THE KENYAN TEXTILE AND FASHION INDUSTRY

27
Supra note 9.
28
Supra note 17.
Overland transportation is also a challenge. While
not as bad as Ethiopia (where factories are generally
around Addis Ababa and the port is in Djibouti, well
over a day’s truck journey away), the roads between
Nairobi and Mombasa are relatively narrow and
unsafe, and could not support exporting activities
on the kind of massive scale that would have a
real impact on job creation at the macro level.
The government therefore needs to prioritize
upgrading Kenya’s highway system. Overland
transport is also substantially more expensive than
competitor countries—getting to the port costs
$0.25 per garment in Kenya, versus $0.04 in China
and $0.10 in Cambodia, 27 partially due to trucking
cartels. The train construction currently underway
will be a hugely useful investment, and to fully
reap the returns it is critical that it is completed on
time, and that the tariffs charged are reasonable,
bringing Kenya in line with its competitors on
in-country transport costs.
Regional overland transportation is also an
important longer-term priority. East Africa and
Ethiopia together could be a powerful juggernaut
offering a true end-to-end garment value chain
(see box above). But currently transportation and
border crossings between the countries make
this prohibitively expensive and time consuming.
Today, “Shipping a container from Tokyo to
Mombasa costs less than transporting it to
neighbouring Uganda from the Kenyan coast.” 28
Improving internal regional transport networks
will be very important for local sourcing, but also,
in the longer-term, as Africa’s consumer base
matures, in offering the opportunity for a nearby
manufacturing base for regional fast fashion (see,
for example, Eve & Tribe in Nigeria). Investing in
regional infrastructure may not have the immediate
impact of port reforms, but it will help create an
ecosystem that gives Kenya, Ethiopia, and Tanzania
a sustainable long-term edge.
Linked with this, the government should pursue
further progress towards regional integration.
While the East African Community putatively
creates a single market since 2010, there have been
reports of fees charged for trucks moving across
country boundaries and other remaining regional
differences in regulation, and, furthermore, Ethiopia
is not a party to the agreement. Creating a truly
integrated regional market is a major opportunity
for East Africa to compete with Southeast Asia as a
regional destination for apparel sourcing.
The second top priority for the Kenyan government,
which it is already taking action on, is continuing
to improve the price and reliability of the power
grid, and particularly to invest in green energy as
it becomes cost-effective. Transportation and
electricity are the two biggest challenges eroding
Kenya’s cost advantage, and also have a substantial
effect on reliability and turnaround time. The
government could help address electricity issues
by investing in the reliability of the grid (especially
for EPZs) and finding sources of cheaper electricity
(like Ethiopia’s hydro-power) or subsidizing
electricity for qualified factories. Subsidies for
solar energy conversions would help with both
energy costs and enhance factory’s “conscious
consumerism” story, while also enabling smaller
factories to operate off-grid with next generation
energy technology, as Hivos has promoted
worldwide. While starting with the EPZs makes
sense, investing in the power grid overall, and offgrid
storage systems can have beneficial effects
throughout Kenya’s economy, much like any
streamlining of the port systems would.
Corruption is another area which is solidly within
the government’s control, and which has cast a
shadow over international companies’ willingness
The Kenyan Textile And Fashion Industry Report
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