man

ager

s•

Patte

rn m

aker

s and

com

puter

-aid

ed d

esig

n op

erato

rs•

Quali

ty ins

pecto

rs•

Lab

techn

ician

s•

Fash

ion

desig

ners

• M

ercha

ndize

rs•

Indus

trial

engi

neer

s.In

addi

tion,

for e

ach

of th

ese f

ields

, trai

n tra

iners

at co

mpa

ny an

d tra

in-ing

insti

tutio

n lev

el.

1X Q2

• Fiv

e tho

usan

d wo

rkers

traine

d pe

r yea

r•

At le

ast 3

00 em

ploy

ees t

raine

d pe

r yea

r und

er o

ther

categ

ories

( to

be re

fined

bas

ed o

n th

e skil

l gap

as

sess

men

t und

er ac

tivity

1.1

.2 )

• Ei

ghty

to o

ne h

undr

ed m

anag

ers

traine

d pe

r yea

r•

At le

ast t

wo tr

ainer

s trai

ned

per

categ

ory

KAM

, ape

x bod

y in

the l

ong

term

wi

th su

ppor

t fro

m N

ITA &

EPZ

AInt

erna

tiona

l trai

ning

agen

cies s

uch

as

Waz

ir an

d IL&

FS fr

om In

dia,

regio

nal

supp

ort f

rom

ACT

IF, U

NIDO

, The

Pro

-du

ctivit

y Cen

tre

1.2.

2 Su

ppor

t firm

s to

prov

ide a

syste

mati

c trai

ning /

indu

ction

pro

cess

fo

r new

ope

rator

s and

dev

elop

traini

ng m

anua

ls on

man

ufac

turin

g op

erati

ons –

pro

ducti

on, q

ualit

y, m

ainten

ance

and

hous

ekee

ping

– fo

r op

erato

rs.

1X Q2

• Tra

in 20

com

panie

s per

year

to

deve

lop

proc

ess a

nd tr

aining

m

anua

ls•

Traini

ng o

f trai

ners

unde

r an

exch

ange

pro

gram

me i

n on

e yea

r

Apex

bod

y in

the l

ong

term

, sup

-po

rt fro

m A

CTIF

Supp

ortin

g Ind

ian Tr

ade a

nd In

vestm

ent

in Af

rica (

SITA

) ( tb

c ), l

ocal

instit

utio

ns,

inclu

ding

BCa

D Co

nsul

ting

( Ken

ya

Mod

ular

Learn

ing S

ystem

– S

up-

ply C

hain

Man

agem

ent (

MLS

–SCM

) pa

rtner

) 1.

2.3

Prov

ide o

veral

l trai

ning

to fi

rms o

n so

urcin

g, fi

nanc

ial m

anag

e-m

ent a

nd su

pply

chain

opt

imiza

tion.

1X Q2

• Ei

ghty

to o

ne h

undr

ed co

mpa

ny

man

ager

s trai

ned

per y

ear

• At

leas

t 20

SMEs

advis

ed p

er ye

ar

Apex

bod

y in

the l

ong

term

, re-

gion

al su

ppor

t fro

m A

CTIF

SITA

( tbc

), Lo

cal i

nstit

utio

ns, i

nclu

ding

BC

aD C

onsu

lting

( Ken

ya M

LS–S

CM

partn

er )

1.2.

4 Co

ach

com

panie

s on

how

to p

ut in

to p

ractic

e the

mos

t suit

able

syste

ms a

nd p

roce

sses

for m

anag

ing o

perat

ions

and

inven

tory

( e.g

. so

urcin

g an

d pl

annin

g fo

r con

stant

avail

abili

ty of

inpu

ts us

ed in

pro

-du

ction

such

as ra

w m

ateria

ls, sp

are p

arts,

dye

s and

chem

icals )

.

1X Q3

• At

leas

t 30

com

panie

s and

20

SM

Es tr

ained

on

inven

tory

man

agem

ent p

er ye

ar :

• Fo

ur m

onth

s per

com

pany

, 10 %

red

uctio

n in

rejec

tions

/ rew

orks

an

d co

mpl

iance

with

buy

er’s

requir

emen

ts

KAM

, ape

x bod

y in

the l

ong

term

SITA

( tbc

), W

azir

Cons

ultan

ts, lo

cal

instit

utio

ns in

cludi

ng B

CaD

Cons

ultin

g ( K

enya

MLS

–SCM

par

tner

)

1.2.

5 Co

ach

com

panie

s to

impl

emen

t cos

t-effi

cient

and

buye

r-orie

nted

so

urcin

g str

ategi

es an

d tec

hniq

ues (

also

ensu

ring

that

respo

nsib

le sta

ff ha

ve fi

nanc

ial sk

ills r

elated

to p

urch

asing

inpu

ts an

d co

ordi

natin

g pr

oduc

tion

sche

dules

).

1X Q4

• At

leas

t 30

com

panie

s and

20

SMEs

train

ed in

sour

cing

strate

gy

impl

emen

tatio

n pe

r yea

r

KAM

, ape

x bod

y in

the l

ong

term

, reg

iona

l sup

port

from

ACT

IFSI

TA

1.2.

6 Tra

in m

anag

ers o

n th

e dev

elopm

ent o

f a co

mpa

ny su

bcul

ture

in th

eir fi

rms t

o ret

ain w

orke

rs’ in

teres

t in

caree

r dev

elopm

ent a

nd

impr

ove w

orkin

g co

nditi

ons.

Traini

ng to

mid

-leve

l man

ager

s will

also

fo

cus o

n pr

oper

floo

r man

agem

ent t

echn

ique

s and

requ

ired

soft

skill

s.De

velo

p a t

rainin

g au

dit m

odul

e to

help

secto

r stak

ehol

ders

iden

tify

spec

ific t

rainin

g ne

eds.

Intro

duce

a vo

lunt

ary tr

aining

audi

t sch

eme t

o he

lp m

anag

ers o

f tex

tile

and

garm

ent c

ompa

nies i

dent

ify an

d de

velo

p in-

hous

e trai

ning

pro-

gram

mes

.

1X Q3

• Ei

ghty

to o

ne h

undr

ed co

mpa

ny

man

ager

s trai

ned

per y

ear

• At

leas

t 20

SMEs

advis

ed p

er ye

ar

KAM

, ape

x bod

y in

the l

ong

term

, reg

iona

l sup

port

from

ACT

IF, M

oi

Unive

rsity

( up

to d

yeing

stag

e )


54

Stra

tegi

c ob

ject

ive

1 : M

axim

ize p

rodu

ctiv

ity a

nd u

phol

d qu

ality

requ

irem

ents

thro

ugh

skill

s de

velo

pmen

t.Op

erat

iona

l obj

ectiv

eAc

tivitie

sPr

iorit

y1=

high

3=

low

Impl

emen

tatio

n pe

riod

Targ

et m

easu

res

Lead

ing

natio

nal in

stitu

tion

and

poss

ible

impl

emen

ting

partn

ers

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

1.2

Impr

ove t

echn

ical a

nd

supe

rviso

ry sk

ills a

s well

as

supp

ly ch

ain p

erfo

rman

ce.

1.2.

7 Su

ppor

t SM

Es / l

ocal

firm

s’ int

egrat

ion

thro

ugh

lead

firm

en-

gage

men

ts : M

oIED

and

EPZA

wor

k with

forei

gn in

vesto

rs to

estab

lish

small

-sca

le tra

ining

/ men

torin

g pr

ogram

mes

for s

electe

d lo

cal f

irms t

o en

ter E

PZs t

hrou

gh th

eir C

SR b

udge

ts ( a

t bot

h th

e ope

rator

and

mid

-m

anag

emen

t lev

els ).

2X Q4

• At

leas

t fou

r men

torin

g pr

ogram

mes

per

year

( relat

ed to

1.

5.1 )

• At

leas

t 20

SMEs

advis

ed p

er ye

ar

KAM

, EPZ

A, ap

ex b

ody i

n th

e lon

g ter

m, r

egio

nal s

uppo

rt fro

m A

CTIF

1.2.

8 Th

e ape

x bod

y, in

colla

borat

ion

with

EPZ

A, w

orks

with

lead

fir

ms /

forei

gn b

uyer

s to

estab

lish

polic

ies an

d pr

oced

ures

for s

electe

d lo

cal f

irms t

o fo

llow.

Lead

firm

s dire

ctly e

ngag

e with

loca

l firm

s in

their

im

plem

entat

ion

thro

ugh

the e

xcha

nge o

f per

sonn

el be

twee

n fir

ms a

nd

thro

ugh

the d

evelo

pmen

t of n

etwor

k acti

vities

.Lin

ked

to ac

tivity

1.5

.2 re

lated

to E

BAP.

2X Q4

• At

leas

t five

exch

ange

s betw

een

loca

l firm

s and

lead

firm

s per

year

Apex

bod

y, in

colla

borat

ion

with

EP

ZA

1.3

Enha

nce q

ualit

y man

-ag

emen

t skil

ls in

line w

ith

inter

natio

nal s

tanda

rds.

1.3.

1 Or

ganis

e wor

ksho

ps an

d di

ssem

inate

guid

e boo

ks to

pro

mot

e th

e ado

ptio

n of

instr

umen

ts rel

ated

to q

ualit

y man

agem

ent s

ystem

s an

d sta

ndard

s (su

ch as

ECO

TEC,

Kaiz

en, I

nter

natio

nal O

rgan

izatio

n fo

r St

anda

rdiza

tion

(ISO)

, and

socia

l res

pons

ibili

ty an

d en

viron

men

tal /

energ

y stan

dard

s) an

d se

rvice

s in

supp

ort o

f ent

erpr

ises.

• Gu

ide:

‘Exp

ortin

g clo

thing

and

textil

es to

targ

et m

arkets

’•

Guid

e: ‘M

anag

ing q

ualit

y in

Keny

a: a d

irecto

ry of

servi

ces’

2X Q4

• Gu

ide :

‘Exp

ortin

g clo

thing

and

textil

es to

targ

et m

arkets

’ mad

e av

ailab

le•

Guid

e : ‘M

anag

ing q

ualit

y in

Keny

a : a

direc

tory

of se

rvice

s’ m

ade a

vaila

ble

KEBS

Keny

a Acc

redita

tion

Servi

ce, I

nsca

p Co

nsul

ting,

Ver

itas,

China

Cer

tifi-

catio

n an

d Ins

pecti

on G

roup

Afri

caRe

gion

al su

ppor

t fro

m A

CTIF

SITA

( tbc

)

1.3.

2 Co

nduc

t sen

sitiza

tion

works

hops

on

man

dato

ry an

d vo

lunt

ary re

-qu

irem

ents

in tar

geted

mark

ets ( I

ndia,

regi

on, E

U ) fo

r SM

Es an

d TIS

Is.

This

woul

d co

ver i

nter

natio

nal a

nd o

ther

requ

irem

ents,

buy

ers’

requir

e-m

ents,

labe

lling

, pac

kagi

ng, c

loth

ing si

ze, a

nd th

e Reg

istrat

ion,

Eva

lua-

tion,

Aut

horiz

ation

and

Restr

ictio

n of

Che

mica

ls ( R

EACH

) reg

ulati

on :

• Br

eako

ut se

ssio

ns to

iden

tify t

he q

ualit

y-rel

ated

need

s of

parti

cipati

ng S

MEs

( and

TISI

s ) ;

• Ide

ntifi

catio

n of

a wa

y for

ward

for a

poo

l of e

nter

prise

s ( IS

O 90

01,

ISO

1400

1, IS

O 50

001,

pro

ducti

vity i

mpr

ovem

ent,

5S, b

asic

quali

ty to

ols,

lean

man

ufac

turin

g, p

acka

ging

, lab

elling

) ;•

Ident

ifica

tion

of a

way f

orwa

rd fo

r TIS

Is ( la

bs, c

ertif

icatio

n bo

dies

, ins

pecti

on b

odies

, con

sulta

ncy c

ompa

nies )

.

2X Q2

• Tw

enty

SMEs

sens

itize

d on

m

anda

tory

and

volu

ntary

req

uirem

ents

in tar

geted

mark

ets•

Ten

TISIs

sens

itize

d on

man

dato

ry an

d vo

lunt

ary re

quire

men

ts in

targe

ted m

arkets

KEBS

, reg

iona

l sup

port

from

AC-

TIF, E

PZA

SITA

1.3.

3 Co

nduc

t cap

acity

-buil

ding

for a

poo

l of s

electe

d SM

Es to

com

ply

with

man

dato

ry an

d vo

lunt

ary re

quire

men

ts an

d im

plem

ent r

equir

ed

certi

ficati

on sc

hem

es ( I

SO 9

001,

ISO

1400

1, IS

O 50

001,

pro

ducti

vity

impr

ovem

ent,

5S, b

asic

quali

ty to

ols,

lean

man

ufac

turin

g, p

acka

ging

, lab

elling

).

2X Q2

• Tw

enty

SMEs

coac

hed

to

impl

emen

t app

ropr

iate c

ertif

icatio

n sc

hem

es an

d m

anag

emen

t too

ls•

Traini

ng m

ateria

ls av

ailab

le

KEBS

, KAM

1.3.

4 Tra

ining

on

unde

rstan

ding

, and

guid

ance

on

impl

emen

tatio

n of,

th

e REA

CH re

gulat

ion.

2X Q2

• Ei

ghty

to o

ne h

undr

ed co

mpa

ny

man

ager

s trai

ned

per y

ear

• At

leas

t 20

SMEs

advis

ed p

er ye

ar an

d 10

relev

ant r

egul

atory

bodi

es•

Road

map

to im

plem

ent R

EACH

reg

ulati

on

EPZA

, UNI

DO, K

EBS


55

Stra

tegi

c ob

ject

ive

1 : M

axim

ize p

rodu

ctiv

ity a

nd u

phol

d qu

ality

requ

irem

ents

thro

ugh

skill

s de

velo

pmen

t.Op

erat

iona

l obj

ectiv

eAc

tivitie

sPr

iorit

y1=

high

3=

low

Impl

emen

tatio

n pe

riod

Targ

et m

easu

res

Lead

ing

natio

nal in

stitu

tion

and

poss

ible

impl

emen

ting

partn

ers

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

1.3

Enha

nce q

ualit

y man

-ag

emen

t skil

ls in

line w

ith

inter

natio

nal s

tanda

rds.

1.3.

5 Pr

omot

e and

facil

itate

the c

reatio

n of

loca

l con

sulti

ng fi

rms a

nd

busin

ess s

ervic

es o

f int

erna

tiona

l con

sulti

ng fi

rms t

o pr

ovid

e ass

is-tan

ce an

d eff

ectiv

e bus

iness

supp

ort t

o T&

C co

mpa

nies.

This

can

be

done

thro

ugh

the f

ollo

wing

:

• Re

ach

out t

o th

e key

play

ers i

n th

e con

sulti

ng in

dustr

y to

bring

them

int

o Ke

nya

• Bu

ild ca

pacit

y of i

dent

ified

relev

ant e

xistin

g co

nsul

ting

firm

s in

Keny

a•

Help

KEB

S to

exten

d th

eir re

ach

of ce

rtific

ation

amon

g Ke

nyan

firm

s an

d pr

omot

e the

adva

ntag

es o

f cer

tifica

tion.

2X Q4

• Bu

sines

s ser

vices

and

a poo

l of

loca

l adv

isers

in th

e area

of

quali

ty ( IS

O 90

01, I

SO 1

4001

, ISO

50

001,

5S,

qua

lity t

ools )

• Su

ppor

t pro

vided

to tw

o co

nsul

ting

firm

s

KAM

1.4

Deve

lop

spec

ific s

kills

for t

he h

andl

oom

subs

ecto

r, fo

r des

igne

rs as

well

as fo

r M

SMEs

.

1.4.

1 St

rengt

hen

selec

ted H

andl

oom

Wea

vers’

Mark

eting

Coo

pera-

tive S

ociet

y ( W

EAM

ACO )

capa

cities

to p

rovid

e ade

quate

supp

ort t

o its

mem

bers

and

tie th

e ass

ociat

ion

to M

oIED,

ACT

IF an

d KA

M. C

arry

out a

n ins

titut

iona

l ass

essm

ent t

o im

prov

e WEA

MAC

O pe

rform

ance

by

mea

surin

g th

e effe

ctive

ness

and

effici

ency

of t

heir

busin

ess p

ractic

es.

