Two international soft drinks manufacturing companies have set up local operations in a major shift tipped to shake up the industry currently in the tight grip of global giant Coca-Cola.

US multinational Pepsi Cola, and London based SABMiller are in the process of establishing a manufacturing presence in Nairobi even as market data points to a flattening market for soft drinks.

PepsiCo, which stopped bottling in Kenya under competitive pressure from Coca-Cola in the 1970s, is putting up a Sh2.4 billion plant off Thika and Baba Dogo roads while SABMiller has taken control of family owned Crown Foods, the bottlers of Keringet brand of drinking water.

PepsiCo has acquired 14 acres of land at Nairobi’s Ruaraka estate through SBC Kenya Ltd, a Franchise Bottler and Distributor of Pepsi products it bought in 2009, from where it will produce at least six of its brands.

“We have completed the excavation stage. We are now tendering after which we expect construction to start by April 15,” said Mr Butch Moldenhauer, the SBC Kenya general manager.

PepsiCo made a marketing re-entry into Kenya late last year relying on imports to serve the local market with its brands such as Pepsi Cola, Pepsi Diet, Mirinda, Evervess Soda Water and Seven Up. Importing the soft drinks is more expensive than having a local production unit.

“We have already recruited 120 Kenyans — engineers, architects and technicians — to handle the development phase. We expect to have about 300 employers on board once it is completed,” said Mr Moldenhauer.
Business Daily (http://www.businessdailyafrica.com/Corporate+News/Pepsi+comeback+stirs+up+battle+of+soft+drink+titans/-/539550/1134208/-/7rbpjlz/-/index.html)

Pepsi is coming back?:cool:

I wonder why they left in the first place. Glad they are back. :cheers:

120 KENYANS HAVE A JOB! hopefully more in the future

More jobs for kenyans.Hoping they wont close shop again.

What type of jobs?Anyways it's better to have something

The soft drinks business is capital intensive, a fact that has seen small challengers fail in their bid to wrest market share from the big players.

Kuguru Foods, which launched the Softa brand a few years ago to rival Coca-Cola’s Coke and Fanta drinks, has practically been overshadowed by the stiff competition from the cash-rich multinational.

Kevian Kenya Ltd that manufactures mainly juices is a new challenger that has introduced a cola brand in the market, priced at Sh38 in a move aimed at undercutting Coca-Cola and PepsiCo.

Hmm, the small domestic beverage makers, hopefully they succeed too. Entrance of larger companies is a good thing as it brings jobs and skills, but it's bad if they totally dominate the market. Still, more competition is good for domestic makers, requires them to work and build up their business to attract more consumers. In that case everyone wins.

There should be some unique sodas or juices unique to the Kenyan or East African market. Maybe Kevian or Kuguru can make one...

http://www.businessdailyafrica.com/image/view/-/1138916/medRes/250653/-/maxw/600/-/p0lht5/-/foton.jpg
China’s vehicle manufacturer Foton is setting up an assembly plant in Kenya in what is set to heighten the battle between China and Western nations for business in Kenya.

The Sh1.2 billion assembly plant is expected to churn out 10,000 units of prime movers, tippers, buses, pick-ups, and light commercial trucks per year, making it one of the biggest foreign direct investments by a Chinese company.

Foton said it is setting up the plant to avoid paying a 25 per cent import duty on cars to allow in its low cost products putting it in a head-to-head battle with Japanese and European brands such as Mercedes, Iveco, Mitsubishi, and Nissan.

“Chinese vehicles are generally competitively priced but that aside, we shall invest heavily in service, parts, and distribution network to gain market share,” said Calvin Guo, the general manager at Foton East Africa.

The assembly plant is expected to be complete by May next year, creating more than 100 new direct jobs.

Foton brands were previously shipped into the country fully made but the move to assemble them locally is set to give them a sharp price advantage as they face off with brands sold by Toyota, General Motors, Simba Colt, and CMC Motors.

Imports of completely knocked down units (CKD) for local assembly are zero-rated as opposed to a 25 per cent import duty on fully made vehicle imports, giving Foton a greater pricing headroom, riding on China’s low cost production.

Foton is signing a dealership agreement with Marshalls East Africa, a move that could help the loss-making auto dealer reverse its dwindling fortunes since losing the Peugeot franchise in 2007.

Increased activity in the construction and trade sectors has boosted demand for light commercial trucks which Marshalls wants to exploit using the Foton brand that is one of the cheapest in that segment.

The entry of Foton comes when relations between Nairobi and Beijing are getting cosier, with China increasingly expanding its economic footprint in the country in line with the government’s policy to look East for new investments and aid.

This has seen Chinese imports more than double in the last five years to Sh74.9 billion, besides Chinese firms winning major contracts in military and infrastructure sectors including telecoms, roads, and airport network upgrade.

Japan’s Toyota and India’s Tata are other vehicle manufacturers that have announced plans to set up assemblies in Kenya seeking a gateway to the East African market.

The EAC market, which recently came under a Common Market, is emerging as a major consumer of goods and services, boasting of 126 million people whose incomes are rising.

The economies of the five member states, including Rwanda, Kenya, and Uganda, are projected to grow by more than five per cent year-on-year in the medium term, according to the World Bank.

The setting up of more vehicle assembly plants in Kenya is expected to pile pressure on existing auto dealers and assemblers like Thika-based Kenya Vehicle Manufacturer (KVM), the Association of Vehicle Assemblers (AVA) Limited of Mombasa and General Motors East Africa (GMEA) who have come under the spotlight for possible involvement in anti-competitive market practices linked to sale of overpriced goods
http://www.businessdailyafrica.com/Corporate+News/China+vehicle+maker+to+open+Kenya+plant/-/539550/1138914/-/aksng/-/index.html
^^wonderful story :cheers:

^^ Great news!I hope the coming elections wont scare away investors. If we had a successful elections in 2007, more investors and even these investors coming to Kenya would have settled by now.

Now this is very very positive news, but like xJamaax says, let's pray our leaders behave themselves and not do anything stupid to scare investors away!

You know, at the end of the day, I really hope there will be some sort of technology transfer in the automobile manufacturing industry. I know we used to manufacture cars during the Moi era, but we really need to revive that industry. Great news by the way.

You know, at the end of the day, I really hope there will be some sort of technology transfer in the automobile manufacturing industry. I know we used to manufacture cars during the Moi era, but we really need to revive that industry. Great news by the way.
I second that!

Chinese may be just here to exploit the cheap labor.They however provide some jobs so it's better to have these kind of jobs than for people to be unemployed

I second that!

Chinese may be just here to exploit the cheap labor.They however provide some jobs so it's better to have these kind of jobs than for people to be unemployed

You guys should nationalize the plant after it being built :nuts:

You guys should nationalize the plant after it being built :nuts:
There is no need for it to be nationalized for the time being as there are less other industries of this kind and more people are unemployed

This plant will be the 4th car assembly plant in the country. Nice.:)

There is something confusing me, was the plant launched and therefore it is now operating or its construction was launched? Either way it is great to have the plant in our country. This is how to develop a country. Nationalising private people's property would contravene the constitution besides discouraging other investors.

congratulations!

Extended article...

BusinessDailyAfrica (http://www.businessdailyafrica.com/Corporate+News/Chinese+manufacturers+go+local+in+battle+for+Kenyas+consumers/-/539550/1142098/-/item/0/-/y3u2w2/-/index.html): Chinese manufacturers go local in battle for Kenya’s consumers

Chinese manufacturers are setting up local production plants, signalling a change of tack in the battle for control of Kenya’s consumer market they have been serving through direct imports.

The Asian giant — popularly known as the world’s factory because of its mass production models that have won it a large fraction of global trade in manufactured goods — has been quietly gaining a manufacturing foothold in Kenya, in a move that is expected to add competitive pressure on old players.

Chinese companies have in the past five years alone established a strong local presence in Kenya’s telecoms infrastructure, automobile, battery, food and beverage markets cutting down the dominance of subsidiaries of western multi-nationals.

China’s economic engagement with Africa has in the past two decades been defined by natural resource extraction and importation of raw materials to power factories that produce industrial goods for export.

The change of tack in favour of local production is not only expected to create thousands of jobs for young Kenyans but also escalate the battle for control of East Africa’s rapidly-growing consumer market that is also being eyed by Western companies.

Kenya Investment Authority (KIA) says at least 18 Chinese companies have set up shop in Nairobi in the past two years targeting diverse markets such as footwear, consumer electronics and beverages with an initial investment cost of over Sh7 billion.

Foton Motors, the vehicle manufacturer that is putting up a Sh1.2 billion assembly plant in Nairobi, battery maker Golden Lion, and technology firms ZTE, Huawei, and Aucma top the list of Chinese firms with a strong presence in the Kenyan market.

“The Chinese are confident that setting up local operations can reduce costs and help them reap the fruits of growth in demand that is expected to come with the integration of East African economies,” said Prof Kieyah of the Kenya Institute of Public Policy Research and Analysis (KIPPRA).

http://www.businessdailyafrica.com/image/view/-/1142102/medRes/252102/-/w/300/-/sha1lz/-/fdi.jpgTwo decades of aggressiveness and fast growth has seen China overtake Japan as the world’s second biggest economy mid last year with a number of forecasts indicating it could topple the US from the top spot by 2025.

