- Title: African economies tried to rekindle manufacturing sectors in 2016.
- Date: 29th December 2016
- Summary: NAIROBI, KENYA (FILE) (REUTERS) VARIOUS OF HOUSE UNDER CONSTRUCTION WITH POLYSTYRENE PANELS VARIOUS OF A HOUSE MADE OF POLYSTYRENE PANELS
- Embargoed: 13th January 2017 14:25
- Keywords: Manufacturing factory foreign exchange commodities employment
- Location: ABIDJAN, PETIT BADIANE, SAN PEDRO, IVORY COAST/ NKOK, GABON/ LAGOS, NNEWI, NIGERIA/ CAPE TOWN, SOUTH AFRICA/ NAIROBI, KENYA
- City: ABIDJAN, PETIT BADIANE, SAN PEDRO, IVORY COAST/ NKOK, GABON/ LAGOS, NNEWI, NIGERIA/ CAPE TOWN, SOUTH AFRICA/ NAIROBI, KENYA
- Country: Various
- Topics: Economic Events
- Reuters ID: LVA0015EXR3O7
- Aspect Ratio: 16:9
- Story Text: Africa's manufacturing sector is positioned to become globally competitive but poor infrastructure and over-reliance on commodity exports have constrained growth.
After decades of exporting its natural resources and importing processed goods, some African governments are pushing for more homegrown industrial solutions as their currencies struggle and commodity prices drop.
The use of Expanded Polystyrene (EPS) Panels is being promoted as a cheap and environmentally friendly way to help plug a growing housing deficit in Kenya. Industry experts say demand for housing is at over 200,000 units a year in a country where developers only manage to supply less than half that number.
EPS panels are made of a by-product of oil refining, which consists of mini spherical particles containing about 98 percent air.
Contractors say it is cheaper and saves on time.
Environmentalists say it is also a more sustainable option than timber.
"You are talking about polystyrene and people are seeing this white stuff. At the end of the day when you look at the house it is the same as any other building. You will not be able to see a panel house and distinguish it from a distance because as far as the looks is concerned, the paint is concerned, the cladding that you use is the same as when you are using a stone house," said Humphrey Ogutu, the head of factory at KOTO Housing Kenya.
In South Africa the James Sedgwick Distillery, which has been making Baines Cape Mountain Whisky for over 30 years, looked to demand for luxury drinks among the country's growing elite to grow its business.
A few years ago, the luxury African market boiled down to a tiny elite but disposable incomes are slowly increasing.
The double matured whisky is made from 100 percent South African yellow maize.
"We are the only commercial whisky distillery on the continent of Africa, there are a few people that make whisky at a very small scale but not on the commercial scale which we do, so back in 1977 when we started making whisky we didn't realize at that stage that we would grow to where we are now," said Andy Watts, a master distiller and manager at James Sedgwick Distillery.
The world's biggest producer of cocoa beans, Ivory Coast is making its own chocolate products, which still remain a novelty for many in the country.
We met Olga Yenou an entrepreneur who used to work for the French chocolate maker CEMOI and is now providing processed alternatives like cocoa powder that can rival expensive, imported foreign brands.
"We are in the producing country, so we have the raw material. The missing link was the transformation and the consumption, and so it needed to be transformed. It was necessary to get settled down and create a small processing plant that sees everything through, from the bean to the finished product, because it is something we could do," said Yenou.
Meanwhile, Nigeria is trying to show that it can export more than oil as global prices of the commodity fall but currency woes are holding businesses back.
Innoson Vehicle Manufacturing (IVM) struggled to meet its targets because dollar shortages meant it could not afford to buy imported components.
Once thriving due to a "Made in Nigeria" campaign that generated strong sales to the police, state agencies and churches, IVM this year had to send workers home as production stalled.
"Our production capacity last year was 4,000 vehicles for all the models, this year we planned to get up to 6,000 but unfortunately because of the issue of foreign exchange, sourcing of foreign exchange, we did not move much," said IVM Chairman, Innocent Chukwuma.
Given that Nigeria imports everything from milk to machinery, some were able to tap into the fast moving consumer goods segment instead.
Wemy Industries manufactures and supplies 2,000 cartons of baby and adult care products, like diapers, daily.
"What we need to do is to change our business model as a country, and also sell outside so we can earn dollars ourselves and that is what Ethiopia does. Kenya does and other countries do. They don't have oil, so they have to... to get their dollars they have to sell what they make into the international market. That is the, that is the secret that is actually the real right module. There are other modules as well but I think modules like exporting what you make, or if you can source some of the things you need locally, source them locally," said the company's managing director, Paul Odunaiya.
There was also renewed debate this year about the African Growth and Opportunity Act (AGOA) - a flagship of US trade policy in Africa and how it should encourage further industrial growth for the continent.
For Kenya, the renewal of AGOA sparked an investment boom with an expected 80 million US dollars meant to go into the country's textile industry.
But analysts said tariff-free access was not enough and exporters needed to diversify their offerings.
"I would say, don't surrender to the U.S. to prepare you to be export ready, once your country is AGOA eligible you should invest heavily in your population to have a constituency of exporters that can take advantage of AGOA," said Kenyan economist, James Shikwati.
A range of problems hold back African exports, from poor transport links to costly electricity, lack of bank credit, corruption and labyrinthine bureaucracy.
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