The a

sses

smen

t sho

uld

surve

y all

activ

ity ar

eas i

nclu

ding

strat

egy a

nd

gove

rnan

ce, r

esou

rces

and

proc

esse

s, pr

oduc

ts an

d se

rvice

s, an

d re-

sults

mea

surem

ent.

Supp

ort W

EAM

ACO

and

the n

ewly

crea

ted h

andl

oom

asso

ciatio

n to

de

mon

strate

the p

oten

tial o

f the

han

dloo

m se

ctor f

or jo

b cr

eatio

n an

d inc

ome g

ener

ation

:

• Or

ganiz

e a st

udy t

our t

o Ind

ia fo

r WEA

MAC

O an

d th

e new

ly cr

eated

ha

ndlo

om as

socia

tion

to u

nder

stand

the v

ast p

oten

tial o

f han

dloo

m

weav

ing an

d th

e pos

sibili

ty to

ope

rate a

s a la

rge m

anuf

actu

ring

unit ;

• Lin

k MSM

Es in

WEA

MAC

O an

d th

e han

dloo

m as

socia

tion

with

ed

ucati

onal

instit

utio

ns an

d TIS

Is, et

c. to

allo

w th

em to

ben

efit f

rom

sim

ilar o

ppor

tunit

ies an

d ac

cess

as th

e T&C

secto

rs in

areas

such

as

resea

rch,

mark

et int

ellig

ence

, fina

ncial

supp

ort,

traini

ng et

c. ;

• Fa

cilita

te inf

orm

ation

exch

ange

betw

een

key a

ctors

in th

e T&C

se

ctor a

nd W

EAM

ACO

and

the n

ewly

crea

ted h

andl

oom

asso

ciatio

n to

share

skill

s and

know

-how

ben

eficia

l to

both

;•

Stren

gthe

n W

EAM

ACO

and

the n

ewly

crea

ted h

andl

oom

asso

ciatio

n in

sour

cing

prac

tices

, mark

et id

entif

icatio

n an

d m

arket

acce

ss ;

• Ad

voca

te fo

r pol

icy su

ppor

t / inc

entiv

es, e

.g. s

uppo

rt in

sour

cing

of

input

s .En

sure

the n

eeds

of t

he h

andl

oom

secto

r are

duly

cons

idere

d an

d re-

flecte

d in

T&C

deve

lopm

ent s

trateg

ies.

2X Q3

• M

embe

rs su

rveye

d an

d rep

ort o

n im

prov

emen

t in

quali

ty of

supp

ort

prov

ided

• Be

nchm

arking

repo

rt pr

oduc

ed

and

valid

ated

by TI

SIs

• Ins

titut

ion

repor

t on

perfo

rman

ce

impr

ovem

ent t

hrou

gh su

rvey

ques

tionn

aires

• A

20 %

impr

ovem

ent i

n be

nchm

arking

scor

e by t

he en

d of

th

e pro

ject

• On

e stu

dy to

ur to

Indi

a of b

oth

TISIs’

key r

epres

entat

ives

• Bo

th TI

SIs c

ollab

orate

clos

ely w

ith

traini

ng in

stitu

tions

• At

leas

t two

train

ings t

o bo

th TI

SIs’

perso

nnel

on so

urcin

g

Apex

bod

y WEA

MAC

O, n

ewly

crea

ted h

andl

oom

asso

ciatio

n, re

-gi

onal

supp

ort f

rom

ACT

IF

SITA

+ an

Indi

an co

nsul

ting

firm

such

as

Waz

ir ( c

oord

inatio

n wi

th In

dian

par

t-ne

rs ),

NIFT

, NID

, IIH

T


56

Stra

tegi

c ob

ject

ive

1 : M

axim

ize p

rodu

ctiv

ity a

nd u

phol

d qu

ality

requ

irem

ents

thro

ugh

skill

s de

velo

pmen

t.Op

erat

iona

l obj

ectiv

eAc

tivitie

sPr

iorit

y1=

high

3=

low

Impl

emen

tatio

n pe

riod

Targ

et m

easu

res

Lead

ing

natio

nal in

stitu

tion

and

poss

ible

impl

emen

ting

partn

ers

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

1.4

Deve

lop

spec

ific s

kills

for t

he h

andl

oom

subs

ecto

r, fo

r des

igne

rs as

well

as fo

r M

SMEs

.

1.4.

2 Or

ganiz

e skil

ls up

grad

ing tr

aining

in In

dia f

or se

lected

Ken

yan

weav

ers :

• Es

tablis

h a l

ink b

etwee

n ha

ndlo

om p

rodu

cers

and

Indian

train

ing

instit

utio

ns ( p

ossib

ly wi

th th

e Nati

onal

Instit

ute o

f Fas

hion

Tech

nolo

gy ( N

IFT ),

Natio

nal I

nstit

ute o

f Des

ign

( NID

), Ind

ian

Instit

ute o

f Hard

ware

Tech

nolo

gy ( I

IHT )

, etc.

) for

wea

vers

to le

arn

vario

us w

eavin

g tec

hniq

ues,

print

ing ( s

cree

n / bl

ock p

rintin

g ),

jacqu

ard / d

obby

wea

ving,

prep

aratio

n an

d us

e of n

atural

dye

s etc.

;•

Repl

icate

/ ado

pt th

e Ind

ian in

terns

hip p

rogr

amm

e, be

aring

in m

ind

the l

ocal

scen

ario.

Cond

uct t

rainin

g in

the f

ollo

wing

addi

tiona

l area

s :

• Sa

les an

d m

arketi

ng ;

• Tre

nd re

searc

h –

colo

urs,

shap

es, e

tc. ;

• Tra

in th

e trai

ners

prog

ramm

e : tr

aining

pro

duce

rs fro

m th

e co

mm

unity

leve

l on

spinn

ing, w

eavin

g an

d dy

eing

techn

ique

s ;•

Trans

late t

rends

into

uniq

ue / m

arketa

ble p

rodu

ct ite

ms.

2X Q4

• At

leas

t 20

hand

loom

firm

s ad

vised

per

year

• At

leas

t thr

ee li

nkag

es es

tablis

hed

with

Indi

an p

artn

er tr

aining

ins

titut

ions

• Int

erns

hip sy

stem

put

in p

lace a

nd

func

tionin

g

Apex

bod

y, ne

wly f

orm

ed h

an-

dloo

m as

socia

tion,

WEA

MAC

O,

regio

nal s

uppo

rt fro

m A

CTIF

India

base

d co

nsul

tants,

SC–

Waz

ir ( c

oord

inatio

n wi

th In

dian

par

tner

s ),

NIFT

, NID

, IIH

T

1.4.

3 De

velo

p co

oper

ation

with

the O

ffice

of t

he D

evelo

pmen

t Com

-m

issio

ner f

or H

andl

oom

s at t

he In

dian

Mini

stry o

f Tex

tiles

to d

evelo

p a n

ation

al ha

ndlo

om d

evelo

pmen

t pro

gram

me f

or K

enya

. Sim

ilarly

to

the I

ndian

Nati

onal

Hand

loom

Pro

gram

me,

the K

enya

n sc

hem

e sho

uld

merg

e all

majo

r com

pone

nts,

nam

ely: t

he In

tegrat

ed H

andl

oom

s Dev

el-op

men

t Sch

eme,

Mark

eting

and

Expo

rt Pr

omot

ion

Sche

me a

nd D

iversi

-fie

d Ha

ndlo

om D

evelo

pmen

t Sch

eme.

1X Q4

• Na

tiona

l han

dloo

m d

evelo

pmen

t pr

ogram

me d

evelo

ped

Apex

bod

y WEA

MAC

O, n

ewly

cre-

ated

hand

loom

asso

ciatio

nInd

ia ba

sed

cons

ultan

ts, S

C–W

azir

( coo

rdina

tion

with

Indi

an p

artn

ers )

, reg

iona

l sup

port

from

ACT

IF

1.4.

4 De

velo

p tai

lor-m

ade o

n-sit

e trai

nings

to in

crea

se th

e cap

acity

an

d pr

oduc

tivity

of t

he M

SMEs

in th

e han

dloo

m se

ctor.

Traini

ngs w

ill

inclu

de en

terpr

ises i

n th

e inf

orm

al se

ctor t

o d

rive t

he tr

ansit

ion

to th

e fo

rmal

econ

omy.

1X Q2

• In

line w

ith ac

tivity

1.1

.2, M

SME

skill

gap

asse

ssm

ent c

arried

out

• At

leas

t 20

SMEs

advis

ed p

er ye

ar

AFAD

( K )

MSE

A, re

gion

al su

ppor

t fro

m A

CTIF

India

base

d co

nsul

tants,

SC–

Waz

ir ( c

o-or

dina

tion

with

Indi

an p

artn

ers )

1.4.

5 Tra

in M

SMEs

own

ers a

nd m

anag

ers o

n m

anag

emen

t skil

ls th

at ca

n be

of i

mm

ediat

e use

and

are re

levan

t to

their

scale

of o

perat

ions

.1

X Q2•

At le

ast 2

0 SM

Es ad

vised

per

year

MSE

A, re

gion

al su

ppor

t fro

m A

CTIF

1.4.

6 Up

grad

e pro

ducti

on te

chno

logy

and

equip

men

t for

selec

ted

MSM

Es th

roug

h th

e ado

ptio

n of

spec

ific t

echn

olog

y stra

tegic

plan

s, co

nsid

ering

the s

pecif

icitie

s of t

he p

rodu

ction

unit

s and

their

resp

ectiv

e pr

oduc

t ran

ge an

d pr

oduc

t dive

rsific

ation

pot

entia

l.Pr

ovid

e sup

port

to th

ese s

electe

d en

terpr

ises t

o ge

t qua

lity a

nd m

an-

agem

ent c

ertif

icatio

ns (I

SO).

1X Q4

• At

leas

t sev

en S

MEs

advis

ed

per y

ear a

nd te

chno

logy

plan

s de

velo

ped

• At

leas

t sev

en S

MEs

supp

orted

th

roug

h ce

rtific

ation

pro

cess

New

hand

loom

asso

ciatio

n, M

SEA,

reg

iona

l sup

port

from

ACT

IF


57

Stra

tegi

c ob

ject

ive

1 : M

axim

ize p

rodu

ctiv

ity a

nd u

phol

d qu

ality

requ

irem

ents

thro

ugh

skill

s de

velo

pmen

t.Op

erat

iona

l obj

ectiv

eAc

tivitie

sPr

iorit

y1=

high

3=

low

Impl

emen

tatio

n pe

riod

Targ

et m

easu

res

Lead

ing

natio

nal in

stitu

tion

and

poss

ible

impl

emen

ting

partn

ers

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

1.4

Deve

lop

spec

ific s

kills

for t

he h

andl

oom

subs

ecto

r, fo

r des

igne

rs as

well

as fo

r M

SMEs

.

1.4.

7 Es

tablis

h an

d eq

uip a

pilo

t sha

red p

rodu

ction

facil

ity g

roup

ing

small

des

igne

rs fo

r the

m to

share

costs

and

bene

fit fr

om co

mm

on

equip

men

t. Co

nnec

t and

par

tner

with

loca

l and

forei

gn cl

othin

g m

anu-

factu

rers w

here

poss

ible

( e.g

. Riva

tex an

d ot

hers

).Es

tablis

h co

nnec

tions

with

the l

ocal

and

regio

nal m

arkets

.Pr

ovid

e cap

acity

-buil

ding

to d

esig

ners

relate

d to

clot

hing

desig

n, ta

i-lo

ring

and

cutti

ng, i

dent

ifica

tion

of in

puts,

and

prod

uct m

arketi

ng. E

s-tab

lish

linka

ges,

exch

ange

pro

gram

mes

and

expo

sure

studi

es b

etwee

n Ke

nyan

and

Indian

des

igne

rs.On

succ

essfu

l rol

l out

of t

he p

ilot,

sprea

d to

regi

ons w

here

there

is a

conc

entra

tion

of sm

all d

esig

ners’

wor

ksho

ps.

1X Q1

• At

leas

t one

pro

ducti

on fa

cility

es

tablis

hed

over

the f

ive-y

ear

perio

d, g

roup

ing 1

00 d

esig

ners

• At

leas

t 100

des

igne

rs tra

ined

per y

ear

• At

leas

t thr

ee ex

chan

ge

prog

ramm

es ca

rried

out

New

hand

loom

asso

ciatio

n, A

FAD

( K ),

MSE

A, re

gion

al su

ppor

t fro

m A

C-TIF

, Equ

ity B

ank

1.4.

8 Le

ad a

sens

itiza

tion

cam

paig

n an

d tra

ining

to h

andl

oom

pro

duc-

ers a

nd d

esig

ners

on in

tellec

tual

prop

erty.

Pub

lic se

ctor o

ffice

rs are

als

o to

atten

d th

ese t

rainin

gs.

1X Q4

• At

leas

t 20

hand

loom

firm

s and

10

0 de

signe

rs ad

vised

per

year

New

hand

loom

asso

ciatio

n, A

FAD

( K )

MSE

A, re

gion

al su

ppor

t fro

m

ACTIF

, Ken

ya In

dustr

ial P

rope

rty

Instit

ute,

Moi

Univ

ersit

y1.

5 Im

prov

e exis

ting

train-

ing an

d ed

ucati

onal

offer

-ing

s in

line w

ith in

dustr

y ne

eds.

1.5.

1 Se

t up

a reg

iona

l trai

ning

cent

re of

exce

llenc

e for

T&C

in th

e EP

Zs, w

here

loca

l tex

tile p

rodu

cers

coul

d tra

in m

iddl

e & u

pper

leve

l m

anag

emen

t on

new

techn

olog

y, fac

tor p

ricing

, qua

lity c

ontro

l and

lab

our p

rodu

ctivit

y.Inc

lude

the f

ull c

hain.

Led

by an

d lin

ked

with

the a

pex b

ody.

Conn

ec-

tion

with

NIFT

on

the c

apac

itatio

n of

the c

entre

of e

xcell

ence

.

1X Q1

• At

leas

t fou

r cen

tres o

f exc

ellen

ce

estab

lishe

d•

At le

ast t

wo M

oUs s

igne

d wi

th

NIFT

Apex

bod

y, EP

ZA, r

egio

nal s

uppo

rt fro

m A

CTIF

EPZA

has

star

ted o

n es

tablis

hing

a re-

gion

al ce

ntre

( Ath

i Rive

r ) of

exce

llenc

e

1.5.

2 Re

view

and

enha

nce E

BAP

to ac

celer

ate th

e gro

wth

of o

perat

iona

l SM

E ex

porte

rs de

siring

to se

t up

unde

r the

EPZ

pro

gram

me:

• Re

view

and

clarif

y the

selec

tion

of fi

rms t

o be

nefit

from

EBA

P•

Stren

gthe

n co

mm

unica

tion

of E

BAP

to en

sure

good

out

reach

and

appl

icatio

ns b

y SM

Es fo

r the

pro

gram

me.

1X Q1

• At

leas

t fou

r new

EBA

Ps

estab

lishe

dEP

ZA, r

egio

nal s

uppo

rt fro

m A

CTIF

1.5.

3 Re

infor

ce ex

isting

TVET

( rela

ted to

stud

y in

1.1.

2. ) o

fferin

g an

d rev

ive th

e offe

r of t

he K

TTI a

s well

as o

ther

relev

ant i

nstit

utio

ns,

targe

ting

both

texti

le an

d clo

thing

com

panie

s. Sp

ecifi

c tec

hnica

l area

s req

uiring

skill

reinf

orce

men

t are

:

• Sp

inning

ope

ratio

ns fo

r ring

spinn

ing, o

pen

end

and

airjet

• W

eavin

g an

d we

aving

prep

arato

ry op

erati

ons f

or m

ajor s

huttl

eless

tec

hnol

ogies

– ai

rjet a

nd ra

pier

• Kn

itting

ope

ratio

ns•

Fibre

/ yarn

/ fab

ric d

yeing

, prin

ting

and

finish

ing p

roce

sses

• Ga

rmen

t man

ufac

turin

g op

erati

ons

• 3G

Tailo

r Trai

ning

Syste

m an

d ot

her m

oder

n int

erna

l trai

ning

techn

ique

s•

Fash

ion

desig

n•

List o

f skil

ls to

be c

ompl

eted

base

d on

the a

sses

smen

t stu

dy.