In Kenya, the surge in Chinese FDI should help boost the country’s thin industrial base, increase export volumes and help the shilling gain stability in the forex market.

It could also introduce the Kenyan consumer to a wider variety of goods that should help tame rapid price escalation.

Consumer market surveys have shown that the relatively cheap Chinese goods have gained popularity across Africa, especially among the low-income households that are exposed to inflationary pressure from the turbulence in commodity prices, including crude oil and cereals.

The Sh1.2 billion Foton assembly plant is, for instance, set churn out 10,000 units of prime movers, tippers, buses, pick-ups, and light commercial trucks per year – that will be priced lower than Western and Japanese brands like Mercedes, Mitsubishi and Toyota.

Chinese investments are also set to benefit the local economy in terms of technology and skills transfer adding impetus to Kenya’s industrial development.

Locally-based Chinese firms are expected to increase rivalry with their Western counterparts who have over the years lost major public and private contracts to the newcomers.

Chinese companies have expanded their economic footprint in Kenya since President Kibaki came to power in January 2003, riding on the government’s deliberate decision to look East for new investments and aid.

During the past eight years, Chinese companies have won major contracts in oil exploration, communication, infrastructure, and military projects at the expense of previously dominant Western multinationals.

Star DTV, for instance, won the contract to roll out the country’s digital TV transmission network while the government has in the past three years turned to China for supply of multi-million shilling military hardware.

Kenya-China’s trade has more than doubled to Sh77 billion in 2009 from Sh24.2 billion in 2005, with Chinese imports accounting for most of the trade.

Chinese firms are also staging more coups in the private sector, edging out Western technology giants like Ericsson, Alcatel-Lucent and Nokia in telecoms infrastructure deals.

ZTE Corporation has recently signed a Sh4 billion contract with Telkom Kenya to roll out the firm’s third generation (3G) network following in the footsteps of Huawei, another Chinese technology firm, is involved in Safaricom’s Sh10 billion 4G rollout.

Rivalry is also expected to intensify in the automobile sector where Foton is bracing for vicious fight with Mercedes, Mitsubishi, Isuzu, Nissan, and Toyota brands sold by CMC, Simba Colt, DT Dobie, General Motors, and Toyota.

The growth of Chinese economic clout in Kenya has caused disquiet in Western countries, with US ambassador to Kenya Michael Ranneberger being quoted in leaked diplomatic cables expressing resentment at growth of Chinese products in the local market that are shrinking market share of American companies like Eveready East Africa.

Chinese companies are coming to Kenya with an aim of penetrating the larger East African market where demand for goods and services is growing.

The EAC market, which last year came under a common market, has a population of 130 million people whose incomes are rising across board.

The removal of barriers to movement of people, goods, and services in the region is attracting more foreign investments, with Kenya gaining from its strategic position as an infrastructure, transport, and financial services hub.

Chinese investments in Kenya are in particular being driven by their government’s support of their expansion outward through credit support and relaxation of rules restricting capital outflows.

Since 2006, the Chinese government simplified capital outflow rules, reducing, for instance, the minimum loan a parent company in China could lend its overseas subsidiary from $5 million.

This saw China’s investment outflows more than double to $52.1 billion in 2008 from $21.1 billion in 2006, according to data from United Nations Conference on Trade and Development (UNCTAD).

The shift in China’s investment strategy is also being pushed by the growing costs of production in China due to higher labour costs and rising inflation, changing its previous standing as a low cost producer.

In the past two decades, American and European multinationals have pumped billions of dollars into China seeking low cost production brought by China’s relatively cheaper labour.

But this has in turn led to a rise in China’s middle class who in the past two years have staged strikes and go-slows that have pushed up salaries, eroding China’s cheap labour status.

I foresee a point in Kenya's future where industrial imports will drastically reduce due to the presence of big time manufacturers in the country.Kenya should brace itself as a big time regional exporter in the coming years.

[QUOTE=ernestombayo7;75854429]I foresee a point in Kenya's future where industrial imports will drastically reduce due to the presence of big time manufacturers in the country.Kenya should brace itself as a big time regional exporter in the coming years.[/QUOTE= Kenya

Kenya risks being left behind in the exports arena.The exports growth of regional countries has been growing faster than that of kenya.In fact the value of Zambia's exports eclipse those of kenya and the others have narrowed the gap considerably.Kwetu focus ni siasa tu 24/7.

[QUOTE=ernestombayo7;75854429]I foresee a point in Kenya's future where industrial imports will drastically reduce due to the presence of big time manufacturers in the country.Kenya should brace itself as a big time regional exporter in the coming years.[/QUOTE= Kenya

Kenya risks being left behind in the exports arena.The exports growth of regional countries has been growing faster than that of kenya.In fact the value of Zambia's exports eclipse those of kenya and the others have narrowed the gap considerably.Kwetu focus ni siasa tu 24/7.


Could it be because Zambia is a mineral-rich country. I know exports in other African countries are picking up but I didn't think Zambia could be one of the top exporters.

^^ Zambia's growth in exports were due to minerals and other resources. Kenya would benefit more from having smaller exports but at the same time having them diversified (manufactured goods, agriculture, natural resources, etc.) than it would having huge exports which basically almost consist of resources.

Kenya risks being left behind in the exports arena.The exports growth of regional countries has been growing faster than that of kenya.In fact the value of Zambia's exports eclipse those of kenya and the others have narrowed the gap considerably.Kwetu focus ni siasa tu 24/7.

Kenya has the most developed manufacturing sector in the EA region, if I'm right, and still making strides as well.

[QUOTE=Amboseli Daima;75874273]


Could it be because Zambia is a mineral-rich country. I know exports in other African countries are picking up but I didn't think Zambia could be one of the top exporters.

http://en.wikipedia.org/wiki/List_of_countries_by_exports

http://www.lusakatimes.com/2011/04/11/zambia-records-7bn-2010-exports/

There you have it.Zambia at #98,kenya #104.They've also been growing their economy faster.(and Ethiopia too)

^^ Zambia's growth in exports were due to minerals and other resources. Kenya would benefit more from having smaller exports but at the same time having them diversified (manufactured goods, agriculture, natural resources, etc.) than it would having huge exports which basically almost consist of resources.


Kenya has the most developed manufacturing sector in the EA region, if I'm right, and still making strides as well.

True,they export mainly minerals but their big positive jumps in NTE's(non traditional exports) and growing trade with kenya's traditional African markets says they're making bigger strides than Kenya is.Kenya has developed a lackadaisical attitude in that area.

FOTON bus in the streets of jinan today morning, EA will be having comfortable,spacious mathree and daladala,how do they call them in Uganda, Rwanda and Burundi?
http://i1213.photobucket.com/albums/cc475/xiaohan1/12042011001.jpg
http://i1213.photobucket.com/albums/cc475/xiaohan1/12042011003.jpg
http://i1213.photobucket.com/albums/cc475/xiaohan1/12042011002.jpg
http://i1213.photobucket.com/albums/cc475/xiaohan1/12042011004.jpg

http://www.businessdailyafrica.com/Corporate+News/Coke+announces+Sh5bn+plan+to+take+on+rivals/-/539550/1142794/-/ns3ek3z/-/index.html

Those are some pretty decent buses.

Please post all news related to Kenyan and foreign manufacturers operating in Kenya here.



Kenyan industries begin to reap the benefits of energy efficiency

Kenyan manufacturers are turning to energy-efficient technologies to save on production costs and increase the competitiveness of their products.
According to an audit by the Kenya Association of Manufacturers their efforts are already bearing fruit with a number of companies reporting significant savings on their expenditure on energy.

In 2010, companies audited by the association’s Centre for Energy Efficiency Conservation saved a cumulative Sh783 million worth of energy.

The centre is an initiative by the manufacturers’ association to encourage companies to use energy efficiently and cut on green house gas emissions.

Kenafric Industries, for instance, saved Sh24 million in 2010 by installing a motor-driven gadget at its footwear division alone.

The gadget is established to be 92 per cent energy-efficient.

The manufacturers association said that energy requirements by the manufacturing sector alone increases by about 10 per cent each year.

“With minimum improvements in operations, industries could save between 15 and 30 per cent of their current energy consumption,” said KAM chief executive Ms Betty Maina.

It is estimated that in 2008, companies recorded a 62.8 per cent increase in savings from both fuel and electricity energy consumption compared to their usage in 2007 during which the audited companies saved Sh831 million.

About two weeks ago, KAM signed a Sh286 million agreement with the French Development Agency to provide technical assistance to renewable energy and energy efficiency investments in Kenya, Uganda and Tanzania.

The Regional Technical Assistance Programme is part of the environmental credit lines extended to local banks in Kenya, Uganda and Tanzania.

The package includes a generic line of credit for each country at soft conditions.

Africa Infrastructure Trust Fund of the European Union provided a grant of Sh220 million while the Frech agency gave Sh66 million towards the development of capacities in Kenya, Uganda and Tanzania.

The programme will involve the transfer of skills to local experts and promoting development of the renewable energy and energy efficiency projects in the region.

“The projects will significantly contribute towards the improvement of the business sustainability and competitiveness through the provision and facilitation of a more secure power supply and a lower energy bill,” said Ms Maina.

