A bright future?

Workers correct colors at a Nairobi printing firm looking forward to expanding its business

Economic growth, stalled by the global financial crisis and Kenya’s election violence, is rising once again. Nairobi’s businesses are poised to reap rewards, Mike Pflanz finds.

INDUSTRIAL AREA, April 11, 2011 (Daily Dispatches) – With an incessant computer-controlled hiss clack clack, hiss clack clack, a million-dollar machine the size of a bus was churning out 14,000 bank flyers an hour.

Over in the corner, sales pouches for a cellphone firm’s SIM cards were being folded. Nearby, neat stacks of An Introduction to Public Health stood ready for shipping.

This 44-year-old firm, Colourprint, housed in a nondescript factory off a pot-holed road, is one of hundreds of companies clustered in Nairobi’s industrial area.

These 20-odd square miles southeast of the city center help power Kenya’s $2bn-a-year manufacturing sector, the second-strongest driver of economic growth.

That growth peaked at 7.1% in 2007, before the global economic crisis and Kenya’s post-election turmoil knocked it down to 1.7%. Today, it’s rising again, with the government boasting of expected 5% expansion this year.

Like many Nairobi-based businesspeople, Colourprint’s chairman, Bushan Vidyarthi, is optimistic for the future.

Phares Okoth with Colourprint’s oldest machine, still working today after 198 million prints in 40 years

“This is going to be a great country,” he said, touring Daily Dispatches around the factory floor as technicians finalized print plates and workers glued and folded finished jobs.

“Kenya is a hub, and Nairobi’s in the middle of it. Industry is highly developed, engineering, manufacturing, services, all of it. Airline connections are great, the roads will be great when they finish them. You have unlimited scope for business.”

Vidyarthi’s realistic as well, however. “Things have changed a lot in the last five years,” he said. “But there is still too much red tape, we still have to pay 25% import duty on raw materials, and our electricity bills have tripled in three years.”

Under its much-flaunted Vision 2030 program, the government in Nairobi has laid-out ambitious plans to bring Kenya from a ‘low-income’ country to a ‘middle-income’ one in 19 years time.

Making it easier and cheaper to do business here in Kenya’s capital is a key plank in that mission, as is encouraging even more international investors to come here.

Already, there are good signs. Nestlé last month announced $30m plans to boost its Nairobi-based production eight-fold in the next five years. Unilever is ploughing in $38m to increase business. Pepsi-Cola said in March it is returning with a $30m new plant, after 40 years away from the Kenyan market.

Bank brochures for premium account holders are folded and glued at Colourprint’s Nairobi HQ

Each of these mammoth multinationals has been drawn to Nairobi because of its existing market, its infrastructure and its relative stability.

But the single biggest pull was the launch last year, finally, of the East African Community, connecting Kenya, Tanzania, Uganda, Rwanda and Burundi in a single duty-free economic zone.

That gives businessmen like Vidyarthi a market of something upwards of 130 million people, compared to the 39 million in Kenya alone.

Across the industrial area, Ashu Sennik is more circumspect. He runs Desbro Engineering, a stainless steel firm making tanks, pipes and fittings for companies including Nairobi’s fledgling microbreweries.

“There’s still too much red tape at the East African Community, it’s going through some serious teething troubles,” he said.

Kenya’s election-time political instability is also a concern, he says, as it drives dangerous fluctuations in the foreign exchange rates. The US dollar is currently trading at 85 Kenya shillings to $1. In 2008, it was 69 shillings to the dollar.

“But things are changing,” he said. “We’re getting more and more competitive, we have a well-educated young workforce who are ready to learn, and clients’ demands for more value for money is refining the business landscape.

“The opportunities are there, and we’re in the right place, that’s for certain.”

Slideshow

This entry was posted on Monday, April 11th, 2011 at 4:10 pm. It is filed under Features, Innovating, Working. You can follow any responses to this entry through the RSS 2.0 feed.

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