1X Q4

• At

leas

t one

new

cour

se cr

eated

an

d av

ailab

le in

each

field

with

in th

e five

-yea

r per

iod

• Si

gned

MoU

with

one

Indi

an

instit

ute

• Th

ree to

four

mon

ths f

or

coor

dina

tion

with

Indi

an in

stitu

tes•

At le

ast t

wo TV

ET in

stitu

tions

tra

ined

on la

test p

edag

ogica

l tec

hniq

ues p

er ye

ar•

At le

ast t

wo TV

ET in

stitu

tions

tra

ined

on la

test t

echn

ical

deve

lopm

ents

in th

e sec

tor

Apex

bod

y, KT

TI, E

PZA

SITA

( tbc

) , In

dian

texti

le res

earc

h as

socia

tions

( Nor

ther

n Ind

ia Te

xtile

Rese

arch

Asso

ciatio

n, S

outh

Indi

a Tex

-til

e Res

earc

h As

socia

tion,

Ahm

edab

ad

Texti

le Ind

ustry

’s Re

searc

h As

socia

-tio

n, et

c. )

Inter

natio

nal t

rainin

g ag

encie

s suc

h as

W

azir

and

IL&FS

from

Indi

a


58

Stra

tegi

c ob

ject

ive

1 : M

axim

ize p

rodu

ctiv

ity a

nd u

phol

d qu

ality

requ

irem

ents

thro

ugh

skill

s de

velo

pmen

t.Op

erat

iona

l obj

ectiv

eAc

tivitie

sPr

iorit

y1=

high

3=

low

Impl

emen

tatio

n pe

riod

Targ

et m

easu

res

Lead

ing

natio

nal in

stitu

tion

and

poss

ible

impl

emen

ting

partn

ers

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

1.5

Impr

ove e

xistin

g tra

in-ing

and

educ

ation

al of

fer-

ings i

n lin

e with

indu

stry

need

s.

(1.5

.3) I

n ea

ch o

f the

se ar

eas,

reinf

orce

train

ing in

stitu

tions

’ cap

acity

an

d cr

eate

highl

y spe

cific

and

shor

t-ter

m co

urse

s ( on

e to

three

wee

ks ),

adap

ted to

tim

e con

strain

ts of

empl

oyee

s. Fo

r mor

e spe

cializ

ed tr

ain-

ing, a

hig

her p

erio

d of

four

to si

x wee

ks m

ay b

e req

uired

. The

tim

eline

sh

ould

be d

ecid

ed w

hile d

evelo

ping

the c

ourse

s. Th

is ac

tivity

is li

nked

wi

th ac

tivity

1.1

.3 as

capa

city-

build

ing an

d co

urse

s will

be d

esig

ned

base

d on

the r

esul

ts of

the s

kill g

ap st

udy a

nd re

lated

curri

cula.

Reinf

orce

KTT

I’s ca

pacit

ies :

1. In

the l

atest

inter

natio

nal b

est p

ractic

e and

tech

nolo

gy av

ailab

le to

th

e sec

tor t

o en

sure

up-to

-date

capa

city-

build

ing p

rovis

ions

;2.

In th

e late

st tra

ining

prac

tices

and

tool

s ;3.

To

estab

lish

prof

essio

nal s

tanda

rds,

job

prof

iles,

quali

ficati

ons a

nd

certi

ficati

ons ;

4. T

o fac

ilitat

e tran

sfer o

f kno

w-ho

w fro

m In

dian

insti

tutio

ns to

dev

elop

voca

tiona

l trai

ning

prog

ramm

es.

1X Q4

• At

leas

t one

new

cour

se cr

eated

an

d av

ailab

le in

each

field

with

in th

e five

-yea

r per

iod

• Si

gned

MoU

with

one

Indi

an

instit

ute

• Th

ree to

four

mon

ths f

or

coor

dina

tion

with

Indi

an in

stitu

tes•

At le

ast t

wo TV

ET in

stitu

tions

tra

ined

on la

test p

edag

ogica

l tec

hniq

ues p

er ye

ar•

At le

ast t

wo TV

ET in

stitu

tions

tra

ined

on la

test t

echn

ical

deve

lopm

ents

in th

e sec

tor

Apex

bod

y, KT

TI, E

PZA

SITA

( tbc

) , In

dian

texti

le res

earc

h as

socia

tions

( Nor

ther

n Ind

ia Te

xtile

Rese

arch

Asso

ciatio

n, S

outh

Indi

a Tex

-til

e Res

earc

h As

socia

tion,

Ahm

edab

ad

Texti

le Ind

ustry

’s Re

searc

h As

socia

-tio

n, et

c. )

Inter

natio

nal t

rainin

g ag

encie

s suc

h as

W

azir

and

IL&FS

from

Indi

a

1.5.

4 Se

t-up

colla

borat

ion

betw

een

loca

l and

Indi

an tr

aining

insti

tu-

tions

to d

evelo

p or

upd

ate a

hand

loom

wea

ving

traini

ng cu

rricu

lum

inc

ludi

ng ad

vanc

ed te

chniq

ues.

• Tra

in sta

ff an

d m

anag

emen

t to

estab

lish

and

man

age q

ualit

y sy

stem

atica

lly to

mee

t clie

nt n

eeds

.•

Estab

lish

a fee

dbac

k mec

hanis

m b

etwee

n M

SMEs

and

buye

rs fo

r co

ntinu

ous i

mpr

ovem

ent t

o sa

tisfy

buye

rs’ n

eeds

and

expe

ctatio

ns.

1X Q3

• Si

gned

MoU

with

one

Indi

an

instit

ute

• Ge

tting

two

expe

rts o

r an

agen

cy

on b

oard

( can

be i

ncrea

sed

if req

uired

)•

Deve

lop

four

exch

ange

pr

ogram

mes

MoE

ST, h

andl

oom

asso

ciatio

n,

apex

bod

y / KA

M, K

TTI,

EPZA

Indian

insti

tutes

, age

ncies

and

expe

rts

1.5.

5 Sy

stem

atize

the u

se o

f TVE

T by c

reatin

g a r

equir

emen

t for

each

ne

w op

erato

r in

Keny

an co

mpa

nies t

o un

derg

o a r

eleva

nt th

ree-w

eek

cour

se ( b

ased

on

the s

pecif

icatio

n ). F

or so

me t

rainin

gs, a

hig

her

perio

d of

four

to si

x wee

ks m

ay b

e req

uired

. The

tim

eline

shou

ld b

e de

cided

whil

e dev

elopi

ng th

e cou

rses.

Estab

lish

a Mem

oran

dum

of U

nder

stand

ing ( M

oU ) b

etwee

n T&

C co

m-

panie

s and

TVET

insti

tutio

ns to

share

costs

for t

he tr

aining

.

2X Q2

• At

leas

t 10

firm

s im

plem

ent

a man

dato

ry tra

ining

for n

ew

oper

ators

each

year

• M

oU is

sign

ed b

etwee

n TV

ET

and

firm

s

Apex

bod

y / KA

M, K

TTI,

EPZA

1.5.

6 Ca

pacit

ate th

e TVE

T stru

cture

with

the r

equir

ed eq

uipm

ent t

o tea

ch tr

ainee

s the

pro

per h

andl

ing o

f new

equip

men

t use

d in

the i

ndus

-try

. Sec

ond-

hand

/ sm

all sc

ale m

odels

of m

achin

ery c

an b

e im

porte

d fro

m cu

rrent

indu

stry l

eade

rs ( In

dia,

for i

nstan

ce ).

Mac

hiner

y sup

plier

s ca

n als

o be

appr

oach

ed to

don

ate so

me o

f the

mac

hiner

y for

train

ing

purp

oses

.

2X Q1

• Le

tter o

f sup

port

obtai

ned

from

two

to th

ree co

mpa

nies o

r mac

hiner

y su

pplie

rs

Apex

bod

y / KA

M, K

TTI,

EPZA

, TV

ETA

Larg

e Ind

ian te

xtile

com

panie

s - A

rvind

, Va

rdhm

an, A

lok,

Raym

ond,

mac

hiner

y su

pplie

rs - L

MW

, Riet

er, D

ornie

r, etc

.

1.5.

7 St

rengt

hen

linka

ges a

nd co

llabo

ratio

n m

echa

nism

betw

een

Ken-

yan

unive

rsitie

s and

enter

prise

s.

• Ba

sed

on ag

reem

ents

reach

ed b

etwee

n un

iversi

ties a

nd th

e T&

C ap

ex b

ody,

supp

ort t

he u

pdati

ng o

f cur

ricul

a and

train

ing

prog

ramm

es o

f univ

ersit

ies ( i

nclu

ding

stud

ent a

ppren

tices

and

inter

nship

pro

gram

mes

).

2X Q4

• Ne

w cu

rricu

la de

velo

ped

• Si

gned

MoU

with

three

to fo

ur

expe

rts o

r ins

titut

es•

Requ

irem

ent o

f one

inter

nship

pr

ogram

me p

er d

iplo

ma

estab

lishe

d

Apex

bod

y / KA

M, u

niver

sities

, EP

ZA, K

AMEA

SITA

( tbc

) ( co

ordi

natio

n wi

th In

dian

ins

titut

es an

d ex

perts

), Ind

ian In

stitu

tes

of Te

chno

logy

, DKT

E, Te

chno

logi

cal I

n-sti

tute

of Te

xtile

and

Scien

ces,

Gove

rn-

men

t Cen

tral T

extil

e Ins

titut

e, reg

iona

l su

ppor

t fro

m A

CTIF


59

Stra

tegi

c ob

ject

ive

1 : M

axim

ize p

rodu

ctiv

ity a

nd u

phol

d qu

ality

requ

irem

ents

thro

ugh

skill

s de

velo

pmen

t.Op

erat

iona

l obj

ectiv

eAc

tivitie

sPr

iorit

y1=

high

3=

low

Impl

emen

tatio

n pe

riod

Targ

et m

easu

res

Lead

ing

natio

nal in

stitu

tion

and

poss

ible

impl

emen

ting

partn

ers

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

1.5

Impr

ove e

xistin

g tra

in-ing

and

educ

ation

al of

fer-

ings i

n lin

e with

indu

stry

need

s.

• Es

tablis

h un

iversi

ty co

oper

ation

with

selec

ted le

ading

T&C

coun

tries

’ univ

ersit

ies. L

ink M

cens

al Sc

hool

of F

ashio

n De

sign

with

Indi

an tr

aining

insti

tutio

ns. L

ink N

ITA w

ith In

dian

mac

hiner

y pr

ovid

ers.

• Fo

rmul

ate in

terns

hip p

rogr

amm

es b

etwee

n pr

ivate

secto

r and

un

iversi

ties /

TVET

insti

tutio

ns. T

his n

eeds

to b

e joi

ntly

prog

ramm

ed.

• Su

ppor

t sele

cted

unive

rsitie

s to

upgr

ade t

he ex

isting

indu

strial

tra

ining

pro

gram

me :

‘Garm

ent T

echn

olog

y & Le

an M

anuf

actu

ring’

.•

Integ

rate w

ithin

unive

rsitie

s’ co

urse

s visi

ts fro

m g

uest

spea

kers

from

th

e ind

ustry

to d

elive

r spe

cial t

rainin

g se

ssio

ns to

Ken

yan

stude

nts.

Sim

ilarly

, inv

ite su

cces

sful K

enya

n T&

C co

mpa

nies t

o gi

ve sp

eech

es

at un

iversi

ties.

• Se

nd te

ache

rs on

nati

onal

and

inter

natio

nal i

ndus

try vi

sits t

o pr

ovid

e th

em w

ith fi

rst-h

and

learn

ing ex

perie

nces

and

to h

elp b

uild

indus

try

linka

ges.

• Th

e ape

x bod

y will

initi

ate, t

ogeth

er w

ith se

lected

univ

ersit

ies,

resea

rch

studi

es co

verin

g sp

ecifi

c cha

lleng

es fa

ced

by th

e ind

ustry

to

gen

erate

thou

ght l

eade

rship

and

find

appr

opria

te so

lutio

ns

( diss

emina

te res

ults

thro

ugh

their

netw

ork a

nd th

roug

h un

iversi

ties )

.•

Invite

inter

natio

nal p

rofes

sors

in or

der t

o sh

are b

est p

ractic

es o

n TV

ET an

d im

prov

e int

er-un

iversi

ty pa

rtner

ship

s.Cr

eatin

g lin

kage

s with

indu

stry n

eeds

to st

art i

n ye

ar on

e of a

stud

ent’s

ex

perie

nce (

and

be sy

stem

ized

thro

ugho

ut ) t

o en

sure

the k

nowl

edge

is

prop

erly

built

.

• De

velo

pmen

t of c

urric

ulum

for

‘Garm

ent T

echn

olog

y & Le

an

Man

ufac

turin

g’ co

urse

• At

leas

t one

indu

stry r

epres

entat

ive

visits

univ

ersit

ies p

er cu

rricu

lum

• Re

quire

men

t put

in p

lace t

o ha

ve

a nati

onal

or in

terna

tiona

l ind

ustry

vis

it pe

r yea

r•

At le

ast f

ive n

ew st

udies

initi

ated

• At

leas

t five

pro

fesso

rs inv

ited

per y

ear

MoE

ST ( c

omm

ittee

on

inter

nship

pr

ogram

me )

, ape

x bod

y / KA

M,

unive

rsitie

s, EP

ZA

Inter

natio

nal t

rainin

g ag

encie

s suc

h as

W

azir

and

IL&FS

from

Indi

a, reg

iona

l su

ppor

t fro

m A

CTIF

1.5.

8 Ba

sed

on a

gap

asse

ssm

ent s

tudy

and

cour

se cu

rricu

lum

dev

el-op

men

t in

line w

ith in

dustr

ial re

quire

men

ts an

d int

erna

tiona

l stan

dard

s, he

lp in

stitu

tes to

:

• Lin

k with

inter

natio

nal i

nstit

utes

for s

tude

nt an

d fac

ulty

exch

ange

/ kno

wled

ge ex

chan

ge p

rogr

amm

es ;

• De

velo

p a s

trong

indu

stry i

nter

face –

gue

st lec

tures

, sch

olars

hips,

spon

sorsh

ips,

traini

ng, p

lacem

ents,

etc.

2X Q1

• At

leas

t five

exch

ange

pro

gram

mes

de

velo

ped

• At

leas

t thr

ee in

terfac

es d

evelo

ped

MoE

ST, a

pex b

ody /

KAM

, univ

ersi-

ties,

EPZA

1.6

Ensu

re th

at na

tiona

l qu

ality

man

agem

ent i

nfra-

struc

ture

respo

nds t

o th

e ind

ustry

’s ne

eds a

nd in

ter-

natio

nal a

mbi

tions

.

1.6.

1 Su

ppor

t KEB

S to

brin

g ex

isting

stan

dard

s up

to d

ate, e

stabl

ish

which

oth

ers a

re req

uired

, and

pub

lish

natio

nal q

ualit

y stan

dard

s for

ga

rmen

ts an

d pr

omot

e the

use

of t

hose

stan

dard

s to

mem

bers

thro

ugh

circu

lars a

nd se

mina

rs.

1X Q4

• Ad

visor

y ser

vice t

o KE

BS o

n co

des

of p

ractic

e for

the d

evelo

pmen

t of

stand

ards ;

five

stan

dard

s ado

pted

; tw

o se

nsiti

zatio

n se

mina

rs co

nduc

ted

KEBS

, reg

iona

l sup

port

from

ACT

IFSI

TA ( t

bc )

1.6.

2 Bu

ild th

e cap

acity

of t

estin

g an

d ce

rtifyi

ng b

odies

for g

armen

t qu

ality.

Estab

lish

colla

borat

ion

with

inter

natio

nal l

eade

rs in

this

area a

nd en

sure

the e

xcha

nge o

f bes

t prac

tices

.