The funds will benefit selected hydro, wind, biomass, co-generation, solar as well as in energy-efficiency projects.

Projects in the agribusiness and hospitality sectors and partner banks will also benefit.

In Kenya, the project funds will be available through CFC Stanbic and Cooperative Bank. A total of Sh3.3 billion has been made available to the two banks for onward lending to businesses that wish to invest in renewable energy and energy efficiency projects.

“The transition process toward renewable energy sources is essential so as to mitigate the negative effects of climate change and reduce the cost of power,” noted Ms Maina. Studies have also shown that the more energy-efficient an appliance is, the less it costs to run.

It is on this basis of that the Industrialisation ministry decided to develop standards for electrical appliances and equipment at household, commercial and industrial levels.

This is part of a five-year project financed by the Global Environment Facility through United Nations Development Programme at a cost of Sh160 million.

Appliances targeted include, mortars, air conditioners, fridges, freezers and bulbs.

Industrialisation Permanent Secretary Karanja Kibicho says developing standards for specified and selected electricity equipment and appliances is meant to reduce the cost of production for Kenyan goods and to mitigate the green house gas emissions.

“The environment has been messed up by global warming, which can be connected with the industrial activity, through the use of energy,” he said.

BusinessDailyAfrica (http://www.nation.co.ke/business/news/-/1006/1158066/-/item/0/-/panwtpz/-/index.html)

More detailed news from coca-cola...

Coca Cola to invest Sh5 billion in Kenya to grow its product range

http://www.nation.co.ke/image/view/-/1158528/highRes/259538/-/maxw/600/-/dsf744/-/PIX.jpg
File | NATION Coca Cola president for East, Central and West Africa Nathan Kalumbu at a past event. The soft drinks maker says it will invest Sh5 billion in Kenya over the next three years to diversify product range and increase capacity.


Soft drinks maker Coca Cola will invest about Sh5 billion in Kenya over the next three years to expand its production capacity and diversify into other product ranges.

The firm’s East Africa general manager Mr Peter Njonjo said part of this investment would go into improving the beverage services plant in Nairobi and the Kisumu bottling plant.

“The juice market has a huge potential. We have contracted about 37,000 farmers to grow passion and mangoes for the factory,” he said. Currently, the company imports syrup to make juices like Minute Maid from India and Brazil.

Contracting local farmers, Mr Njonjo said, is one way of providing a ready and steady market as well as a source of raw materials.

Coca Cola president for East, Central and West Africa Nathan Kalumbu said the continent’s economic outlook is positive.

“High level of urbanisation and education will create economic opportunities to sell our beverages,” he said.

Mr Kalumbu, however, said that though challenges in Africa were expected, players should be confident of better things to come. He downplayed the effect on their market share with the re-entry of rival Pepsi.

“Competition is healthy for the industry and a good sign for the country,” said Mr Kalumbu.

Demographic trends

During a media briefing at their head office in Nairobi’s Upper Hill, Mr Kalumbu said demographic trends show that over 60 per cent of the population would comprise the youth aged below 25 presenting huge growth opportunities.

A recent study by African Development Bank indicated that half of Kenyans are categorised as middle class.

The decision by the giant beverages maker comes in the wake of an announcement by Pepsi Cola that it will be making a foray into the Kenyan market.

Last month, SBC Kenya Ltd, which holds the local franchise for Pepsi said it would invest Sh2.4 billion in a bottling facility as its first phase in Nairobi to be completed next year.

Daily Nation (http://www.nation.co.ke/business/news/-/1006/1158526/-/522mdcz/-/index.html)

^^ "A recent study by African Development Bank indicated that half of Kenyans are categorised as middle class"
:uh:

I don't think that's the case in reality.

Because the study included those who spend $4 a day in the middle classs bracket.

^^ "A recent study by African Development Bank indicated that half of Kenyans are categorised as middle class"
:uh:

I don't think that's the case in reality.

it all depends on how they define middle class. i can say if you make $1 per day then in my research you will be considered to be in the middle class.

second, middle class varies from country to country or from region to region(i am not entirely sure of that)

the devil is in the details. i wanna know how they(AfDB) defined middle class

[QUOTE=ernestombayo7;75854429]I foresee a point in Kenya's future where industrial imports will drastically reduce due to the presence of big time manufacturers in the country.Kenya should brace itself as a big time regional exporter in the coming years.[/QUOTE= Kenya

Kenya risks being left behind in the exports arena.The exports growth of regional countries has been growing faster than that of kenya.In fact the value of Zambia's exports eclipse those of kenya and the others have narrowed the gap considerably.Kwetu focus ni siasa tu 24/7.

comparing zambia exports to kenya's exports is not a good comparison.

zambia has a huge mining sector, kenya hardly has any.

a fair and good comparison would be kenya's exports and ethiopia's exports. these two countries have economies that are almost the same size( i think kenya's economy is slightly bigger) and their economies are NON-MINERAL based economies. to me it this comparison makes more sense than zambia - kenya comparison

TheEastAfrican (http://www.theeastafrican.co.ke/business/Nestl++Foods+to+buy+and+process+milk+from+Kenya+Uganda+locally/-/2560/1162782/-/item/0/-/mtsuht/-/index.html): Nestlé Foods to buy and process milk from Kenya, Uganda locally

Swiss food giant Nestlé is set to start buying powdered milk from Kenya and Uganda.

According to the firm, this will cut import costs for its Kenya factory as it positions Nairobi as its regional hub

Nestlé had delayed its local purchases due to what it termed the poor quality of milk produced in the region and lack of a quality processor of powdered milk.

The shift will offer a fresh income stream for milk farmers in the region.

The company said it is in talks with a local processor in Uganda to begin buying fresh milk and process it on its behalf.

“Our aim is to provide market access to the farmers in the region through the purchase of powdered milk,” said Pierre Trouilhat, chief executive officer for Nestlé Equatorial Africa region.

Nestlé Kenya mainly buys milk from New Zealand despite an ample supply in the region, especially Kenya’s Rift Valley, where communities keep cattle on a large scale.

Kenya is the third-largest milk producer in Africa, behind Sudan and Egypt with the sector providing income to an estimated 625,000 rural households.

According to the Food and Agricultural Organisation, milk production increased from 2.4 million litres in 2000 to 4.1 million litres in 2008.

The New Kenya Co-operative Creameries’ recent commitment to process milk on behalf of Nestlé implies the initial purchase will kick off soon, reviving hopes of the dairy’s capacity to absorb excess milk.

Instant processors

New KCC said it had installed instant processors in its Kiganjo and Eldoret plants to meet the rising demands for quality powdered milk by companies including CocaCola and recently Nestlé.

The Eldoret plant will be used to process Nestlé’s powdered milk with supply of fresh milk from one of Rift Valley’s dairies.

Nestlé has agreed to take Kabiyet dairy for a pilot project and enhance production of milk to its standards, guaranteeing farmers a ready market.

The dairy’s average production capacity per month stands at 1.4 million litres.

Nestlé said the success of this initiative would be spread to other parts of the country.

Heavy rain at the end of 2009 caused a milk glut in 2010 that put pressure on milk processors in the country including New KCC and Brookside Dairy Ltd.

New KCC was receiving an average of 680,000 litres of milk per day, up from 400,000 litres, against a processing capacity of 550,000 litres.

The producer price over the glut period dropped from Ksh24 (US cents 28) per litre to Ksh20 (US cents 23). The price has currently stabilised at Ksh21 (US cents 25).

The Kenya factory is expected to supply products to Uganda, Tanzania, Rwanda, Burundi, Eastern DRC, Malawi and Zambia.

Nestlé earlier this year announced it would invest $32.4 million in expanding its Nairobi-based factory and setting up a new production line to support its newly launched food service division, Nestlé Professional.

Quality concern

The quality of fresh milk from Kenya and Uganda remains a concern but to prepare for a final quality product, Nestlé is supporting Kabiyet farmers with cow selection, quality feed, breeding practices, disease prevention, milking, housekeeping, storage, processes and transportation.

Through this model, dairy farmers will also gain skills in reduction of bacterial count in milk, and hift from plastic bottles to metal cans.

Nestlé has also deployed its experts at the dairy for one year to train the 4,000 farmers ahead of projected rains that are expected to increase milk production.

“We are in discussions with the government for a major investment,” New KCC managing director Kipkirui Arap Lang’at said.

New KCC daily capacity is currently 300,000 litres according to Mr Lang’at.

However, the volume of processed milk this year is anticipated to rise against the backdrop of new demand and capacity indicating that the government might be in a position to absorb larger volumes.

In 2010, milk sales increased by 26 per cent due to expanded production and processing capacities.

According to the Kenyan National Bureau of Statistics, 511 million litres of milk were processed in 2010 compared with 407 million litres in 2009.

As Nestlé strengthens its presence, other food and beverage companies like Colgate Palmolive and Unilever have closed down their factories in Kenya and relocated most of their manufacturing plants to other countries, citing the high costs of doing business.

Other consumer goods manufacturers who have left are Procter & Gamble, Johnson & Johnson and Reckitt & Benckiser.:ohno:

Nestlé however said the level of competition had not changed even with the exit as the companies continued exporting their products to Kenya.

“We are here to stay and we are expanding the company using local raw materials to create identity with the region,” explained Mr Trouilhat.

.............after days of being banned, THE GHOST is finally freed.

nice writings guys, keep posting!!


FOREVER-IN-LOVE

--------------------------------------------------------------------
"If real development is to take place, the people have to be involved."


Julius Kambarage Nyerere, from his book Uhuru na Maendeleo (Freedom and Development), 1973.

You were banned?

You were banned?

Yes! three days!

Well, whats done is done.

Well, whats done is done.



after the end of our arguments!!!

Chinese firm smells opportunity to build steel plant in Kenya

Daily Nation,
May 21 2011.

By MARK AGUTU.

The discovery of rich iron ore deposits in parts of the country has increased prospects of Kenya setting up its first steel manufacturing plant.

Intensive prospecting over the past three years has yielded promising data on availability of iron ore deposits, with Kishushe Location in Taita Taveta County topping the list of areas most endowed with the natural resource. Other zones are in western Kenya.

Due to the positive find, a Chinese steel manufacturer has approached Kenyan firm Wanjala Mining Company with a proposal for partnership in the setting up of a local steel manufacturing plant.

Wanjala Mining, which set up a Sh600 million mining site at Kishushe two years ago, says it is mulling over the proposal even as it intensifies prospecting to meet the high threshold set by the Chinese firm.

“All they want is a guarantee that we have iron ore deposits to the tune of 20 million tonnes. This is the quantity that would make such a venture, including the construction of a plant locally, economically viable,” said Mr RK Sanghani, the head contractor at Wanjala Mining, during an interview.

A delegation from the Chinese company General Nice Development visited Kishushe between May 5 and 10 and after deliberations agreed to finance a feasibility study for the construction of the steel complex.

Mr Sanghani is to immediately commence consultations with various government departments to get the necessary support and approval for the proposed iron and steel project.

The Chinese firm is a major player in the industry in its home country where it has 37 smelting plants.

China is currently the world’s largest consumer of steel products. Its steel manufacturing plants consume about 500 million tonnes of iron ore annually against a local supply of 100 million tonnes. The country relies on imports to meet the shortfall.

For the over two years it has been operation, Wanjala Mining harvests between 10,000-12,000 tonnes of iron ore at Kishushe which it exports to China. The firm has, however, set itself a target of 30,000 tonnes.

The revelations are set to fuel mounting interest in the mining industry, which has largely been left in the hands of cartels and a few individuals.

Far-reaching amendments

The government has lately demonstrated its willingness to change this state of affairs by proposing far-reaching amendments to the mining laws to ensure broader participation by, among others, the state and communities in the designated areas.

According to Mr Sanghani, geophysical surveys have revealed rich deposits of iron ore in the Kishushe area but the belt could be more expansive than previously thought.

The firm has been given a 21-year lease by the Taita Taveta County Council to carry out prospecting in the area, which is trust land. An application for a mining lease has been forwarded to the government.

A visit to the site reveals frenzied activity amid the deafening roar of heavy machines hacking into solid rock, tearing it apart and collecting pieces for sorting and grinding in other complicated machinery nearby.

The ground reverberates with the motion and noise of the heavy machines as red dust billows from the intensive digging work going on.

With the help of other machines fitted with magnets, the crushed stones and pebbles are sorted out and heaped together in order of their iron ore content.

“In the absence of a smelting plant, this is the furthest we can go. This is the material we export for smelting and manufacturing into steel products,” Mr Sanghani says pointing at the pieces of hard rock, laden with iron ore.

Drilling machine

Besides the teams busy with harvesting the rock from underground and grinding and sorting them, another team led by a geologist is busy extracting rock samples from 40 metres underground using a special core drilling machine.

Drilling 40 metres deep at a 50 degrees angle, the machines bring out rock samples which are then analysed for the presence of iron ore.

Mining activity in the Kishushe locality has brought its share of benefits to area residents of Kishushe. The area has become more accessible with the upgrade of a 50km stretch of road from the main Mombasa-Nairobi highway to the site.

The company, which employs over 100 locals at the site, has also installed culverts on the road, making it accessible to pedestrians and matatus plying the route.

As part of its corporate social responsibility, the company also deposits Sh70 from every tonne of iron ore it exports into the Kishushe Development Trust Fund to support community projects.

With prospects of more iron ore deposits, residents of Kishushe and Taita Taveta County in general can only hope for more income from the venture.

And according to district geologist Edward Omitto, there are heavy deposits of other minerals like rubies, green garnet, sapphire and tourmaline in the area.

^^ I think it would have been better if the government invests in some of these natural resources by building the factories themselves instead of letting almost everything to be own by outsiders. An alternative could also be owning a majority number of shares of these firms when outsiders agree to operate them.

An alternative could also be owning a majority number of shares of these firms when outsiders agree to operate them.

kenya(thru the govt) and kenyans(private investors) own alot of shares on most of these big multi-national companies you see in kenya but keep it ssshhhhhh......... do not tell that to other people on the oasis. they like to believe that kenyans do not own anything in those companies.

think it would have been better if the government invests in some of these natural resources by building the factories themselves

that would be a great thing to do but u know money is everything in this topic.

the encouraging thing is that the government has already started doing that through parastals.

the GDC(geothermal development company which is a GoK parastatal) bought 2 drilling machines and as we speak they are drilling their own geothermal wells. that is a fully kenyan owned kenyan run geothermal company that is now doing what for long periods we have let foreigners do for us.

also NOCK(the annoying oil parastatal) has plans to join the search for oil in kenya.

these are steps in the right direction but more needs to be done

kenya(thru the govt) and kenyans(private investors) own alot of shares on most of these big multi-national companies you see in kenya but keep it ssshhhhhh......... do not tell that to other people on the oasis. they like to believe that kenyans do not own anything in those companies.
Hao watu ni mafala saa zingine.:lol:

[/B]
Hao watu ni mafala saa zingine.:lol:

:lol::lol::lol::lol::lol:

i know but i am not surprised.

I sure won't do that again! Yes, owning a majority share would be nice (as opposed to owning no shares) But I think they should go for something between 25-35% and make it so that Kenyan citizens/ companies own the remaining 16-26% so they together form a majority.

Kenya has licensed investors from New Zealand to set up an avocado processing plant in Murang’a, opening new markets to farmers and employment opportunities to hundreds of jobless youths.

Trade minister Chirau Ali Mwakwere said he had gazetted about 2.05 hectares of land in Maragwa as a new private export processing zone (EPZ) to be used by the investors to set up the factory.

“This business is still at its formative stage, having just met the first legal requirement of being officially gazetted,” the Export Processing Zone Authority told the Business Daily through spokesperson Jonathan Chifalu.

“The investors are not ready to go public about their identity or business structure, but their choice of Murang’a was influenced by the proximity to source of raw materials,” said Mr Chifalu.

The processing plant will open a new market for avocado farmers who are currently locked out of key export markets in US, Europe and South Africa by stringent quality standards.

Estimate puts the number of farmers and youths who are likely to derive incomes directly from the new Murang’a plant at 1,000, with EPZ officials saying this number is likely to grow as export trade picks up.

It will also bolster the country’s long running campaign to diversify exports by shifting from raw materials to value added products.

The US which opened its market for duty-and-quota free import of a range of goods, including fresh produce, under African Growth and Opportunity Act (Agoa) 11 years ago is yet to clear Kenya’s raw avocados to sell in its territory.

Fruit flies

South Africa was, up to five years ago, the largest export destination for Kenya’s raw avocado until it banned mangoes and avocados from the region two years ago, citing prevalence of fruit flies.

The ban has sparked debate with Stephen Mbithi , CEO of the Fresh Produce Exporters Association of Kenya saying, “fruit flies are common in all tropical countries and should not be introduced as a quality measure to lock out goods from getting into an African market.” Avocado is one of the horticultural crops that fetches Kenya up to Sh2.2 billion annually, according to government statistics.

On industrial scale, it has been important revenue earner for listed agricultural firm, Kakuzi Limited whose exports of Hass avocado variety accounts for up to 75 per cent of Kenya’s total avocado exports to Europe. The entry of the foreign investors comes just days after the EPZA’s newly appointed CEO Richard Mutule announced that many new private EPZs are eyeing Kenya. The new factories will use locally available raw materials with EPZA encouraging larger foreign firms to partner with small and medium enterprises.

The Maragwa plant is expected to start building its infrastructure and factory immediately, becoming the 43rd export processing zone for the country, in a race that began with only two public zones in Athi River and Mombasa.

It is being set up just months after another firm— Saw Africa EPZ Ltd started operations in Thika last year to process macadamia nuts for exports.

The firm’s CEO, Patrick Wainaina, said about 800 local women now derive their incomes directly from the factory which intends to expand its operations once market conditions improve.

http://www.businessdailyafrica.com/Corporate+News/-/539550/1168774/-/rojms0/-/index.html

^^
And this comes shortly after they started another fruit processing factory along the Nairobi-Nyeri highway in the same area. Nice.

The discovery of rich iron ore deposits in parts of the country has increased prospects of Kenya setting up its first steel manufacturing plant.