1X Q4

• At

leas

t two

testi

ng an

d ce

rtifyi

ng

bodi

es tr

ained

KEBS

SITA

( tbc

)

1.6.

3 Inv

olve

secto

r ins

titut

ions

in se

nsiti

zing

and

supp

ortin

g th

e pri-

vate

secto

r on

quali

ty m

anag

emen

t and

conf

orm

ity as

sess

men

t ( te

st-ing

, cer

tifica

tion,

insp

ectio

n ).

KAM

to co

nduc

t awa

renes

s-rai

sing

cour

ses f

or ( M

)SM

Es ab

out i

nter

na-

tiona

l man

dato

ry an

d vo

lunt

ary st

anda

rds r

elated

to T&

C.

1X Q2

• KA

M an

d ap

ex b

ody t

o de

velo

p se

nsiti

zatio

n ca

mpa

igns

for t

heir

mem

bers

KEBS

, reg

iona

l sup

port

from

ACT

IF


60

Stra

tegi

c ob

ject

ive

2 : Im

prov

e th

e bu

sine

ss e

nviro

nmen

t to

furth

er s

uppo

rt th

e de

velo

pmen

t of t

he T

&C in

dust

ry.

Oper

atio

nal o

bjec

tive

Activ

ities

Prio

rity

1=hi

gh,

3=lo

w

Star

ting

perio

dTa

rget

mea

sure

sLe

adin

g na

tiona

l inst

itutio

n an

d po

ssib

le im

plem

entin

g pa

rtner

s

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

2.1

Impr

ove c

ompl

i-an

ce as

a wa

y to

in-cr

ease

pro

ducti

vity a

nd

com

petit

ive-n

ess.

2.1.

1 De

velo

p a r

eferen

ce b

ook o

n ex

isting

socia

l and

envir

onm

ental

gu

ideli

nes a

pplie

d in

the T

&C se

ctor i

n Ke

nya,

inclu

ding

the m

oni-

torin

g an

d rep

ortin

g m

echa

nism

s in

plac

e.

1X Q4

• As

sess

men

t carr

ied o

utNa

tiona

l Env

ironm

ental

Man

-ag

emen

t Aut

horit

y, KE

BS,

Keny

a Ind

ustri

al Re

searc

h an

d De

velo

pmen

t Ins

titut

e, M

inistr

y of

Labo

ur, S

ocial

Sec

urity

and

Servi

ces

Inter

natio

nal L

abou

r Org

aniza

tion,

W

orld

Ban

k, reg

iona

l sup

port

from

AC

TIF o

n ac

tiviti

es 1

, 2 an

d 6.

In 20

12 : A

CTIF

and

Danis

h Int

erna

-tio

nal D

evelo

pmen

t Age

ncy,

KAM

pr

ovid

ed tr

aining

on

CSR

for t

extil

e &

appa

rel m

embe

rs, In

terna

tiona

l Lab

our

Orga

nizati

on2.

1.2

Estab

lish

an ad

visor

y com

mitt

ee co

mpo

sed

of K

AM, b

uy-

ers,

empl

oyer

s, th

e Tail

ors a

nd Te

xtiles

Wor

kers

Unio

n ( m

embe

r of

Cent

ral O

rgan

izatio

n of

Trad

e Unio

ns ),

TISIs

and

othe

r rele

vant

stak

e-ho

lder

s. Ag

ree o

n im

plem

entat

ion

of g

loba

l com

plian

ce st

anda

rds

and

mod

alitie

s in

the c

ount

ry an

d fo

r the

T&C

secto

rs, in

cludi

ng

mon

itorin

g an

d rep

ortin

g.

1X Q4

• Co

mm

ittee

on

com

plian

ce p

rogr

amm

e se

t up

Tailo

rs an

d Te

xtiles

Wor

kers

Unio

n

2.1.

3 Es

tablis

h m

odali

ties f

or b

uyer

and

enter

prise

enga

gem

ent i

n im

plem

entat

ion,

mon

itorin

g, re

porti

ng an

d tak

ing co

rrecti

ve ac

tions

rel

ated

to co

mpl

iance

.

2X Q2

• Inv

olve

men

t of b

uyer

s defi

ned

thro

ugh

respe

ctive

term

s of r

eferen

ce ( a

t lea

st tw

o )

KAM

, ape

x bod

y, Na

tiona

l Env

i-ro

nmen

tal M

anag

emen

t Aut

hor-

ity, K

EBS,

Mini

stry o

f Lab

our,

Socia

l Sec

urity

and

Servi

ces

2.1.

4 Ag

ree u

pon

and

sign

a cou

ntryw

ide c

ompl

iance

fram

ewor

k for

th

e T&C

indu

stry i

n Ke

nya.

2X Q2

• Co

untry

wide

com

plian

ce fr

amew

ork

signe

d

2.1.

5 W

ork w

ith b

uyer

s to

build

com

plian

ce b

uy-in

thro

ugh

build

-ing

trus

t and

own

ersh

ip w

ith m

anag

emen

t and

wor

kers.

Esta

blish

a wo

rking

team

( man

agem

ent a

nd w

orke

rs ) a

t the

enter

prise

leve

l to

prom

ote c

ompl

iance

.

2X Q2

• At

leas

t 20

worki

ng te

ams e

stabl

ished

in

Keny

an co

mpa

nies

2.1.

6 Tra

in wo

rkers,

empl

oyer

s and

oth

er st

akeh

olde

rs on

the

agree

d-up

on co

mpl

iance

fram

ewor

k for

the T

&C in

dustr

y in

Keny

a, inc

ludi

ng so

cial a

nd en

viron

men

tal st

anda

rds,

and

their

impl

icatio

ns

for a

ttrac

ting

FDI a

nd g

loba

l buy

ers.

2X Q2

• At

leas

t 500

wor

kers

traine

d pe

r yea

r ( fr

om p

artic

ipati

ng co

mpa

nies )

2.1.

7 Tra

in em

ploy

ers a

nd w

orke

rs on

the l

ink b

etwee

n co

mpl

iance

an

d im

prov

ed w

orkin

g co

nditi

ons f

or q

ualit

y, pr

oduc

tivity

, clea

ner

prod

uctio

n an

d hu

man

reso

urce

man

agem

ent.

2X Q2

• At

leas

t 500

wor

kers

and

50 m

anag

ers

traine

d pe

r yea

r ( fro

m p

artic

ipati

ng

com

panie

s )2.

1.8

Agree

with

buy

ers o

n an

appr

opria

te ve

rifica

tion

syste

m fo

r the

co

untry

, inc

ludi

ng th

e use

of a

ccred

ited

Keny

an se

rvice

pro

vider

s. Se

lect a

nd tr

ain ad

visor

y ser

vice p

rovid

ers t

o ca

rry o

ut fa

ctory-

level

asse

ssm

ent,

mon

itorin

g an

d rep

ortin

g ( s

ervic

e cou

ld b

e int

egrat

ed

with

in TIS

I or e

stabl

ished

usin

g th

e Int

erna

tiona

l Lab

our O

rgan

izatio

n Be

tter W

ork p

rogr

amm

e app

roac

h ).

2X Q2

X•

Verif

icatio

n sy

stem

dev

elope

d

2.1.

9 Tra

in ad

visor

y ser

vice p

rovid

ers o

n ho

w to

follo

w up

and

work

with

com

panie

s to

impr

ove o

n co

mpl

iance

gap

s.2

X Q2•

At le

ast f

ive co

nsul

tancy

firm

s trai

ned

per y

ear

2.1.

10 E

stabl

ish a

syste

m to

regu

larly

publ

ish h

ighl

ight

s abo

ut ef

-fo

rts to

adhe

re to

glo

bal s

ocial

and

envir

onm

ental

prin

ciples

bein

g un

derta

ken,

via v

ariou

s out

lets a

nd in

colla

borat

ion

with

buy

ers a

nd

inves

tmen

t pro

mot

ion

agen

cies,

to b

uild

glob

al tra

nspa

rency

abou

t th

e cou

ntry’

s effo

rt.

2X Q2

• Ce

ntral

ized

com

mun

icatio

n sy

stem

on

com

plian

ce es

tablis

hed

2.2

Increa

se th

e cap

ac-

ity o

f the

por

t com

mu-

nities

to en

forc

e T&C

-rel

ated

regul

ation

.

2.2.

1 Cr

eate

a ded

icated

T&C

Custo

ms o

ffice

rs di

visio

n / po

ol

that

will

spec

ifica

lly b

e allo

cated

to w

ork w

ith T&

C pr

oduc

tion

to

increa

se sp

ecial

izatio

n of

staff

( cur

rently

there

is a

shift

of o

ffice

rs be

twee

n va

rious

secto

rs of

the e

cono

my )

.

1X Q2

• Sp

ecial

ized

T&C

Custo

ms’

offic

ers’

pool

estab

lishe

d, E

PZA

KRA,

apex

bod

y, tex

tile e

xper

ts


61

Stra

tegi

c ob

ject

ive

2 : Im

prov

e th

e bu

sine

ss e

nviro

nmen

t to

furth

er s

uppo

rt th

e de

velo

pmen

t of t

he T

&C in

dust

ry.

Oper

atio

nal o

bjec

tive

Activ

ities

Prio

rity

1=hi

gh,

3=lo

w

Star

ting

perio

dTa

rget

mea

sure

sLe

adin

g na

tiona

l inst

itutio

n an

d po

ssib

le im

plem

entin

g pa

rtner

s

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

2.2

Increa

se th

e cap

ac-

ity o

f the

por

t com

mu-

nities

to en

forc

e T&C

-rel

ated

regul

ation

.

2.2.

2 Pr

ovid

e trai

ning

to C

usto

ms o

ffice

rs in

KRA

to : c

lassif

y ( ta

r-iff

s ) im

port

item

s cor

rectly

; rec

ogniz

e pro

duct

coun

try o

f orig

in ba

sed

on th

e orig

in ce

rtific

ate ; c

ompl

y with

new

impo

rt reg

ulati

on

norm

s ; an

d ge

t the

m fa

mili

arize

d wi

th te

xtile

prod

ucts,

their

uniq

ue-

ness

and

need

ed fl

exib

ility.

• At

leas

t 20

offic

ers o

f KRA

train

edKR

A, ap

ex b

ody,

textil

e exp

erts

2.2.

3 Inc

rease

effic

iency

of c

learan

ce p

roce

dures

, spe

cifica

lly

thro

ugh

the f

ollo

wing

mea

sures

.

• Ch

eckin

g an

d ap

prov

ing sh

ould

be r

educ

ed to

less

than

24

hour

s.•

Good

s sho

uld

be ve

rified

onc

e the

y get

to C

usto

ms o

ffice

s to

avoi

d de

lays.

They

shou

ld co

nsid

er in

crea

sing

the i

nspe

ction

staff

at

exit

point

s.•

Com

panie

s with

goo

d rec

ords

get

a ‘gr

een

chan

nel’.

• En

sure

a mor

e care

ful s

electi

on o

f Int

erne

t ser

vice p

rovid

ers f

or

Custo

ms o

ffice

s.•

The C

omm

issio

ner G

ener

al an

d Co

mm

issio

ner o

f Cus

tom

s sh

ould

com

e up

with

an al

terna

tive f

or w

hen

the S

imba

syste

m is

do

wn, t

o red

uce i

ncon

venie

nces

caus

ed b

y the

auth

oriti

es.

• KE

BS to

spee

d up

pro

cess

ing o

f exp

ort d

ocum

ents.

• Ca

pacit

y-bu

ilding

of C

usto

ms e

mpl

oyee

s on

inter

natio

nal

stand

ards a

nd co

st co

mpa

rison

s.•

Impr

ove t

he Le

ss C

ontai

ner L

oad

carg

o sy

stem

thro

ugh

a tran

sfer

to C

ontai

ner F

reigh

t Stat

ion

( exte

nsio

n of

the p

ort b

ut p

rivate

ly ru

n ). E

stabl

ish a

feedb

ack l

oop

mec

hanis

m w

ith th

e priv

ate se

ctor

and

Custo

ms t

o co

nstan

tly en

sure

that

the p

roce

ss ru

ns in

an

optim

al m

anne

r.

2X Q2

• Tim

e tak

en fo

r clea

rance

pro

cedu

res

reduc

ed to

24

hour

sKR

A, ap

ex b

ody,

textil

e exp

erts

2.3

Impr

ove t

he le

gal

and

regul

atory

fram

e-wo

rk rel

evan

t to

the

T&C

indus

try.

2.3.

1 Int

rodu

ce T&

C-sp

ecifi

c reg

ulati

ons a

nd ap

ply r

ecom

men

da-

tions

from

the r

ecen

t non

-tarif

f mea

sure

surve

y :

• St

rong

ly reg

ulate

and

cont

rol i

mpo

rts o

f sec

ond-

hand

clot

hing

and

new

cloth

ing im

porte

d un

der t

he ‘s

econ

d-ha

nd’ c

atego

ry,

and

increa

se d

uty l

evels

on

impo

rts ( a

nd es

pecia

lly re

infor

ce

cont

rol o

n ne

w pr

oduc

ts be

ing im

porte

d as

seco

nd-h

and )

;•

Impr

ove e

nfor

cem

ent o

f the

requ

irem

ent f

or p

rodu

ct or

igin

labell

ing ;

• Inc

rease

aware

ness

of i

ntell

ectu

al pr

oper

ty rig

hts f

or K

enya

n de

signs

( kiko

yi, et

c. ),

e.g. a

dver

tising

free

Wor

ld In

tellec

tual

Prop

erty

Orga

nizati

on o

nline

aware

ness

-raisi

ng co

urse

s ;•

Intro

duce

regu

latio

ns o

n wa

stewa

ter an

d pe

nalti

es fo

r fail

ure t

o co

mpl

y ;•

Estab

lish

a req

uirem

ent f

or an

orig

in ce

rtific

ate / r

espe

ct of

ph

ytosa

nitary

nor

ms.

1X Q1

• Fo

ur n

ew re

gulat

ions

des

igne

d an

d su

bmitt

ed fo

r app

rova

lM

oEID

, TM

EA, r

egio

nal s

uppo

rt fro

m A

CTIF

Keny

a Ind

ustri

al Pr

oper

ty In-

stitu

teKR

A / KA

M, K

NCCI


62

Stra

tegi

c ob

ject

ive

2 : Im

prov

e th

e bu

sine

ss e

nviro

nmen

t to

furth

er s

uppo

rt th

e de

velo

pmen

t of t

he T

&C in

dust

ry.

Oper

atio

nal o

bjec

tive

Activ

ities

Prio

rity

1=hi

gh,

3=lo

w

Star

ting

perio

dTa

rget

mea

sure

sLe

adin

g na

tiona

l inst

itutio

n an

d po

ssib

le im

plem

entin

g pa

rtner

s

Ongo

ing /

futu

re d

evelo

pmen

t pr

ogra

mm

es +

inte

rnat

iona

l par

tner

s15

1617

1819

2.3

Impr

ove t

he le

gal

and

regul

atory

fram

e-wo

rk rel

evan

t to

the

T&C

indus

try.

2.3.

2 KR

A to

adju

st ( re

view )

their

regu

latio

ns to

impr

ove e

ase o

f do

ing b

usine

ss, e

spec

ially

in th

e T&C

secto

r.

• Ca

ncel

bond

s pro

mpt

ly so

as n

ot sl

ow d

own

busin

ess.

• Ca

ncel

impo

rt de

clarat

ion

fee.

• St

ream

line K

RA’s

oper

ation

s at t

he p

ort t

o en

able

mor

e tra

nsac

tions

. Clea

rance

of g

oods

shou

ld b

e don

e im

med

iately

on

arriva

l onc

e the

y com

ply w

ith th

e req

uirem

ents.

1X Q4

• Th

ree n

ew re

gulat

ions

des

igne

d an

d su

bmitt

ed fo

r app

rova

lM

oEID

, TM

EAEP

ZA M

omba

saKA

M, K

NCCI

2.4

Expa

nd an

d m

od-

erniz

e the

fina

ncial

se

rvice

s ava

ilabl

e to

the

indus

try.

2.4.