Intensive prospecting over the past three years has yielded promising data on availability of iron ore deposits, with Kishushe Location in Taita Taveta County topping the list of areas most endowed with the natural resource. Other zones are in western Kenya.

Due to the positive find, a Chinese steel manufacturer has approached Kenyan firm Wanjala Mining Company with a proposal for partnership in the setting up of a local steel manufacturing plant.

Mining site

Wanjala Mining, which set up a Sh600 million mining site at Kishushe two years ago, says it is mulling over the proposal even as it intensifies prospecting to meet the high threshold set by the Chinese firm.

“All they want is a guarantee that we have iron ore deposits to the tune of 20 million tonnes. This is the quantity that would make such a venture, including the construction of a plant locally, economically viable,” said Mr RK Sanghani, the head contractor at Wanjala Mining, during an interview.

A delegation from the Chinese company General Nice Development visited Kishushe between May 5 and 10 and after deliberations agreed to finance a feasibility study for the construction of the steel complex.

Mr Sanghani is to immediately commence consultations with various government departments to get the necessary support and approval for the proposed iron and steel project.

The Chinese firm is a major player in the industry in its home country where it has 37 smelting plants.

China is currently the world’s largest consumer of steel products. Its steel manufacturing plants consume about 500 million tonnes of iron ore annually against a local supply of 100 million tonnes. The country relies on imports to meet the shortfall.

For the over two years it has been operation, Wanjala Mining harvests between 10,000-12,000 tonnes of iron ore at Kishushe which it exports to China. The firm has, however, set itself a target of 30,000 tonnes.

The revelations are set to fuel mounting interest in the mining industry, which has largely been left in the hands of cartels and a few individuals.

Far-reaching amendments

The government has lately demonstrated its willingness to change this state of affairs by proposing far-reaching amendments to the mining laws to ensure broader participation by, among others, the state and communities in the designated areas.

According to Mr Sanghani, geophysical surveys have revealed rich deposits of iron ore in the Kishushe area but the belt could be more expansive than previously thought.

The firm has been given a 21-year lease by the Taita Taveta County Council to carry out prospecting in the area, which is trust land. An application for a mining lease has been forwarded to the government.

A visit to the site reveals frenzied activity amid the deafening roar of heavy machines hacking into solid rock, tearing it apart and collecting pieces for sorting and grinding in other complicated machinery nearby.

The ground reverberates with the motion and noise of the heavy machines as red dust billows from the intensive digging work going on.

With the help of other machines fitted with magnets, the crushed stones and pebbles are sorted out and heaped together in order of their iron ore content.

“In the absence of a smelting plant, this is the furthest we can go. This is the material we export for smelting and manufacturing into steel products,” Mr Sanghani says pointing at the pieces of hard rock, laden with iron ore.


http://www.standardmedia.co.ke/business/?

^^
And this comes shortly after they started another fruit processing factory along the Nairobi-Nyeri highway in the same area. Nice.

^^sure i heard also they is a pineapple factory coming, plus they is multi billion herbal manufacturing plant will be launched by korean company, lets wait and see

http://www.standardmedia.co.ke/business/InsidePage.php?id=2000035873&cid=14&story=Biggest%20open-air%20market%20coming%20to%20Kasarani

Manufacturers push for lower cost of labour
Investors in the energy, agriculture, and property sectors have praised tax measures announced in the Budget last week but asked the Government to address the high cost of labour and electricity.

While they are saying the proposals were positive indicators for domestic investment, they want policies targeting the two areas to make them more competitive and not be pushed out by imports.

Players in the green energy market say the tax waivers were likely to spur activity, especially among assemblers of solar panels, but said duty-free imports from low-cost markets like China would still be a threat. Domestic investments have overtaken foreign investments (FDI) and the planned taxation was expected to create new jobs and generate more revenues.
continue reading (http://www.businessdailyafrica.com/Corporate+News/-/539550/1179276/-/rp6r39/-/index.html)..
^^hmmm, read it a bit. Costs of production seem to stem from having to pay duties on imported raw materials, electricity costs, etc. Really, I found it quite awkward how solar panels could be imported in Kenya duty free, yet the raw materials needed to make them had a duty meaning Kenyan manufacturers of solar panels were being screwed over by the added costs making foreign-made solar panels more competitive.:nuts:
---
some good news on that turf
Tax cut on solar panels to light up more homesPlayers in the solar energy market last week won a reprieve when the government removed tax on imported raw materials for the manufacture of solar panels.

The move is also expected to reduce the cost of acquiring the units for consumers, eliminating one of the stumbling blocks against adoption of green energy. It will also reduce demand on the national electricity grid which is currently under pressure from increased investments especially by the manufacturing sector.

“To encourage local manufacturing, I propose to grant duty remission on inputs for the production of solar panels,” said Finance minister Uhuru Kenyatta in last week’s Budget statement.

Solar panels are duty free while the imported raw materials for the manufacture of the same attract duty at 25 per cent and 10 per cent which in effect makes local manufacture unattractive. This comes as a boost to solar equipment dealers who are gearing up to boost supplies in anticipation of high demand thanks to policy changes that require property developers to install the systems on housing units.
continue reading... (http://www.businessdailyafrica.com/Corporate+News/-/539550/1179282/-/rp6r41/-/index.html)

National Cement unveils Sh13bn expansion plans
National Cement, a subsidiary of Devki Group, has revealed plans to grow its production by more than six-fold by the end of next year, making it East Africa’s largest producer.

The firm has announced plans to invest an additional Sh13 billion to expand production capacity to 2.5 million metric tonnes per year, from the current 400,000 MT, essentially making it the biggest player in the region.

The investment is likely to heighten competition in the sector that has already seen older players cede more than 10 per cent market share to new entrants since January last year.
continued... (http://www.businessdailyafrica.com/Corporate+News/Devki+Group+launches+cement+plant+in+Mavoko/-/539550/1181468/-/qipwctz/-/index.html)
^^:cheers: good news for kenya, healthy competition and cheaper cement.

http://www.nation.co.ke/business/news/Leather+firm+to+be+set+up+in+Bungoma/-/1006/1183802/-/jvb4m8/-/

Leather firm to be set up in Bungoma

A new mini-leather tannery is being constructed in Bungoma County, to revive the ailing leather sector and strengthen the agro-based livestock sector.

Once operational, the tannery will serve farmers from Western province and part of North Rift, who are selling off their animals at throwaway prices.

Livestock permanent secretary, Kenneth Lusaka, who presided over the ground breaking ceremony of the new tannery, said the leather sector has continued to contribute to the agricultural and the national GDP by about 4 per cent and 1.5 per cent respectively.

He added that earnings from the industry have risen from Sh3.15 billion in 2005 to Sh4.02 billion in 2008.

“The figures illustrate that the sector is poised for growth, which is why we want more farmers to join in,” said Mr Lusaka.

He pointed out that by constructing tanneries, the government aims at improving the living standards of rural communities by helping them take part in leather production ventures, adding that Sh100 million had been allocated to construct three medium-sized tanneries in rural areas.

The PS also pointed out that value addition holds the key to unlocking the economic potential of the multi-billion dollar leather industry.

“Value addition in the leather sector can double the contribution to Kenya’s Gross Domestic Product and create employment opportunities,” he said.

Mr Lusaka said his ministry will train two youth from each tannery at the Animal Heath training institute, to equip them with skills for manning the tanneries.

He added that the youth will then train the work force appointed to run the tanneries in a move aimed at creating employment and wealth in rural areas.

How is progress with the Sanghi Cement Factory in West Pokot, who has that information. I guess because it is not easily accessible we rarely hear of its progress but it would be great to hear any news about it, if anyone has it.

http://www.businessdailyafrica.com/Corporate+News/Toyota+to+build+truck+assembly+plant+in+Kenya/-/539550/1194520/-/u68muez/-/index.html

Toyota to build truck assembly plant in Kenya

Toyota Corporation plans to acquire a 50 per cent stake in a local truck and bus assembly firm, as it seeks to position itself as the top seller of new vehicles in the country by establishing a presence in the heavy motor vehicle segment.

The firm says it will acquire half of Associated Vehicle Assemblers (AVA) to assemble Hino trucks and buses locally.
It will invest Sh3.1 billion ($35 million) to upgrade the assembly plant with its target being the regional market.

“We plan to buy 50 per cent shares, upgrade and expand the plant. We are finalising the talks today with the firm,” Denis Awori, the chairman of Toyota Kenya, told the Business Daily on Monday.

The auto dealer has been heavy in the saloon market, a move that saw General Motors East Africa (GMEA)—which is dominant in the bus and commercial truck market— overtake it as the top seller last year.

But Toyota has since overtaken General Motors based on sales for the five months to May with a 25.3 per cent stake compared to its rival’s 21.2 per cent and the deal to buy the AVA stake will intensify the battle for marketshare between the two firms. Toyota specialises in selling saloon cars and this exposed the company to the negative effects of the global economic recession and the 2008 post-election violence that saw a major decline in new car orders from individuals and corporate Kenya in 2009 and part of last year.

It lost its top position for the first time last year to GMEA, which was riding on strong demand for buses in the public transport sector where 14-seater vans are being phased out in favour of buses and higher demand for trucks.