1 Pr

ovid

e cap

acity

-buil

ding

on

mod

ern

risk a

nd fi

nanc

ial an

aly-

sis to

staff

at le

ading

fina

ncial

insti

tutio

ns an

d rai

se aw

arene

ss o

f m

oder

n fin

ancia

l sup

port

mec

hanis

ms a

nd in

strum

ents.

1X Q4

• At

leas

t 50

empl

oyee

s of f

inanc

ial

instit

utio

ns tr

ained

per

year

MoIE

D, M

inistr

y of F

inanc

e, Ke

nya B

anke

rs As

socia

tion

2.4.

2 Ad

voca

te fo

r the

crea

tion

of a

secto

r-spe

cific

indus

triali

zatio

n fu

nd an

d rec

omm

end

areas

for i

ts ut

iliza

tion

in lin

e with

indu

stry

requir

emen

ts.

1X Q3

• T&

C se

ctor i

ndus

triali

zatio

n fu

nd

crea

tedM

oIED,

apex

bod

y to

advo

cate

Wor

ld B

ank

2.5

Supp

ort c

om-

petit

ive-n

ess t

hrou

gh

impr

oved

elec

tricit

y pr

icing

and

quali

ty.

2.5.

1 Ini

tiate

a viab

le tem

porar

y tari

ff red

uctio

n sc

hem

e as s

oon

as

poss

ible

and

exten

d tar

iff su

bsid

y to

non-

EPZ c

ompa

nies.

2X Q4

• Al

l-Ken

ya el

ectri

city r

educ

tion

finan

cial

sche

me d

evelo

ped

Apex

bod

y, M

oIED,

Mini

stry o

f En

ergy,

Mini

stry o

f Fina

nce

Keny

a Pow

er an

d Lig

hting

Com

-pa

ny / K

enya

Ene

rgy R

egul

atory

Com

miss

ion,

KAM

Wor

ld B

ank /

GDS

2.5.

2 Lo

ad re

distr

ibut

ion

plan

requ

ired

to en

sure

cont

inuou

s sup

ply

of el

ectri

city t

o EP

Zs.

1X Q4

• Re

distr

ibut

ion

plan

prep

ared

Apex

bod

y, M

oIED,

Mini

stry o

f En

ergy,

KAM

, Ken

ya P

ower

and

Light

ing C

ompa

ny / K

enya

En-

ergy R

egul

atory

Com

miss

ion

Wor

ld B

ank /

GDS

2.5.

3 Su

ppor

t firm

s to

mod

erniz

e equ

ipm

ent a

nd in

crea

se tr

aining

ac

tiviti

es o

n en

ergy s

aving

and

optim

izatio

n.

1X Q4

• Ei

ghty

to o

ne h

undr

ed co

mpa

ny

man

ager

s trai

ned

per y

ear

• At

leas

t 20

SMEs

advis

ed p

er ye

ar

Apex

bod

y, M

oIED,

Mini

stry o

f En

ergy,

Mini

stry o

f Fina

nce

Keny

a Nati

onal

Clea

ner P

rodu

c-tio

n Ce

ntre,

KAM

Wor

ld B

ank /

GDS

, Cen

tre fo

r Ene

rgy

Effic

iency

and

Cons

erva

tion /

Susta

in-ab

le Us

e of N

atural

Res

ourc

es an

d En

ergy F

inanc

ing / M

oIED

/ Fren

ch

Deve

lopm

ent A

genc

y / TM

EA /

Danis

h Int

erna

tiona

l Dev

elopm

ent

Agen

cy2.

6 Im

prov

e the

ef-

ficien

cy an

d co

st co

mpe

titive

-nes

s of

trans

porta

tion

and

logi

stics

.

2.6.

1 Im

prov

e coo

rdina

tion

and

utili

zatio

n of

truc

king

servi

ces

by es

tablis

hing

an IC

T-ba

sed

mon

itorin

g sy

stem

allo

wing

for f

ull

utili

zatio

n of

truc

ks d

uring

all t

heir

trans

its. E

stabl

ish co

st sh

aring

wh

en th

e tru

ck is

bein

g us

ed b

y one

firm

one

way

and

anot

her o

n th

e way

bac

k.En

sure

know

ledge

tran

sfer f

rom

well

-per

form

ing ca

ses i

n Ind

ia ( p

ar-tic

ularl

y Retu

rn Tr

uck I

ndia

com

pany

) on

this

initia

tive.

2X Q4

• Tru

cking

coor

dina

tion

syste

m

deve

lope

d•

MoU

sign

ed w

ith R

eturn

Truc

k Ind

ia on

kn

owled

ge tr

ansfe

r

Apex

bod

y, GS

1, TM

EA, K

enya

Tra

nspo

rters

Asso

ciatio

n, K

RAW

orld

Ban

k


63

Stra

tegi

c ob

ject

ive

3 : E

xpan

d th

e be

nefit

s of

inve

stm

ent t

hrou

ghou

t the

T&C

val

ue c

hain

.Op

erat

iona

l ob

jectiv

eAc

tivitie

sPr

iorit

y1=

high

, 3=

low

Star

ting

perio

dTa

rget

mea

sure

sLe

adin

g na

tiona

l inst

itutio

n an

d po

ssib

le im

plem

entin

g pa

rtner

sOn

goin

g / fu

ture

dev

elopm

ent

prog

ram

mes

+ in

tern

atio

nal

partn

ers

1516

1718

19

3.1

Pursu

e ef-

forts

to es

tablis

h id

eal c

ondi

tions

fo

r inv

esto

rs.

3.1.

1 M

oIED

seek

s to

conf

er to

p go

vern

men

tal p

riorit

y an

d ex

pedi

te th

e fol

low-

ing o

ngoi

ng p

rojec

ts in

orde

r to

enha

nce c

ondi

tions

for i

nves

tmen

t in

T&C

secti

on

in Ke

nya.

• Re

duce

elec

tricit

y co

sts :

from

US$

0.21

–US$

0.23

per

kWh

down

to U

S$0.

09

thro

ugh

impl

emen

tatio

n of

the o

ngoi

ng p

rojec

t for

the a

dditi

onal

5,00

0 m

egaw

atts o

f elec

tricit

y to

the n

ation

al gr

id.

• Tr

ansp

orta

tion :

impl

emen

t ong

oing

stan

dard

gau

ge ra

ilway

pro

ject (

inclu

ding

co

nnec

tion

betw

een

Nairo

bi an

d M

omba

sa).

• Bu

ild n

ew te

xtile

cities

at N

aivas

ha a

nd A

thi R

iver a

nd n

ew T&

C tex

tile p

arks

(nea

r Mom

basa

or K

isum

u) u

sing

inter

natio

nal e

xper

tise t

o en

sure

highe

st pr

oduc

tion

• Es

tabl

ish a

low

-inte

rest

indu

stria

lizat

ion

fund

that

woul

d pr

ovid

e loa

ns

for s

tart-u

p an

d m

achin

ery u

pgrad

es in

the y

arn an

d fab

ric se

ctor,

offer

ing

inter

natio

nally

com

petit

ive in

teres

t rate

s of 5

%–6

%.

1 1 2 1

X XX X

• At

leas

t 10

majo

r roa

d ax

es

mod

erniz

ed w

ithin

the f

ive-y

ear p

erio

d•

Redu

ction

of e

lectri

city c

ost t

o US

$ 0.0

5 wi

thin

and

outsi

de o

f EPZ

s•

Naiva

sha T

extil

e City

buil

t•

At le

ast t

wo T&

C ind

ustri

al pa

rks b

uilt

with

in fiv

e yea

rs•

Secto

r-spe

cific

indus

triali

zatio

n fu

nd

estab

lishe

d

Apex

bod

y, M

oIED,

Mini

stry o

f Fi-

nanc

e, M

inistr

y of E

nerg

y, M

inistr

y of

Trans

port

and

Infras

tructu

re, E

PZA

3.1.

2 Es

tablis

h a t

rainin

g ce

ntre

in th

e Naiv

asha

Texti

le Ci

ty an

d pr

ovid

e sup

port

in th

e sele

ction

and

purc

hase

of n

eces

sary

traini

ng eq

uipm

ent t

o tea

ch tr

ainee

s ( li

nked

with

activ

ity 1

.5.6

).

2X Q 1

• At

leas

t one

train

ing ce

ntre

estab

lishe

d in

Naiva

sha T

extil

e City

• Le

tter o

f sup

port

obtai

ned

from

one

to

two

com

panie

s or m

achin

ery s

uppl

iers

Apex

bod

y, co

nsul

tancy

servi

ce ap

-po

inted

by M

oIED,

NITA

, KTT

I, EP

ZA

3.2

Increa

se

capa

city o

f TIS

Is to

targ

et an

d at-

tract

appr

opria

te inv

estm

ents.

3.2.

1 Bu

ild ca

pacit

y of i

nves

tmen

t pro

mot

ion

offic

ers t

o eff

ectiv

ely fa

cilita

te an

d tar

get T

&C in

vestm

ent,

and

impr

ove t

heir

inves

tmen

t ana

lysis

and

targe

ting

capa

city /

tech

nique

s to

narro

w do

wn an

d be

st tar

get p

oten

tial i

nves

tors

base

d on

inv

estm

ent r

equir

emen

ts an

d sp

ecs (

this

impl

ies in

vestm

ent i

n da

ta ac

cess

and

man

agem

ent s

ervic

es su

ch D

un an

d Br

adstr

eet,

Finan

cial T

imes

, fDi

Mark

ets ).

1XQ 3

• On

e fab

rics p

rojec

t and

one

garm

ent

acce

ssor

ies p

rojec

t com

e onl

ine

as a

resul

t of K

enInv

est t

argeti

ng

cam

paig

ns

Regi

onal

supp

ort f

rom

ACT

IF, E

PZA,

Ke

nInve

st, co

unty

gove

rnm

ents

3.2.

2 Es

tablis

h co

llabo

ratio

n be

twee

n Ke

nInve

st / E

PZA /

the C

onfed

erati

on o

f Ind

ian In

dustr

ies ( C

II ) / E

xim B

ank i

n or

der t

o im

prov

e the

capa

city o

f the

form

er

instit

utio

ns to

pro

mot

e inv

estm

ents

from

Indi

a in

Keny

a. Ar

eas o

f col

labor

ation

wi

ll inc

lude

:

• De

velo

pmen

t of u

p-to

-date

secto

r–pr

oduc

t com

petit

ivene

ss st

udies

for f

ibre

to

cloth

ing, i

nclu

ding

acce

ssor

ies ;

• Ide

ntifi

catio

n of

the s

ubse

gmen

t and

Indi

an co

mpa

nies f

rom

whic

h to

attra

ct FD

I ;•

Deve

lopm

ent o

f cus

tom

ized

prom

otio

nal m

ateria

l to

attrac

t FDI

;•

Prep

aratio

n of

inve

stmen

t pro

files

for I

ndian

inve

stors.

Activ

ity 3

.3.3

can b

uild

and

align

on th

e ach

ievem

ents

unde

r this

activ

ity.

1X Q2

• De

velo

pmen

t of i

nves

tmen

t guid

e, fea

sibili

ty stu

dies

, bro

chur

es an

d we

bsite

cont

ent (

two

to th

ree m

onth

s fo

r pro

mot

iona

l mate

rial )

Apex

bod

y, M

oIED

KenIn

vest,

EPZ

ASI

TA / i

nter

natio

nal t

rainin

g ag

encie

s suc

h as

Waz

ir an

d IL&

FS fr

om In

dia,

regio

nal s

up-

port

from

ACT

IF, In

dian

Hig

h Co

mm

issio

n

3.2.

3 St

rengt

hen

the a

bilit

y of K

enInv

est /

EPZA

/ Ken

ya P

rivate

Sec

tor A

lli-

ance

/ KAM

to re

spon

d eff

ectiv

ely to

dire

ct inq

uiries

from

inve

stors

thro

ugh

a sys

-tem

atic j

oint

appr

oach

, rely

ing o

n sh

ared

inves

tor d

ata an

d m

ateria

ls.

1X Q2

• Si

gned

MoU

s am

ong

the f

our p

artn

ers

and

share

d ad

optio

n of

tech

nicall

y co

nsist

ent a

nd u

nifor

mly

bran

ded

prom

otio

nal m

ateria

ls fo

r the

secto

r

Regi

onal

supp

ort f

rom

ACT

IFAp

ex b

ody,

MoIE

D, K

enInv

est,

EPZA

3.3

Furth

er

prom

ote K

enya

as

the m

ain F

DI

desti

natio

n fo

r T&

C.

3.3.

1 Ke

nInve

st an

d EP

ZA to

spec

ifica

lly ad

verti

se th

e fol

lowi

ng ta

rget

areas

for

FDI :

• Sh

ort t

erm

: garm

ent m

anuf

actu

ring–

FOB

• M

ediu

m te

rm : t

extil

e mill

s and

integ

rated

texti

le / c

loth

ing fa

ctorie

s•

Med

ium

term

: orig

inal d

esig

n ga

rmen

t man

ufac

turer

s•

Long

term

: T&C

pro

ducti

on b

rande

d as

gree

n or

susta

inabl

e for

nich

e mark

ets•

Long

term

: yarn

spinn

ing fa

ctorie

s.

1X Q1

• Ke

nInve

st an

d EP

ZA ad

verti

se an

d ha

ve p

repare

d a s

trateg

ic ap

proa

ch

towa

rds i

nves

tors

Apex

bod

y, M

oIED,

Ken

Inves

t, EP

ZA


64

Stra

tegi

c ob

ject

ive

3 : E

xpan

d th

e be

nefit

s of

inve

stm

ent t

hrou

ghou

t the

T&C

val

ue c

hain

.Op

erat

iona

l ob

jectiv

eAc

tivitie

sPr

iorit

y1=

high

, 3=

low

Star

ting

perio

dTa

rget

mea

sure

sLe

adin

g na

tiona

l inst

itutio

n an

d po

ssib

le im

plem

entin

g pa

rtner

sOn

goin

g / fu

ture

dev

elopm

ent

prog

ram

mes

+ in

tern

atio

nal

partn

ers

1516

1718

19

3.3

Furth

er

prom

ote K

enya

as

the m

ain F

DI

desti

natio

n fo

r T&

C.

3.3.

2 TIS

Is to

estab

lish

a spe

cific

mark

eting

strat

egy f

or te

xtile

cities

( Naiv

asha

an

d ot

her f

acili

ties t

hat w

ill fo

llow )

in o

rder

to at

tract

and

invite

wor

ldwi

de te

xtile

man

ufac

turer

s to

set u

p be

st pr

actic

e man

ufac

turin

g fac

ilitie

s in

the c

ount

ry ( jo

int

vent

ures

or 1

00 %

own

ed ).

2X Q1

• M

arketi

ng st

rateg

y for

texti

le cit

ies

prep

ared,

bas

ed o

n tec

hnica

lly

cons

isten

t, un

iform

ly br

ande

d an

d reg

ularl

y upd

ated

prom

otio

nal m

ateria

l

MoIE

D, K

enInv

est,

EPZA

, KAM

, ape

x bo

dy

3.3.

3 Su

ppor

t the

dev

elopm

ent o

f ( ex

isting

and

new )

custo

mize

d FD

I pro

mot

iona

l m

ateria

l.De

velo

p we

ll-cr

afted

valu

e pro

posit

ions

for p

oten

tial i

nves

tors,

com

prisi

ng fe

a-sib

ility

studi

es o

n th

reads

, den

im m

ill es

tablis

hmen

t, op

en en

d ya

rn, p

roce

ssing

un

its, g

armen

t unit

s, ac

cess

ories

and

pack

aging

, etc.

• De

velo

p co

mpr

ehen

sive a

nd u

p-to

-date

secto

r pro

files

.•

Deve

lop

a cen

traliz

ed d

ataba

se o

f the

criti

cal i

nfor

mati

on &

intel

ligen

ce

requir

ed b

y inv

esto

rs.•

The p

rom

otio

nal m

ateria

l mus

t em

phas

ize th

e ben

efits

of tr

ade a

gree

men

ts av

ailab

le in

Keny

a and

the r

ecen

t ren

ewal

of A

GOA,

secu

ring

Unite

d St

ates

mark

et ac

cess

for t

he n

ext 1

0 ye

ars ( l

inked

with

activ

ity 3

.2.2

).