The new saloon car market has also faced stiff competition from second hand dealers and parallel importation –-legal importation of similar but cheaper cars outside appointed dealer channels.

In the Kenyan market, the sale of trucks and buses has been pushed by rapid economic growth, which has driven up demand for cargo and public and transport.

Kenya’s economy—which grew 5.6 per cent in 2010 after suppressed growths of 1.5 per cent and 2.6 per cent in 2008 and 2009 respectively—has benefited from increased activities in the construction, manufacturing, and agricultural sectors. The vibrant growth in the three sectors has benefited truck dealers.

The government policy to ban the issuance of new licences for 14-seater PSVs effective January 1 this year is also expected to boost demand for buses.

It is this shift in market structure that is pushing Toyota to seek a piece of the heavy commercial market.

An acquisition will provide an easy solution for Toyota because it will remove the headache of hiring local staff and fighting for market share against rivals like GMEA and CMC Motors.

Hino Trucks has a 35-year experience in the heavy commercial vehicle market and has a presence countries such as the USA, in Australia, Japan, New Zealand or Korea.

Over 2,000 dairy farmers are to benefit from the construction of three milk cooling plants in Bungoma County. The plants will have a capacity to handle 5,000 litres of milk.



Livestock permanent secretary Kenneth Lusaka said the coolers will be installed at Bukembe, Sang’alo and Kamukuywa markets. They will help boost milk production and reduce spoilage.

The PS said the few available coolers had been unable to cope with excess production.

The current rains, Mr Lusaka said, had led to a 60 per cent increase in milk production in the country. He urged farmers to devise better means of feeding animals in dry seasons to maintain supply.

This can be done by storing hay, silage and water harvested during rains. The PS urged framers to venture into value-addition to increase their earnings.

“Instead of just selling milk, you can produce yoghurt which has better market,” he said.

Mr Lusaka, who spoke at Sosio Secondary School during a funds drive, urged farmers to venture into diary farming to increase their incomes.

Mr Lusaka challenged the political class in the county to concentrate on economic empowerment of people.

“We need development conscious leaders who can revive our ailing industries to spur economic growth,” he said.


http://www.nation.co.ke/business/news/Three+milk+cooling+plants+to+be+set+up+in+Bungoma/-/1006/1194424/-/h43nex/-/index.html

Sany Kenya, the subsidiary of Chinese construction machinery firm Sany Group, plans to set up a training centre, a workshop and assembly factory in Nairobi.
The centre will boost the company’s capacity for support services for heavy duty machinery as demand for the capital goods grows, due to expansive infrastructure activities underway.
Yesterday, the firm opened a warehouse storing heavy machinery spare parts worth Sh12 billion ($1.5 million), as a precursor to the assembly factory that will be built on a 20-acre parcel of land located on the outskirts of Nairobi.
"East African market has a huge potential," said Yang Zhi Hua the vice president of Sany Overseas.
"Our customers are increasing daily, and we are looking at ways to bring services closer to them."
Sany, which was established just over 20 years ago, is one of the world’s biggest construction materials manufacturer, specialising in concrete, road, excavating, pilling driving machinery. The company also manufactures hoisting, port and mining machinery, in addition to wind energy equipments.
The decision by the company to set an assembly plant comes at a time when the country is witnessing numerous road construction activities.
The company will also benefit from planned initiatives to boost housing supply in the country, which will increase demand for both excavating, and concrete making machinery.
Speaking at the function, Roads minister, Franklin Bett, called on financial institutions to partner with construction companies to enable them purchase heavy-duty machinery, and boost infrastructure development in the country.
http://www.cmbol.com/news/detail/2010/09/2010091111044156.shtm

^^they will be investing about 5.6 billion for the project, they have completed building the showroom, from yesterdays standard newspaper :cheers:

wow that's amazing! really good for industrialization.

Foreign companies triple investment in key industries
Foreign firms have more than tripled their investments in Kenya’s manufacturing sector as they target a larger share of the region’s consumer goods market.

Data from the Kenya Investment Authority shows that foreign investors pumped Sh18.7 billion into the sector in the 12 months to June, more than three times the Sh4.4 billion a year earlier and the highest in the past five years.

The renewed interest in the country’s manufacturing sector could give it a new shine after a six-year decline. The sector’s contribution to the economy has stagnated at 9.8 per cent in the past six years, with the first quarter GDP figures showing it had declined to 3.2 per cent from six per cent the previous year.

Sh14 billion or three-quarters of the investments in manufacturing came in the past four months, with analysts saying they expect the sector to attract even more capital expenditures in the medium term as businesses look to capture a larger share of the region’s growing consumer goods market.
BusinessDailyAfrica (http://www.businessdailyafrica.com/Corporate+News/Foreign+companies+triple+investment+in+key+industries/-/539550/1201236/-/11i2i6w/-/index.html)
..continued in link..

High demand in EA to drive cement makers’ earnings
Limestone deposits and growing demand in East Africa will drive the profitability of cement companies in Kenya, according to a research by investment bank Renaissance Capital.

The deposits in Kenya and Tanzania are expected to lower the costs of production for the firms with Athi River Mining(ARM)—Kenya’s integrated minerals firm—becoming the largest producer in Tanzania over the next two years.

The deposits give cement manufactures in the two countries a cost edge over other manufacturers who have to import clinker, the base ingredient in cement production.

“Kenya and Tanzania produce most of the cement in the region, and will benefit from the strong demand from inland countries,” said the RenCap analysts, projecting demand to rise by two million tonnes by 2015.
BusinessDailyAfrica (http://www.businessdailyafrica.com/High+demand+in+EA+to+drive+cement+makers+earnings/-/539552/1201284/-/2ahirsz/-/index.html)
continued in link...

Makers of building materials profit on real estate boom

Manufacturers of building materials have recorded double-digit sales, thanks to boosted fortunes from increased investments in the property market.

Makers of cement, galvanised iron sheets, steel products and paints have emerged the biggest beneficiaries of the property boom, recording the highest sales in recent years .

Firms such as East African Portland Cement Company (EAPCC), iron sheet maker Mabati Rolling Mills and paint firm Crown Berger have recorded brisk business in the first half of the year, which they expect to hold for the rest of the year, a move that is set to raise their full-year earnings.

“Increased orders from the construction sector helped us grow sales by 20 per cent in the first half of the year,” said Rakesh Rao, the chief executive of Crown Berger.

Data from the Kenya National Bureau of Statistics also shows surging demand for cement and steel products –a signal that the red-hot property market is unlikely to cool off in the short term.

Production of galvanised roofing sheets, for instance, stood at 136,673 tonnes in the six months to June, growing by more than a third from 101,826 tonnes a year earlier.

Cement consumption stood at 1.4 million tonnes in the first five months of the year, compared to 1.1 million tonnes a year earlier, representing a growth of 19.2 per cent.

[..continued]

BusinessDailyAfrica (http://www.businessdailyafrica.com/Corporate+News/Makers+of+building+materials+profit+on+real+estate+boom/-/539550/1204862/-/item/0/-/14vgky7/-/index.html)

BusinessDailyAfrica (http://www.businessdailyafrica.com/Corporate+News/Power+rationing+signals+fresh+rise+in+cost+of+consumer+goods/-/539550/1207750/-/item/0/-/xqgsl/-/index.html)
Power rationing signals fresh rise in cost of consumer goods

Electricity distributor Kenya Power’s just-announced rationing plan has handed the country’s manufacturing sector its biggest shock this year putting thousands of jobs at risk.

The rationing plan that will see Nairobi’s industrial district go without power for six hours a week leaves the manufacturers with the option of using expensive diesel powered generators to keep their operations going or shut the plants down and shed some jobs.

Using diesel-powered generators bears the risk of significantly increasing production costs and instigating a further rise in the cost of consumer goods while closing down the plants offers the unenviable option of cutting down the number of work shifts and leaving thousands of temporary workers jobless.

Kenya Power announced the rationing programme in a press statement Monday saying it was experiencing serious challenges in meeting demand during the evening peak consumption period.

The power distributor blamed the shortage on delayed installation of new thermal power generators with delayed processing of security guarantees for investors in the energy sector, planned maintenance and breakdowns of generators. The distributor is also short of the contracted 26 megawatts from Mumias Sugar Company that is currently closed for maintenance.

“We are going to see some factories operate at below capacity even as costs such as wages remain constant,” said Jaswinder Bedi, the chairman of the Kenya Association of Manufactures (KMA).

Mr Bedi said such costs will add on to a weak shilling, high commodity prices and high transport costs to erode the competitiveness of Kenya’s industrial products both locally and in key regional markets.

The rationing schedule is expected to be particularly costly for big industrial plants such as steel mills and other 24 hour operators. It is mainly targeted at Nairobi, Thika’s industrial districts, western Kenya and Rift Valley-based manufacturers.

The timing of the power shortage is particularly bad because it comes in the middle of a steady surge in the cost of petroleum products that has seen the price of diesel rise by more than 20 per cent since January.

Diesel prices have risen by 21 per cent in the past six months to Sh102 per litre in Nairobi according to data from the Petroleum Institute of East Africa, helping push inflation to 14.49 per cent from 12.9 per cent in May.