1X Q1

• Pu

blica

tion

of te

chnic

ally c

onsis

tent,

unifo

rmly

bran

ded,

and

regul

arly

upda

ted p

rom

otio

nal m

ateria

ls fo

r th

e sec

tor,

inclu

ding

web

sites

, Po

werP

oint

s, se

ctor p

rofil

es, s

tart-u

p ro

adm

aps a

nd su

pplie

r data

base

s

MoIE

D, K

enInv

est,

EPZA

, KAM

, ape

x bo

dy, r

egio

nal s

uppo

rt fro

m A

CTIF

SITA

, an

Indian

cons

ultin

g fir

m

such

as W

azir

3.3.

4 Ca

rry o

ut in

vestm

ent p

rom

otio

n ac

tiviti

es in

targ

et co

untri

es ( a

nd p

artic

u-lar

ly Ind

ia ) –

road

show

s, fac

ilitat

ing d

irect

inter

actio

ns b

etwee

n Ke

nyan

firm

s and

tar

geted

inve

stors,

help

ing fo

reign

repr

esen

tative

s to

prom

ote t

he se

ctor,

etc.

Use s

ide e

vent

s to

show

case

inve

stmen

t pro

files

dev

elope

d. E

xam

ple o

f sid

e ev

ents

coul

d be

Afri

ca–I

ndia

Conc

lave o

r Orig

in Af

rica.

Invite

pot

entia

l inv

esto

rs to

strat

egic

loca

tions

to sh

owca

se th

e inf

rastru

cture

and

busin

ess c

limate

.

1X Q1

• On

e roa

dsho

w ea

ch in

six m

ajor t

extil

e cit

ies –

Ludh

iana,

Delh

i, Ah

med

abad

, M

umba

i, Ba

ngalo

re an

d Tir

upur

• M

eetin

g wi

th 8

–10

inves

tors

in ea

ch

loca

tion

• Vi

sits o

f int

ereste

d inv

esto

rs ( to

tal

8–10

) to

Keny

a

MoIE

D, K

enInv

est,

EPZA

, KAM

, ape

x bo

dy, r

egio

nal s

uppo

rt fro

m A

CTIF

Indian

Em

bass

y

SITA

, int

erna

tiona

l trai

ning

agen

cies s

uch

as W

azir

and

IL&FS

from

Indi

a

3.3.

5 St

rengt

hen

the i

nves

tmen

t pro

mot

ion

man

date

/ resp

onsib

ility

role

of d

ip-

lom

ats an

d pr

ovid

e reg

ular

traini

ng to

staff

. Rev

ise an

d en

hanc

e the

inve

stmen

t pr

omot

ion

prog

ramm

e for

emba

ssies

to re

flect

lates

t tren

ds.

Subs

eque

ntly

supp

ort a

nd p

lan en

quiry

and

prom

otio

nal v

isits

to ap

prop

riate

and

targe

ted in

terna

tiona

l inv

esto

rs by

emba

ssy s

taff.

1X Q3

• M

oU an

d sta

ndard

ope

rating

pr

oced

ures

draf

ted an

d ag

reed

betw

een

KenIn

vest

and

the M

inistr

y of

Forei

gn A

ffairs

and

Inter

natio

nal T

rade

• Co

nclu

de in

vestm

ent p

rom

otio

n tra

ining

for e

cono

mic

/ com

merc

ial

coun

sello

rs an

d se

creta

ries a

t em

bass

ies an

d co

nsul

ates i

n tar

get

coun

tries

• Fin

alize

inve

stmen

t pro

mot

ion

man

ual

for n

ew d

iplo

mats

Mini

stry o

f For

eign

Affai

rs an

d Int

er-na

tiona

l Trad

eSI

TA ( t

bc )

3.4

Enab

le eq

uipm

ent u

p-gr

ading

thro

ugh

inves

tmen

t.

3.4.

1 Co

nduc

t aud

its an

d di

agno

stics

of i

ndivi

dual

textil

e unit

s and

pro

vide s

up-

port

– fir

st fo

r a li

st of

iden

tified

com

panie

s, th

en to

a wi

der g

roup

of b

enefi

ciar-

ies –

with

a str

ategi

c tec

hnol

ogy p

lan ( t

o be

link

ed w

ith g

ap an

alysis

of a

ctivit

y 1.

1.2 )

.

1X Q1

• At

leas

t 10

firm

s adv

ised

per y

ear a

nd

techn

olog

y plan

s dev

elope

dKA

M, a

pex b

ody,

regio

nal s

uppo

rt fro

m A

CTIF,

Moi

Univ

ersit

y

3.4.

2 Ad

verti

se an

d su

ppor

t ( th

roug

h bu

sines

s clin

ic co

nsul

tancy

servi

ces )

in-

vestm

ent a

mon

g Ke

nyan

firm

s in

spec

ific m

achin

ery r

equir

ed in

the f

ibre–

cloth

ing

valu

e cha

in, es

pecia

lly sp

inning

, wea

ving,

knitt

ing an

d pr

oces

sing.

2X Q3

• At

leas

t 10

firm

s acc

ompa

nied

thro

ugh

the m

achin

ery u

pgrad

e pro

cess

KAM

, ape

x bod

y, reg

iona

l sup

port

from

ACT

IF, M

oi U

niver

sity

3.4.

3 Fa

cilita

te lin

kage

s with

Indi

a with

insti

tutio

ns w

orkin

g on

prin

ting,

des

ign,

an

d pr

oduc

t and

mark

et de

velo

pmen

t to

spur

inve

stmen

t in

hand

loom

tech

nolo

gy.

Supp

ort t

o up

grad

e to

adva

nced

type

s of h

andl

oom

s, ac

cess

ories

, and

fash

ion

and

desig

n tec

hnol

ogy.

1X

Q 2•

At le

ast t

hree

link

ages

estab

lishe

d wi

th

Indian

par

tner

train

ing in

stitu

tions

KAM

, ape

x bod

y, reg

iona

l sup

port

from

ACT

IF, N

ITA


65

Stra

tegi

c ob

ject

ive

3 : E

xpan

d th

e be

nefit

s of

inve

stm

ent t

hrou

ghou

t the

T&C

val

ue c

hain

.Op

erat

iona

l ob

jectiv

eAc

tivitie

sPr

iorit

y1=

high

, 3=

low

Star

ting

perio

dTa

rget

mea

sure

sLe

adin

g na

tiona

l inst

itutio

n an

d po

ssib

le im

plem

entin

g pa

rtner

sOn

goin

g / fu

ture

dev

elopm

ent

prog

ram

mes

+ in

tern

atio

nal

partn

ers

1516

1718

19

3.5

Increa

se

colla

borat

ion

betw

een

loca

l SM

Es an

d fo

reign

di

rect i

nves

tors

to en

sure

syne

r-gi

es.

3.5.

1 Re

plica

te th

e EBA

P ini

tiativ

e, sp

ecifi

cally

targ

eted

to S

MEs

in th

e T&C

valu

e ch

ain.

2X Q4

• At

leas

t fou

r new

EBA

Ps es

tablis

hed

MSE

A, E

BAP,

EPZA

, cou

nty g

over

n-m

ents

3.5.

2 He

lp es

tablis

h lin

kage

s betw

een

new

inter

natio

nal i

nves

tors

and

loca

l su

pplie

rs m

ore s

ystem

atica

lly, t

aking

into

acco

unt t

he S

MEs

’ per

spec

tive.

For

exam

ple,

ensu

re th

at fo

reign

-own

ed fi

rms b

egin

to p

rovid

e mor

e sys

temati

c and

or

ganiz

ed in

-hou

se tr

aining

, ope

ned

to lo

cal f

irms.

1X Q4

• Ex

chan

ge m

echa

nism

estab

lishe

d wi

thin

four

EPZ

s usin

g th

e trai

ning

cent

res cr

eated

( 1.5

.1 )

MSE

A, re

gion

al su

ppor

t fro

m A

CTIF,

EP

ZA

3.5.

3 Fo

reign

buy

ers t

o es

tablis

h sm

all-s

cale

traini

ng ac

adem

ies an

d tec

hnica

l as

sistan

ce p

rojec

ts fin

ance

d th

roug

h th

eir C

SR b

udge

ts, to

offe

r skil

l for

mati

on

prog

ramm

es o

fferin

g tec

hnica

l edu

catio

n an

d vo

catio

nal t

rainin

g, in

ord

er to

sup-

ply t

he g

armen

t ind

ustry

with

qua

lified

wor

kers

at bo

th o

perat

or an

d m

id-m

anag

e-m

ent l

evels

.

1X Q1

• At

leas

t two

train

ing ac

adem

ies

crea

ted b

y lea

d fir

ms

• At

leas

t fou

r trai

ning

cent

res su

ppor

ted

by le

ad fi

rms (

linke

d wi

th 1

.5.1

)

MSE

A, K

enInv

est,

regio

nal s

uppo

rt fro

m A

CTIF

Terti

ary in

stitu

tions

, EPZ

A, TV

ETA

Stra

tegi

c ob

ject

ive

4 : E

nabl

e m

arke

t pen

etra

tion

and

prod

uct d

evel

opm

ent t

hrou

gh tr

ade

inte

llige

nce.

Oper

atio

nal

objec

tive

Activ

ities

Prio

rity

1=hi

gh,

3=lo

w

Star

ting

perio

dTa

rget

mea

sure

sLe

adin

g na

tiona

l inst

itutio

nan

d po

ssib

le im

plem

entin

g pa

rtner

s

Ongo

ing /

futu

re

deve

lopm

ent

prog

ram

mes

+

inte

rnat

iona

l par

tner

s

1516

1718

19

4.1

Impr

ove a

c-ce

ss to

strat

egic

trade

intel

ligen

ce

for T

&C fi

rms.

4.1.

1 Cr

eate

a stra

tegic

mon

itorin

g ce

ll, h

osted

at A

CTIF,

to g

ather

up-

to-d

ate an

d T&

C-sp

ecifi

c trad

e inf

orm

ation

and

to d

etect

early

sign

als o

n tar

geted

mark

ets an

d pr

oduc

ts.Th

is im

plies

supp

ortin

g KN

CCI /

KAM

/ KAM

EA to

subs

crib

e to

impo

rtant

texti

le jo

urna

ls an

d we

bsite

s to

be ab

le to

upd

ate it

s mem

bers

with

the l

atest

mark

et inf

orm

ation

. The

se

inclu

de : h

ttp : /

/ www

.emerg

ingtex

tiles

.com

/ ; w

ww.fi

breto

fashio

n.co

m ; w

ww.co

tlook

.co

m.

1X Q1

• On

e mon

itorin

g ce

ll se

t up

• Re

com

men

datio

n rep

ort o

n im

plem

entat

ion

of th

e com

petit

ive

intell

igen

ce sy

stem

ACTIF

, EPZ

A, K

AMSI

TA

4.1.

2 Im

prov

e the

web

site o

f KNC

CI / K

AM th

roug

h we

b-ba

sed

solu

tions

for e

ffecti

ve

trade

intel

ligen

ce g

ather

ing an

d di

ssem

inatio

n, an

d en

sure

a con

stant

supp

ly of

tim

ely

mark

et int

ellig

ence

etc.

Conv

ert w

ebsit

es in

to m

obile

-frien

dly f

orm

ats.

Keep

trac

k of t

he u

sage

of w

ebsit

es w

ith G

oogl

e ana

lytics

.En

hanc

emen

t of t

he co

mpa

ny d

irecto

ry in

the T

&C se

ctor,

inclu

ding

MSM

Es, a

ncho

red

at AC

TIF.

1X Q1

• Tw

o we

bsite

s rev

ampe

dKN

CCI,

KAM

4.1.

3 Es

tablis

h a c

oope

ratio

n fra

mew

ork t

o pr

omot

e the

exch

ange

and

diss

emina

tion

of

T&C

trade

info

rmati

on am

ong

Gove

rnm

ent a

genc

ies, T

ISIs,

med

ia, ac

adem

ia, re

searc

h or

ganiz

ation

s and

the p

rivate

secto

r. Ex

chan

ge o

f com

pany

info

rmati

on am

ong

instit

u-tio

ns.

2X Q3

• On

e netw

ork e

stabl

ished

ACTIF

, EPC

, EPZ

A, te

chnic

al ins

titu-

tions

, KNC

CI

4.1.

4 Or

ganiz

e trai

nings

of c

omm

ercial

attac

hés b

ased

in ke

y targ

et m

arkets

( e.g

. Unit

ed

State

s, So

uth

Afric

a and

the E

U ), a

s well

as tr

ade p

rom

otio

n of

ficial

s, to

bes

t coo

rdina

te,

colle

ct, co

mpu

te an

d di

ssem

inate

trade

info

rmati

on an

d pr

omot

ion

matt

ers.

2X Q1

• On

e trai

ning

orga

nized

and

cond

ucted

Mini

stry o

f For

eign

Affai

rs an

d Int

er-na

tiona

l Trad

eSI

TA ( t

bc )


66

Stra

tegi

c ob

ject

ive

4 : E

nabl

e m

arke

t pen

etra

tion

and

prod

uct d

evel

opm

ent t

hrou

gh tr

ade

inte

llige

nce.

Oper

atio

nal

objec

tive

Activ

ities

Prio

rity

1=hi

gh,

3=lo

w

Star

ting

perio

dTa

rget

mea

sure

sLe

adin

g na

tiona

l inst

itutio

nan

d po

ssib

le im

plem

entin

g pa

rtner

s

Ongo

ing /

futu

re

deve

lopm

ent

prog

ram

mes

+

inte

rnat

iona

l par

tner

s

1516

1718

19

4.1

Impr

ove a

c-ce

ss to

strat

egic

trade

intel

ligen

ce

for T

&C fi

rms.

4.1.

5 Bu

ild th

e cap

acity

of E

PC /

EPZA

/ KA

MEA

/ KN

CCI /

ACT

IF to

dev

elop

mark

et pr

ofile

s on

targe

t mark

ets u

se m

arket

analy

sis to

ols a

nd re

searc

h m

ethod

olog

ies (e

.g.

Unite

d St

ates,

Sout

h Af

rica a

nd o

ther

coun

tries

that

offer

pref

erent

ial ac

cess

such

as A

us-

tralia

, Can

ada,

EU co

untri

es, J

apan

, New

Zeala

nd, N

orwa

y, Sw

itzer

land,

Turke

y, Be

larus

, Ka

zakh

stan

and

the R

ussia

n Fe

derat

ion)

. The

se m

arket

prof

iles i

nclu

de p

rodu

ction

and

cons

umpt

ion

trend

s (sp

ecifi

c foc

us o

n fas

hion

desig

ners)

, trad

e ana

lysis,

mark

et req

uire-

men

ts, p

rice i

nfor

mati

on, d

istrib

utio

n ch

anne

ls, lo

gisti

cs (t

ariff

and

non-

tariff

barr

iers)

an

d ke

y bus

iness

cont

acts.

2X Q2

• De

velo

pmen

t of t

wo m

arket

prof

iles

and

traini

ng o

f EPZ

A / AC

TIF / K

AMEA

sta

ff to

capa

citate

them

to p

repare

tw

o m

ore s

uch

prof

iles

• Th

ree tr

aining

s on

com

petit

ive

intell

igen

ce an

d m

arket

prof

iles

orga

nized

and

cond

ucted

EPC,

EPZ

A, K

AMEA

, KNC

CI, A

CTIF,

AF

AD ( K

)SI

TA ( t

bc ) )

, Ind

ian co

n-su

lting

firm

such

as W

azir

4.2

Expa

nd m

ar-ke

t acc

ess a

nd

prom

ote K

enya

’s T&

C pr

oduc

ts.

4.2.

1 En

hanc

e awa

renes

s am

ong

Keny

an fi

rms o

n th

e exte

nsio

n of

AGO

A an

d th

e sig

-na

ture

of th

e trip

artit

e agr

eem

ent,

as w

ell as

on

the e

xisten

ce an

d be

nefit

s of K

enya

’s reg

iona

l and

inter

natio

nal p

refere

ntial

mark

et ac

cess

cond

ition

s ( in

cludi

ng p

refere

ntial

ac

cess

to th

e fol

lowi

ng co

untri

es : A

ustra

lia, C

anad

a, EU

coun

tries

, Jap

an, N

ew Ze

aland

, No

rway

, Swi

tzerla

nd, T

urke

y, Be

larus

, Kaz

akhs

tan an

d th

e Rus

sian

Fede

ratio

n ).

EPZA

shou

ld p

rom

ote a

dditi

onal

prod

ucts

with

hig

h po

tentia

l tha

t T&C

com

panie

s cou

ld

expo

rt un

der t

hese

sche

mes

.

1X Q2

• Br

ochu

re pr

oduc

ed is

diss

emina

ted

to m

embe

rs of

the a

pex b

ody

KAM

, ape

x bod

y, EP

C, re

gion

al su

p-po

rt fro

m A

CTIF,

EPZ

ASI

TA ( t

bc )

4.2.

2 Bu

ild o

n th

e rec

ent e

xtens

ion

of A

GOA

to fu

rther

pen

etrate

the U

nited

Stat

es m

ar-ke

t.

• Se

lect a

ppro

priat

e exh

ibiti

ons i

n th

e Unit

ed S

tates

to p

ublic

ize an

d pr

omot

e the

Ke

nyan

T&C

indus

try ex

perti

se an

d pr

ofes

siona

lism

, and

info

rm A

mer

ican

buye

rs ab

out K

enya

’s lat

est o

fferin

g an

d pe

rform

ance

in th

e Am

erica

n m

arket.

• As

sist s

electe

d Ke

nyan

man

ufac

turer

s to

conn

ect w

ith th

e rig

ht b

uyer

s and

par

tner

s in

the U

nited

Stat

es th

roug

h th

e pro

mot

ion

of K

enya

n kn

ow-h

ow to

selec

ted ap

parel

ret

ail ch

ain st

ores

and

loca

l bran

ded

man

ufac

turer

s to

estab

lish

and /

or st

rengt

hen

relati

onsh

ips.

• As

sist s

electe

d co

mpa

nies i

n bu

ilding

relat

ions

hips w

ith n

ew A

mer

ican

buye

rs ( p

ossib

ly th

roug

h di

fferen

t dist

ribut

ion

chan

nels

than

the e

xistin

g on

es as

m

ultic

hann

el di

strib

utio

n is

a nec

essit

y ) an

d m

ake t

heir

prod

uctio

n an

d di

strib

utio

n pr

oces

s as t

ransp

arent

as p

ossib

le.•

Supp

ort c

urren

t exp

orter

s and

expo

rt-rea

dy fi

rms t

o en

sure

com

plian

ce w

ith A

mer

ican

CSR

stand

ards (

can

be u

sed

for m

arketi

ng e.

g. fo

r pro

duct

storyt

elling

).•

Prom

ote a

nd ta

rget

inves

tmen

t stra

tegica

lly to

: –

Enab

le pr

oduc

tion

of g

armen

ts fo

r FOB

bus

iness

and

be ab

le to

offe

r ful

ly int

egrat

ed se

rvice

s ; –

Focu

s on

refine

men

t of p

re-pr

oduc

tion

servi

ces ;

–Im

prov

e inv

ento

ry co

ntro

l sys

tems,

in pa

rticu

lar, b

y bett

er fo

recas

ting

orde

r de

man

d ; –

Facil

itate

data

com

mun

icatio

n wi

th A

mer

ican

buye

rs by

impl

emen

ting

electr

onic

data

interc

hang

e ; –

Impl

emen

t web

-bas

ed p

rodu

ct or

der f

acili

ties s

o Am

erica

n bu

yers

can

chec

k the

sta

tus o

f the

ir or

ders.

1X Q1

• On

e pro

mot

ion

cam

paig

n ini

tiated

to

ward

s the

Unit

ed S

tates

mark

et•

At le

ast 1

0 ex

porti

ng co

mpa

nies a

re su

ppor

ted to

dive

rsify

their

buy

ers’

base

in th

e Unit

ed S

tates

• At

leas

t 10

com

panie

s ach

ieve

com

plian

ce to

CSR

and

envir

onm

ental

stan

dard

s rele

vant

to

the U

nited

Stat

es m

arket

KNCC

I, KA

M, r

egio

nal s

uppo

rt fro

m

ACTIF

, EPZ

A


67

Stra

tegi

c ob

ject

ive

4 : E

nabl

e m

arke

t pen

etra

tion

and

prod

uct d

evel

opm

ent t

hrou

gh tr

ade

inte

llige

nce.

Oper

atio

nal

objec

tive

Activ

ities

Prio

rity

1=hi

gh,

3=lo

w

Star

ting

perio

dTa

rget

mea

sure

sLe

adin

g na

tiona

l inst

itutio

nan

d po

ssib

le im

plem

entin

g pa

rtner

s

Ongo

ing /

futu

re

deve

lopm

ent

prog

ram

mes

+

inte

rnat

iona

l par

tner

s

1516

1718

19

4.2

Expa

nd m

ar-ke

t acc

ess a

nd

prom

ote K

enya

’s T&

C pr

oduc

ts.

4.2.

3 Bu

ild o

n th

e rec

ent s

igna

ture

of th

e trip

artit

e agr

eem

ent t

o en

ter th

e Sou

th A

frica

n m

arket.

• Se

lect a

nd as

sist c

ompa

nies t

o ex

hibit

their

pro

ducts

at th

e trad

e sho

w So

urce

Afri

ca

2016

Cap

e Tow

n an

d pa

rticip

ate in

side

netw

orkin

g ev

ents

and

busin

ess s

emina

rs :

–Ho

st a f

ashio

n sh

ow an

d co

cktai

l par

ty at

Sour

ce A

frica

201

6 to

pro

mot

e the

Ke

nyan

texti

les in

dustr

y’s ex

perti

se an

d pr

ofes

siona

lism

, and

to st

rengt

hen

the

Keny

an b

rand

and

savo

ir fai

re. P

repare

and

orga

nize b

usine

ss to

bus

iness

mee

tings

wi

th S

outh

Afri

can

buye

rs. –

Orga

nize m

eetin

gs b

etwee

n ke

y Ken

yan

publ

ic an

d pr

ivate

stake

hold

ers a

nd

influ

entia

l nati

onal

coun

terpa

rts su

ch as

Cap

e Tow

n Ch

ambe

r of C

omm

erce,

Wes

tgro

, the

May

or o

f Cap

e Tow

n, et

c. an

d ca

rry o

ut m

edia

inter

views

so as

to

stren

gthe

n Ke

nya’s

intro

ducti

on in

Sou

th A

frica

.•

Selec

t and

assis

t com

panie

s to

exhib

it th

eir p

rodu

cts at

the S

outh

ern

Afric

an

Inter

natio

nal T

rade E

xhib

ition

for R

etail

Prod

ucts

2016

Joha

nnes

burg

and

repea

t the

ap

proa

ch ta

ken

for S

ourc

e Afri

ca.

• Tra

in an

d co

ach

the K

enya

n tra

de at

taché

and

emba

ssy s

taff t

o ca

rry o

ut th

e fol

lowi

ng

activ

ities

: –

Prom

ote K

enya

n pr

oduc

ts to

the m

ajor t

extil

es re

tail c

hain

stores

and

loca

l bran

ded

man

ufac

turer

s to

stren

gthe

n rel

ation

ship

s. Th

is wi

ll en

tail v

isitin

g th

e sou

rcing

di

recto

rs an

d di

scus

sing

how

the t

rade a

ttach

é can

assis

t with

inwa

rd b

uying

for

any s

ourc

ing g

aps.

–Pr

epara

tion

and

facili

tatio

n of

an in

ward

buy

ing m

issio

n. –

Trade

attac

hé In

vesti

gatio

n of

and

parti

cipati

on in

small

er ex

hibiti

ons a

nd fa

irs.

–As

sist K

enya

n m

anuf

actu

rers t

o co

nnec

t with

the r

ight

buy

ers a

nd p

artn

ers i

n So

uth

Afric

a. –

Atten

d of

ficial

texti

les an

d ne

twor

king

even

ts wi

th o

ther

forei

gn co

unter

parts

.

2X Q3

• On

e fas

hion

show

hos

ted at

Sou

rce

Afric

a 201

6•

At le

ast 1

0 bi

later

al m

eetin

gs

betw

een

Keny

an an

d So

uth

Afric

an

stake

hold

ers c

arried

out

• At

leas

t 10

com

panie

s sho

wcas

ed

at th

e Sou

ther

n Af

rican

Inter

natio

nal

Trade

Exh

ibiti

on fo

r Reta

il Pr

oduc

ts 20

16•

At le

ast 1

0 co

mpa

nies a

nd th

e trad

e att

aché

train

ed

KNCC

I, KA

M, A

FAD

( K ),

regio

nal

supp

ort f

rom

ACT

IF, E

PZA

4.2.

4 Su

ppor

t and

wid

en se

rvice

s of t

he E

PC an

d EP

ZA to

supp

ort m

arket

deve

lop-

men

t und

ertak

en b

y com

panie

s. Fo

r exa

mpl

e, Ke

nyan

texti

le ex

porte

rs to

par

ticip

ate in

im

porta

nt in

terna

tiona

l tex

tile f

airs s

uch

as M

AGIC

( USA

), So

urce

Afri

ca–A

ppare

l ( So

uth

Afric

a ), C

PD D

usse

ldor

f ( Ge

rman

y ), S

o Et

hic ( F

rance

), etc

., an

d bu

yer–

selle

r mee

tings

.

2X Q2

• EP

C an

d EP

ZA p

rovid

e at l

east

four

ne

w fai

rs fo

r Ken

yan

expo

rters

to

parti

cipate

in

EPC,

EPZ

A, K

AM, K

NCCI

4.2.

5 AC

TIF, i

n co

llabo

ratio

n wi

th K

enya

n tra

de m

issio

ns ( e

mba

ssies

) bas

ed in

the

Unite

d St

ates a

nd S

outh

Afri

ca, a

rrang

es b

uyer

–sell

er m

eetin

gs to

facil

itate

inter

actio

n be

twee

n Ke

nyan

expo

rters

and

forei

gn b

uyer

s in

targe

t mark

ets.

2X Q2

• At

leas

t 20

buye

r–se

ller m

eetin

gs

cond

ucted

by A

CTIF

with

Am

erica

n an

d So

uth

Afric

an b

uyer

s

ACTIF

, KNC

CI

4.2.

6 De

velo

p ap

prop

riate

natio

nal b

rand /

sign

pro

mot

ion

polic

y and

coor

dina

te im

ple-

men

tatio

n of

activ

ities

und

er th

e ‘M

ade i

n Ke

nya’

tag.

Crea

te a l

ogo

and

mot

to as

a pr

iorit

y.

2X Q3

• On

e nati

onal

bran

ding

strat

egy

deve

lope

d•

Com

mon

logo

/ mot

to ag

reed

KAM

, AFA

D ( K

), ap

ex b

ody,

EPZA

, Br

and

Keny

a Boa

rd, M

oIED

4.2.

7 Co

nduc

t trai

ning

on d

evelo

pmen

t of c

ompa

ny le

vel b

rands

to b

e link

ed w

ith th

e na

tiona

l bran

d (s

ubse

quen

t to

4.2.

6)2

X Q1•

Assis

tance

pro

vided

to at

leas

t 10

firm

s to

crea

te or

impr

ove t

heir

bran

ding

KAM

, AFA

D ( K

), ap

ex b

ody,

EPZA

, Br

and

Keny

a Boa

rd, M

oIED


68

Stra

tegi

c ob

ject

ive

4 : E

nabl

e m

arke

t pen

etra

tion

and

prod

uct d

evel

opm

ent t

hrou

gh tr

ade

inte

llige

nce.

Oper

atio

nal

objec

tive

Activ

ities

Prio

rity

1=hi

gh,

3=lo

w

Star

ting

perio

dTa

rget

mea

sure

sLe

adin

g na

tiona

l inst

itutio

nan

d po

ssib

le im

plem

entin

g pa

rtner

s

Ongo

ing /

futu

re

deve

lopm

ent

prog

ram

mes

+

inte

rnat

iona

l par

tner

s

1516

1718

19

4.3

Increa

se

firm

s’ ca

pacit

y to

alig

n pr

oduc

t de

velo

pmen

t wi

th ke

y mark

ets’

requir

emen

ts.

4.3.

1 Su

ppor

t sele

cted

com

panie

s will

ing to

dive

rsify

their

pro

duct

base

by p

rovid

ing

back

up an

d co

nsul

ting

servi

ces t

hrou

ghou

t the

pro

cess

. The

follo

wing

orie

ntati

ons c

ould

be

of i

ntere

st.Hi

gh p

oten

tial p

rodu

cts to

the U

S m

arket

unde

r AGO

A:

• HS

641

410

– Int

imate

wea

r•

HS 6

4044

3 –

Dres

ses o

f che

ap va

lue s

ynth

etic

• HS

640

193

– M

en’s

chea

p va

lue s

ynth

etic o

uter

wear

• HS

611

596

– Sp

ecial

ty ho

siery

of sy

nthe

tics.

Othe

r mark

ets :

• Ya

rn an

d fab

rics (

shirt

ing, b

otto

m w

eight

and

denim

) – re

gion

al m

arkets

• Va

lue a

dded

garm

ents,

dive

rse fi

bre b

ase –

oth

er E

U m

arkets

.Ad

ditio

nal a

ctivit

y: su

ppor

t des

igne

rs in

subs

crib

ing to

fash

ion

trend

data

base

s. To

be

linke

d wi

th th

e mon

itorin

g ce

ll un

der A

CTIF.

2X Q4

• At

leas

t 20

com

panie

s sup

porte

d to

di

versi

fy th

eir p

rodu

ct ba

se in

targ

et m

arkets

KNCC

I, EP

C, K

AM, a

pex b

ody,

re-gi

onal

supp

ort f

rom

ACT

IF, E

PZA

4.3.

2 Ba

sed

on ta

rget

mark

ets’ n

eeds

, trai

n fir

ms o

n ho

w to

enha

nce c

usto

mer

focu

s th

roug

h va

lue a

dded

servi

ces s

uch

as ve

ndor-

man

aged

inve

ntor

y, m

ulti-

fibre

expe

rtise

, IC

T cap

acity

( ICT

-ena

bled

teac

hing )

and

drop

ship

men

t.

2X Q4

• Ei

ghty

to o

ne h

undr

ed co

mpa

ny

man

ager

s trai

ned

per y

ear

KNCC

I, EP

C KA

M, a

pex b

ody

4.3.

3 Co

nduc

t visi

ts to

regi

onal

and

inter

natio

nal t

rade s

hows

on

T&C

prod

uctio

n tec

h-no

logi

es an

d ne

w m

achin

eries

with

T&C

entre

pren

eurs

(indu

strial

asso

ciatio

ns, c

loth

ing

enter

prise

s)Vi

sit th

e wor

ld’s

leadi

ng ap

parel

patt

ern

desig

n an

d cu

tting

equip

men

t man

ufac

tur-

ers,

e.g. L

ectra

Res

earc

h an

d M

anuf

actu

ring

Facil

ity, B

orde

aux ;

Tech

nical

Unive

rsity

of

Libere

c, Te

xtile

Depa

rtmen

t, Cz

ech

Repu

blic

; Prem

ière V

ision

( app

arel s

how )

, Pari

s.Th

e main

out

com

es o

f the

se to

urs s

houl

d be

to ac

quire

know

ledge

on

the l

atest

deve

lop-

men

ts in

the T

&C p

roce

ssing

indu

stry.

1X Q2

• At

leas

t 20

com

panie

s acc

ompa

nied

to tr

ade s

hows

and

equip

men

t tou

rsKN

CCI,

EPC,

KAM

, ape

x bod

y, reg

iona

l sup

port

from

ACT

IF, M

oi

Unive

rsity,

NITA

SITA

4.4

Prov

ide t

ar-ge

ted as

sistan

ce

to h

andl

oom

fir

ms a

nd d

esig

n-er

s on

trade

pr

omot

ion.

4.4.

1 Es

tablis

h lin

kage

s betw

een

Keny

an h

andl

oom

pro

duce

rs an

d de

signe

rs, an

d fo

r-eig

n bu

yers.