Mabati Rolling Mills (MRM), one of Kenya’s top makers of steel and iron products, said high production costs risk slowing down the volume of exports to the region and piling pressure on the country’s current account balance further weakening the shilling.

The shilling Monday ceded little ground to the dollar exchanging at the rate of Sh90.40 having opened at Sh90.10.
MRM said that even though a power shortage was anticipated the notice period was too short.

“Factories need adequate time to prepare for power rationing, you cannot prepare for a changeover to generators in two days,” said Kaushik Shah, the company’s managing director adding that the firm would be forced to suspend some shifts in its operations.

Unlike medium-sized plants that can run on diesel powered generators, heavy machines used by steel mills have to be switched off in the event of a cut off from the main power grid, he said.

The list of manufacturers that will feel the weight of power cut offs includes Devki Steel Mills, Nation Media Group’s Printing Press, Mabati Rolling Mills, East African Breweries’ Malting plant and a host of Small and Medium-sized Enterprises (SMEs).

The majority of SMEs are expected to revert to scaling down of operations in response to the power shortage because of inability to buy expensive generators and bear high recurrent costs.

The horticulture industry, which is Kenya’s third top most earner of forex exchange, is also expected to take a hit from rationing that is set to come when flowers are being chilled for export.

“Our produce is exported in the evening and must be cooled by that time,” said Stephen Mbithi, the chief executive of Fresh Produce and Exporters Association of Kenya (FPEAK).

Mr Mbithi said most members of the association are small scale operators that cannot afford generators and may suffer losses if their consignments are shipped out not well chilled.

Since May, Kenya’s economy has been hit by natural and man-made shocks in the form of drought and water shortage, and a weak Kenya shilling that power rationing is only expected to aggravate.

The Consumer Federation of Kenya (Cofek) expressed concern that power rationing could see the cost of manufactured goods rise further and cause job losses for thousands of low income industrial workers.

“There is the danger of job losses among the low income groups whose employers may not have diesel powered generators,” said Stephen Mutoro, secretary general of Cofek.

Mr Mutoro warned that the rationing is likely to spill over into non designated areas as it is technically impossible to curve out neighborhoods on the same supply lines.

Some analysts expect the robust construction sector to come under severe strain as the cost of inputs such as steel and cement goes up. That will ultimately push up the cost of houses further dampening growth that has been under strain in the past two months.

The hotel industry, which is in the peak tourism season could also suffer increased energy costs in the use of alternative energy sources to power their cookers.

“It is expensive to run kitchen cookers on generators, the number of ovens in some hotels will have to be reduced,” said Ken Macharia, the chief executive Kenya Association of Hotel Keepers and Caterers (KAHKC).

Kenya’s total electricity consumption rose by 12 per cent to 2513Kwh in the first five months of the year compared to 2250Kwh in the last five months of 2010, according to the Kenya National Bureau of Statistics.

Increased demand

Though rationing is expected to affect the Kenya Power stock price in the short term the company’s long-term performance is expected to remain on course. “The rationing is expected to be short term, hence it won’t affect the firm much,” said George Bodo an analyst at Apex Africa Capital.

He said the power rationing having arisen mainly from increased demand and not serious supply constraints will not have a serious effect on the firm’s earnings but jittery investors may review the stock in the short term.

The company’s stock remained flat on Monday at 20.25 per share.

KAM is set to meet the president on Wednesday to discuss the high cost of doing business in Kenya especially energy costs.
^^this is horrible.:ohno:

http://www.biztechafrica.com/section/computing/article/mustek-re-launches-mecer-kenya/902/

Mecer relaunches in Kenya

Kenyan computer assembler Mustek East Africa has re-launched its Mecer brand in a bid to win over the market.

The Mecer product range includes laptops, desktops, servers, slates, UPSes, and TVs.

In a move to turn around brand positioning, Mustek E.A. Ltd has switched to a new platform of product management, an approach that is expected to change the market wind in favor of this key brand.

Addressing the media at the company’s head office, the new managing director, Corne Combrinck said the move will go a long way in establishing credibility of the company’s brands at the channel sales levels.

“Our focus will be one stop service, client satisfaction and preferred service provider in the market,” he said.

“Our repositioning in the market will see us invest over KSh250 million in redefining the process for effective service delivery to our customers,” Combrinck added.

Mustek’s business model

Combrinck says Mustek’s business model is structured to sell via channel partners.

However, end user awareness will be key to the success of the relaunched brand.

“The resellers will have a choice of running with different brand names which are proposed by sales representatives depending on end users understanding of the products,” he says.

Albert Kigada, regional sales and marketing manager, said the relaunch of the brand would enhance competition in a more effective way by offering real alliances to partners. “The benefits we shall be offering will include many intangibles such as confidence, reliability and friendly customer service,” he said.

Kigada said the company iplanned to expand to Uganda, Tanzania, Ethiopia, and Southern Sudan. “We are going to focus more on Mecer products and services, as they have a huge growth potential in these countries,” Kigada added.

Tempting offers

At the same time, Mustek will be supporting three main lines, mainly the Mecer business express slate with a stylish Xpress Business tablet, Mecer’s home PCs will be initially positioned to penetrate and capture the market with an attractive price tag.

There is also the Business Special, an intermediate system that will see the new Intel microchip architecture platforms for Nehalem and Sandy bridge with the three variance (core i3, i5 and i7) dispensed to the market at very affordable rates. This will fill the gap in the positioning which will be used most importantly by high-end office users and small business main workstations because of its renowned performance, specifications and price.

Staying competitive

“These are complex products that require serious knowledge and experience to use. Our competitors sell only the products themselves and unfortunately, we cannot afford to sell the products at a higher price just because we offer unique services,” Kigada said.

Mustek will also be working on partnership programs with Intel Corporation to position its products and solutions as the preferred choice in the market. “We intend to maximize the benefits offered by the class mate PC to foster our growth through an aggressive marketing campaign and efficient customer care services,” he said.

Kigada cited competition and grey markets as key challenges facing the industry, but stated that the market shall be informed of available local warranty support services for all products sourced through the right channel.

“This is the only manufacturing plant in east and central Africa that prides itself of the outstanding 48 hrs turnaround time on warranty,” he concluded.

Mustek East Africa Ltd was locally incorporated in Kenya in 2003 in response to demand within the region for high quality and affordable branded personal computers. Mustek East Africa is a 100%-owned division of Mustek Limited; a Public Company founded in 1987 in South Africa and is listed on both the Johannesburg and Taiwan Stock Exchanges

i want to see computers assembled in Kenya not importing a fully finished comp

That won't happen till power cuts are finally put to an end. But yeah it would be neat. VMK has to manufacture its tablets in China because obviously it can't do so in DRC. Hopefully someday Kenya has the infastructure needed so companies like VMK can manufacture there instead of in China.

http://www.businessdailyafrica.com/Opinion+++Analysis/Coal+deposits+in+Kitui+will+trigger+industry+if+well+run/-/539548/1208096/-/x9aspvz/-/index.html

I would like to see mobile phones made in Kenya.I am tired of stores always running out of stock of the phones i like.

Investor pledges to revive Sh14bn cement project
source: BusinessDailyAfrica (http://www.businessdailyafrica.com/Corporate+News/Investor+pledges+to+revive+Sh14bn+cement+project/-/539550/1216230/-/hwwfda/-/index.html)

Investors behind the Sh14 billion cement factory in Pokot have pledged to go ahead with construction work, which has failed to take off 14 months after the ground-breaking ceremony.

The project was expected to kick off soon after the June 2010 launch ceremony in Ortum, Pokot, but its directors blamed the delay on various studies required before the investment.

Sanghi Cement, the world’s largest single-stream producer of cement, won a tough and acrimonious battle with India’s Mehta Group and promised to shortly commence the construction. The first phase, which involved putting up a grinding plant, was initially set to be complete by next year.

“The Chinese contractors will be on the site soon,” said project director Rajeshkumar Rawal. “A general manager is already on the ground.”

He swiftly rebuffed industry talk that Sanghi had approached a local cement industry player insisting that local investors still held 26 per cent of the stake with the Indian group taking the balance.


The location of the project deep in the remote area had prompted its initiators to wring a promise from the government of an extension of the railway line into the area while its investors intended to put cash in a 65-megawatt captive power generation plant.

Mr Rawal, a shareholder in the project, was in the thick of the battle to secure rights and licences for the project but yesterday he could not give a specific time frame promising more details in two weeks when Sanghi chiefs visit Kenya.

On Monday, the County Council of Pokot chairman David Moiben admitted that the project is yet to take off but could not tell why. He, however, said he had information that officials from Sanghi would visit the country and could be preparing to implement it. It was set to be the single-largest investment in the Pokot where up to 30 minerals remain untapped with residents of the harsh terrain being some of the poorest in Kenya.

Some industry players have doubted the viability of setting up a factory in the remote area with poor infrastructure despite its proximity to the South Sudan market whose potential is immense.

National Cement CEO Narendra Raval, the proprietor of the Devki Steel Mills, which runs two plants in Athi River and Ruiru, says the location is too far from the consumers. However, he could not comment on reports that the quality and quantity of relevant mineral deposits was wanting.