• Pr

omot

e uniq

ue h

andl

oom

pro

ducts

and

desig

ns in

colla

borat

ion

with

loca

l and

/ or

inter

natio

nal d

esig

ners

/ buy

ers.

• Lin

k loc

al de

signe

rs wi

th h

andl

oom

wea

vers

to d

evelo

p un

ique

fabr

ics w

hich

can

be

used

to d

evelo

p pr

oduc

ts fo

r loc

al / e

xpor

t mark

ets.

• Su

ppor

t sele

cted

weav

ers a

nd d

esig

ners

to :

–Ap

proa

ch o

nline

stor

es th

at of

fer sp

ecial

colle

ction

s ( e.

g. fa

ir tra

de p

rodu

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APPENDICES


70

SECTION A: INVESTMENT AND EPZ

1 ) Table 1: International business rankings of Kenya and its competitors

East African countries Selected Asian textile and apparel exporters

International benchmark Kenya Ethiopia

United Republic

of Tanzania China India Bangladesh

Viet Nam Pakistan Myanmar

Ease of Doing Business ranking (1) 136 132 131 90 142 173 78 128 177

Competitive Industrial Performance ranking (2) 102 130 106 7 43 78 54 74

Not ranked

Global Competitiveness Index (3) 90 118 121 28 71 109 68 129 134

Inward FDI Performance Index (4) 129 120 59 86 97 114 22 110 52

Corruption Perception Index (5) 145 110 119 100 85 145 119 126 156

Economic Freedom Index (6) 122 149 109 139 128 131 148 121 161

1– World Bank Group, 2015); 2– United Nations Industrial Development Organization (UNIDO), 2010; 3– World Economic Forum, 2014; 4– United Nations Conference on Trade and Development, 2010; 5–Transparency International, 2014; 6– Heritage Foundation, 2015

2 ) EPZ and Government concessions

The EPZs were created as means of promoting ex-ports from a number of priority sectors, including the T&C industry, by offering various Government con-cessions, including:

� A 10-year corporate tax holiday and 25% tax rate thereafter

� A 10-year withholding tax holiday on dividend re-mittance

� Duty and VAT exemption on all inputs except mo-tor vehicles

� An investment deduction of 100% on capital ex-penditures for 20 years

� Stamp duty exemption � Exemption from pre-shipment inspection � Availability of on-site Customs inspection � Work permits for senior expatriate staff.

At the Athi River EPZ, space can be rented within office blocks, business centres and industrial build-ings at rates ranging from US$2 to US$2.80 per square foot per year.1 Leases are renewable every six years and subject to a 15% service charge annually. Serviced industrial plots can be leased for a mini-mum of 30 years at a rate of US$5,000 per hectare per year plus a 10% service charge fee. Sixty-year leases are available for US$100,000 per hectare.

1. Kenya Export Processing Zones Authority (2015). Website. Available from http://www.epzakenya.com/.

http://www.epzakenya.com/

[ APPENDICES ]

71

SECTION B: TRADE STATISTICS ANALYSIS

Figure 1: Decomposition of Kenya’s T&C export growth, 2004–2013

Source: International Trade Centre (2015).

There are, however, some signs of product diversifi-cation in the T&C sector. For example, in 2004 there were only 11 products whose exports were valued between US $ 1 million and US $ 10 million. A decade later, 26 products fall within this category, while 10 have exports of over US $ 10 million. Even so, it is worrisome to note that the probability of a Kenyan product surviving for two or more years in a market is only 9 %. For the sake of comparison, the probability in Ethiopia is 11 %, while in China, India, Bangladesh and Turkey it ranges between 16 % and 20 %.

An analysis of the Revealed Comparative Advantages Index, which evaluates a country’s exports vis-à-vis other exporters, puts Kenya’s T&C sector in a slightly more positive light. The index suggests that most segments in Kenya’s T&C sector are more competi-tive today than they were 10 years ago ( 2002–2006 ). This improvement is particularly notable in textile segments. Nevertheless, the improvements have been slow compared with other countries. Greater competitiveness should be expected given the rela-tive age and size of the sector when compared with newer industry players.


72

Figure 2 : Kenya T&C, Normalized Revealed Comparative Advantage ( NRCA ) ANNEX


Note : NRCA>0 : comparative advantage ; NRCA<0 : comparative disadvantage.

Table 2 : Kenya’s exported garments with value equal to or above US $ 10 million in 2013 ( US $ thousands )

HS code

Product Exported value in 2013

( US $ thousands )CAGR ( 2004 versus 2013 )

CAGR ( 2009 versus 2013 )

Export share

2009 2013

HS 620462

Women’s / girls’ trousers and shorts, of cotton, not knitted 41 990 52.0 % 9.1 % 14.1 % 13.2 %

HS 620342

Men’s / boys’ trousers and shorts, of cotton, not knitted 33 528 84.7 % 32.6 % 5.2 % 10.5 %

HS 611090

Pullovers, cardigans & similar articles of other textile materials, knitted 25 411 122.5 % 64.7 % 1.6 % 8.0 %

HS 610469

Women’s / girls’ trousers and shorts, of other textile materials, knitted 19 377 114.7 % 69.1 % 1.1 % 6.1 %

HS 620463

Women’s / girls’ trousers and shorts, of synthetic fibres, not knitted 17 355 195.8 % 163.0 % 0.2 % 5.5 %

HS 620469

Women’s / girls’ trousers & shorts, of other textile materials, not knitted 14 778 60.9 % 34.1 % 2.2 % 4.6 %

HS 610590

Men’s / boys’ shirts, of other textile materials, knitted 14 482 102.8 % 78.1 % 0.7 % 4.6 %

HS 610829

Women’s / girls’ briefs and panties, of other textile materials, knitted 13 477 93.2 % 223.5 % 0.1 % 4.2 %

HS 610990

T-shirts, singlets and other vests, of other textile materials, knitted 12 858 29.8 % 33.3 % 1.9 % 4.0 %

HS 630612

Tarpaulins, awnings and sunblinds, of synthetic fibres 7 723 17.2 % 27.5 % 1.4 % 2.4 %


[ APPENDICES ]

73

Table 3 : Kenya’s textiles exports >= US $ 0.1 million in at least two years between 2004 and 2013

HS code

Product descriptionExport value in 2013 ( US $

thousands )

Growth rateShare in

textile export

CAGR 2004 versus 2013

CAGR 2009 versus 2013 2009 2013

HS 530500

Coconut fibres, abacá, Manila hemp and other vegetable textile fibre 22 153 412.9 % 0.1 % 43.9 %

HS 551110

Yarn, > / =85 % of synthetic staple fibres by weight, put up for retail sale 9 211 12.8 % 16.4 % 18.1 % 18.2 %

HS 530390

Jute and other textile bast fibres, not spun, n.e.s. ; tow and waste of these fibres 8 395 16.6 % 16.3 % 16.6 %

HS 530310

Jute and other textile bast fibres, raw or retted ( excluding flax, true hemp and ramie ) 3 450 79.3 % -27.0 % 43.8 % 6.8 %

HS 560790

Twine, cordage, ropes and cables, of other materials 1 427 43.0 % 56.0 % 0.9 % 2.8 %

HS 580219

Terry towelling and similar woven terry fabrics, of cotton 820 47.4 % 92.3 % 0.2 % 1.6 %

HS 560721

Binder or baler twine, of sisal or other textile fibres of the genus Agave 444 -5.9 % 49.0 % 0.3 % 0.9 %

HS 540754

Woven fabrics of yarn containing >= 85 % by weight of textured polyester filaments 380 48.2 % 41.1 % 0.3 % 0.8 %

HS 560490

Textile yarn, strip and impregnated, coated, covered or sheathed with rubber or plastics 371 26.4 % 74.5 % 0.1 % 0.7 %

HS 560811

Made up fishing nets, of man-made textile materials 309 2.2 % 15.8 % 0.6 % 0.6 %

HS 580810 Braids in the piece 250 63.5 % 2.4 % 0.8 % 0.5 %



74

SECTION C: TRADING ACROSS BORDERS

Table 4: Time and cost to trade across borders in Kenya, Ethiopia and the United Republic of Tanzania

Kenya Ethiopia United Republic of Tanzania

Nature of export / import procedures

Export procedures

Import procedures

Export procedures

Import procedures

Export procedures

Import procedures

Time (days)

Cost (US$)

Time (days)

Cost (US$)

Time (days)

Cost (US$)

Time (days)

Cost (US$)

Time (days)

Cost (US$)

Time (days)

Cost (US$)

Document preparation 12 305 11 250 27 520 29 700 8 270 13 575

Customs clearance and inspections 4 375 3 510 7 290 5 390 4 250 5 250

Ports and terminal handling 6 375 8 390 3 270 3 270 4 320 7 540

Inland transportation and handling 4 1 200 4 1 200 7 1 300 7 1 600 2 250 1 250

Totals 26 2 255 26 2 350 44 2 380 44 2 960 18 1 090 26 1 615

Source: World Bank (2015).2

2. Stakeholders indicated that in practice the number of days is generally lower.

[ APPENDICES ]

75

SECTION D: POTENTIAL INVESTORS

Company Products / activities Turnover ( US $ millions )

Vardhman Textiles Yarn, fabric, threads, fibre & garment 834

JBF Industries Ltd Synthetic fibre 772

Arvind Limited Denim, fabric, apparel, advanced materials 770

Trident Group Towels 624

Welspun India Ltd Home textile and synthetic yarns 570

SRF Limited Tyre cord yarn 551

Garden Silk Mills Polymers, yarn, filament and fabric 495

SEL Manufacturing Company Ltd. Yarns, knitted fabric, terry towels, ready-made garments 477

Bombay Rayon Fashions Ltd Fabrics, apparel 469

RSWM Ltd Synthetic and blended yarn, fabric, denim fabric 463

Indo Rama Synthetic Ltd Synthetic fibre and filament 424

Lakshmi Machine Works Textile machinery 362

Nahar Spinning Mills Limited Yarn and fabric 356

Raymond Limited Suiting and shirting fabric, apparel 353

KPR Mill Limited Yarn and fabric 316

Sutlej Textiles Synthetic and blended yarn, fabric, home textile 303

Filatex India Ltd Synthetic yarn 285

Mandhana Industries Pvt. Ltd Yarn dyeing, weaving, fabric printing, processing & garmenting 245

Century Enka Ltd Nylon & polyester filament yarns, polyfill yarn 237

Sangam India Limited Yarn, fabric, denim fabric 231

Indo Count Industries Ltd Yarn & knitted fabrics 227

Siyaram Silk Mills Ltd Suiting 210

Page Industries Knitwear 192

Spentex Industries Ltd Yarn and fabric 184

Gokaldas Exports Ltd Garments 179

Similar lists can be obtained for each target country from their respective sector associations or inde-pendent sector research. As an example, the follow-ing list offers the names of three of the top clothing brands and retailers in some of Kenya’s most likely sources for T&C FDI. Investment promoters would investigate the top garment factories supplying such firms and target them for investment in Kenya.


76

Likely FDI source countries Major brand, retailer or manufacturer Type of business

United States

GAP Specialty store

Limited Brands Specialty store

Polo Ralph Lauren Specialty store

Republic of Korea

Lotte Department store

Shinsegae Department store

Hyundai Department store

China

Youngour Group Ready-made garment manufacturer

Hongdou Group Ready-made garment manufacturer

Heilan Group Ready-made garment manufacturer

Germany

C&A Specialty store

H&M ( Sweden ) Specialty store

KiK Specialty store

Spain

Inditex ( Zara ) Specialty store

Mango Specialty store

El Corte Inglés Department store

United Kingdom

Next Specialty store

Marks and Spencer Department store

Heilan Group Ready-made garment manufacturer

Turkey

Aksa Akrilik Kimya Ready-made garment manufacturer

Korteks Mensucat Ready-made garment manufacturer

Advansa Sasa Polyester Ready-made garment manufacturer

[ APPENDICES ]

77

SECTION E: LIST OF PARTICIPANTS IN PUBLIC PRIVATE CONSULTATIONS

Name of Institution Name

1. Ministry of Industrialization and Enterprise Development - PS Dr. Wilson Songa

2. Ministry of Industrialization and Enterprise Development - Industrialization Secretary Mr. Julius Korir

3. ACTIF Jas Bedi

4. ACTIF Belinda Edmonds

5. ACTIF Joseph Nyagari

6. Africa Apparels EPZ LTD Mr. Pankaj Motilal

7. Africa of Women Entreprenure Program Zohra Baraka

8. Alliance garments Harrison Kinuthia

9. Alltex EPZ Ltd Jane Adero Okech

10. Alpha Knits Limited Mr. Hiran Bid/Mr. Sagar

11. Ashton Apparel EPZ Ltd/Atraco Group Pankaj Mehta

12. Association of Fashion Designers Sally Karago

13. Brother Knits Mohan Arora

14. Cotton Fibre Directorate Anthony Muriithi

15. Cotton Ginners Association James Mathenge

16. Designer Peggy Odhiambo

17. Equator Apparels Mr.Ndumbia

18. Export Processing Zones Authority - Kenya - CEO Cyrille Nabutola

19. Export Processing Zones Authority - Kenya - COO Fanuel Kidenda

20. Export Processing Zones Authority - Kenya - GM Investments Margaret Waithaka

21. Export Processing Zones Authority - Kenya - Head of Projects Moses Ngaruia

22. Export Processing Zones Authority - Kenya - Head of Textiles Moses Kipkebut

23. Export Promotion Council James Munyi

24. Fair Trade Africa James Mwai

25. Global Apparels Mr.Narain Shahdadpuri

26. Handloom Weavers Marketing Cooperative Society Rose Mwathi

27. IREN KENYA James Shikwati

28. Julius Rono - Solidaridad Julius Rono

29. Kapric Apparels Ltd Mr. Thomas Puthoor

30. Kenya Association of Manufacturers Betty Maina/Joseph Wairuko

31. Kenya Civil Society Association Ayoma Mutunga

32. Kenya Industrial Research and Development Institute (KIRDI) Alice Waithaka

33. Kenya Investment Authority Moses Ikiara

34. Kenya National Chamber of Commerce and Industry (KNCCI) Peter Biwott


78

Name of Institution Name

35. Kenya Polytechnic University Mary Nyaiyeka

36. Kenya Private Sector Alliance Carole Kariuki

37. Kenya Revenue Authority - Deputy Commissioner of Customs Ms. Rose Gichria

38. Kenya Textile Training Institute - Center Manager Mr. Festus Musyoki

39. Kiboko Leisure wear Ltd Sabine Huster

40. KIKOROMEO (Kiro Ltd) Ann MacCreath

41. Kimili Africa Sylvia Mwaura

42. Kitui Ginneries Ltd Taher Zavery

43. LOULOU CREATIONS Catherine Obam

44. Makueni Ginnery David Masika

45. MEFA Creations Evelyne Akinyi

46. Micro & Small Enterprises Authority/Federation Mathew Ashers

47. Midco Textiles (EA) Ltd Mr. Tejal Shah

48. Moi University Dr. Eric Oyondi

49. New wide Garments Kenya EPZ Ltd Heman Boodia

50. Panah Project Evgeniya Khromina

51. PVH Roy Ashurst

52. Rift Valley Products(Salawa ginnery ) Sital Panara/Ramesh Khagram

53. Rivatex East Africa Ltd - MD Mr. Thomas Kipkurgat

54. Rupa Mills (EPZ)td Mr.Tinu Shah

55. Sandstorm Mark Stephenson

56. Sunflag Textile & Knitwear Mills Ltd Mehboob Moledina

57. Tailor made Jeans EPZ ltd Samuel Meeks

58. Technology Development Center Lucy Wambugu

59. Thika Cloth Mills Ms. Tejal Dodhia

60. Tosheka Textiles Herman Bigham

61. TSS spinning & weaving mills Mr. Mwamisi

62. Ultra Kenya Ltd Sumeet Walia

63. United Aryan (EPZ) Ltd Pankaj Bedi

64. University of Nairobi Dorothy Mc Cormick

65. USAID - EATIH Kanini Mutooni

66. USAID - EATIH Finn Holm Olsen

67. Vision 2030 Seceretariat - Director Social & Political Pillars Dr. Gituro Wainaina

68. World Bank Aref Adamali

[ REFERENCES ]

79

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