In particular, limestone deposits are said to be rich in magnesium, a quality most cement makers tend to avoid. Tororo Cement, owners of Mombasa Cement in Kenya, for years mined the limestone and hauled it off to Uganda for processing cement. However, they declined to invest in a cement plant as demanded by the locals and were forced to close down the Kavee mines. “We did not study the field because we were not interested,” said Mr Raval. “Our plan is to build the single-largest cement plant in Africa with a capacity of 3 million tonnes.”

National Cement is currently doubling its Lukenya-based plant’s capacity to 500,000 tonnes annually.

Other cement makers, Bamburi, Athi River Mining, East African Portland and Mombasa Cement have never expressed interest in Pokot where some of them privately claim earlier studies done during the Moi regime found the mineral deposits to be of poor quality.

Instead, the first three have engaged in a vicious battle for Kitui limestone deposits reported to be of very high quality. Bamburi and Athi River have taken the battle to the High Court which has prevented investment worth billions of shillings taking place as local political leaders take sides with the antagonists.

I have my doubts. Why not just move the plant to another area of the country so there is at least investment somewhere?

Chery Automobile is to become the second Chinese vehicle maker to build an assembly plant in Kenya, joining truck manufacturer Beiqi Foton Motors in a move to tap East African demand and further strengthening Chinese links with the continent.

“They (Chery) are discussing with the (Chinese) government so that they can get some $50 million to invest in Kenya through an assembly plant,” said Mr Justus Nguu, the director of Stantech Motors, the Kenya franchise holder of Chery.

China has made big inroads in Africa, where it is seeking to secure energy, minerals and food and their quest to set assembly plants in Kenya is set to open a new battle front with Japanese, India’s and local assemblers.

Their entry is set to loosen the stranglehold of Thika-based Kenya Vehicle Manufacturer (KVM), the Association of Vehicle Assemblers (AVA) Limited of Mombasa and General Motors East Africa (GMEA) who have come under the spotlight for possible involvement in anti-competitive market practices linked to sale of overpriced goods.

Toyota Corporation plans to acquire half of AVA to assemble Hino trucks and buses locally and tap the rising demand for heavy commercial vehicles in the region with India’s Tata to unveil such assemblies.

The new assemblers are looking to use Kenya as the launching pad for entry into the regional common market, reaffirming Nairobi’s position as East Africa’s economic hub.

The fragmented economies of the five East African countries had discouraged the auto dealers from setting up assembly plants, but the common market has made it possible for the dealers to capture a region of more than 130 million residents.

So far, the auto dealers ship in built vehicles in what has denied them room to lower prices because of high freight and duty charges.

Duties on locally assembled units are zero per cent against 25 per cent for fully built units.

The truck business is dominated by established players CMC Holdings and the Kenyan unit of General Motors. Chery Automobile, which started selling cars overseas in 2002, and is now China’s biggest auto exporter, aims to set up its plant next year after tasting the market by venturing into Kenya in 2010 through a franchise.




The firm sold a modest 120 cars last year, but aims to produce 1,000 units in 2013 at its plant which will serve Kenya, east Africa’s biggest economy, and other countries in the region. Chery Automobile, China’s largest indigenous car maker, aims to increase auto exports by over 30 percent this year to 120,000 vehicles.

The firm targets developing nations in Southeast Asia, Middle East, South America and Africa.

Chery operates 16 assembly plants overseas.

Analysts said proximity to growing markets was the key driver for the firms planning to set up in Kenya.

“(The delay in) lead time for orders ... has made it strategically important for auto manufacturers targeting Africa to want a serious presence in Africa,” said Hanningtone Gaya, an independent regional vehicle analyst based in Nairobi.
China’s truck maker, Shanghai-listed Beiqi Foton Motors , a unit of Beijing Automotive Industry Holdings Co (BAIC), plans to begin construction of its assembly plant in Kenya this year, to help it nudge up sales on the continent.

The firm plans to double sales in Africa to 20,000 units by 2013 from last year by ramping up sales to economies that require heavy commercial vehicles for use in the building of their infrastructure projects, including roads, rails and ports. “When you look at the international markets, we are still young. Africa is a good market for us,” Calvin Guo managing director of the Kenyan subsidiary of Beiqi Foton Motors. “In Africa ... Kenya has a very strategic position ... good socio-economic base for us to open an assembly plant,” said Guo.

:cheers:

2nd one?Nice.

2nd one?Nice.

Now there will be 5 vehicle assembly plants. :)

Now there will be 5 vehicle assembly plants. :)

^^more than that, Toyota have started constructing their assembly complex in Mombasa Road and tata is seriously considering joining the Frey lets just wait :)

Bamburi first half profit up 21.6 per cent
BDA (http://www.businessdailyafrica.com/Bamburi+first+half+profit+up+21+6+per+cent/-/539552/1224660/-/p05e3hz/-/index.html)


Bamburi Cement has reported 21.6 per cent rise in net profit in the first half of the year, driven by the booming construction sector.

The cement manufacturer said yesterday its profit in the six months to June 2011 had grown to Sh2.9 billion, compared to the Sh2.4 billion reported in a similar period last year.

Increased demand for cement saw its sales grow 26 per cent to Sh16.4 billion, an indicator that it would reverse the 23 per cent drop in profit it made last year, when a loss in its market share shrunk its sales to Sh28 billion from Sh29.9 billion.

“Despite the difficult operating environment amplified by surging fuel, transport and power costs; operating profit grew by 20 per cent driven by increased volumes and cost management measures,” the firm said in a statement.

Increase in volumes across both Uganda and Kenya boosted the turnover. Pre-tax profit rose 22 per cent to Sh 4.3 billion due to exchange gains on deposits, which were, however, partially eroded by higher loan financing costs. The company is betting on its new plant in Uganda to increase production and its sales in the region.

Sh250m solar panel factory opens in Naivasha

http://www.businessdailyafrica.com/image/view/-/1228462/medRes/291183/-/maxw/600/-/2jesqf/-/soalr.jpg
Some of the staff members at work at the new factory.
BDA (http://www.businessdailyafrica.com/Corporate+News/Sh250m+solar+panel+factory+opens+in+Naivasha/-/539550/1228460/-/wltb5tz/-/index.html)

A new solar panel manufacturing factory has been put up in Naivasha at an estimated cost of Sh250 million, giving impetus to Kenya’s drive for change towards renewable energy. [Read: Tax cut on solar panels to light up more homes]

Ubbink East Africa Managing Director Haijo Kuper said during the official opening ceremony that the company will be producing 100 solar panels per day. The company, he said, will uphold quality in the industry. “Our prices are at par with our competitors,” said Mr Kuper.

The manufacturer is currently making solar panels of between 13 and 120 watts, targeting rural households. The firm is a joint venture of Ubbink B.V - a wholly owned subsidiary of Centrotec Sustainable AG- and Chloride Exide (Kenya), the local partner.

It is the first to make photovoltaic (PV) solar panels in East and Central Africa. The firm will boost solar panel production in the region.

Mr Kuper said there was high demand for the panels, and the company would increase output in the coming months. “The market is huge,” he said.

The manufacturer also plans to venture outside the East African region. He said the choice to invest in the country was a deliberate one, due to the country’s efficient distribution network for solar products, sound economic policies and good infrastructure.

“This is not a coincidence, the country has got an educated workforce and high labour ethics,” he said.

The Chief Executive of Centrotec Sustainable AG, Mr Gert-Jan Huisman, said almost 98 per cent of the rural population in Africa does not have access to grid electric power supply, and this was holding back economic development.

The most common energy sources are the highly polluting kerosene lamps, and fuel generators.

“As one of the sunniest continents on the planet, Africa gives solar applications like LED-lighting, mobile charging, water pumps, street lighting very short pay-back times thus minimising pollution levels,” Mr Kuper said.

NHC factory starts churning our prefab panels
Capital FM Business (http://www.capitalfm.co.ke/business/?p=13070)

The National Housing Corporation (NHC) has begun construction of houses using prefabricated panels from its Mavoko Factory.

The introduction of prefab houses into the Kenyan market is one of the ways the housing corporation is looking to improve the efficiency of meeting a housing deficit in the country.

NHC Managing Director James Ruitha said the technology reduces the time taken to put up housing by up to 50 percent and diminishes the cost by about 20 percent.

“The benefits of this new technology translate into lower cost of purchase for the consumer,” Ruitha said.

The National Housing Corporation of Kenya is constructing the housing panels to take advantage of Italian technology for mass factory production of modular houses.

The prefabrication factory was put up at a cost of Sh700 million to mass produce industrial panels for house construction.

To demonstrate the cost and time advantages of the technology, the corporation embarked on constructing a sample house using the EPS panels alongside a conventional stone and mortar house.

Both houses are of identical design, built by an equal number of workers and commenced on the same date.

The technology further simplifies construction of houses to mere assembly of the panels.

The construction of the two houses started on September 8 and the completion date is expected to be on September 30. The expected completion date of houses built with conventional stone and mortar is January next year.

The factory is set to be commissioned in December and mass production of the panels is set for January next year.

That is good news. Toyota wanted to start a complete vehicle manufacturing plant in Nairobi. some feasibility studies were done. whatever happened to that project.

the toyota project is still in the works but we have yet to see the project commencing.after the storm in japan,that is when they realised the need to open a plant-it almost crippled its supply due to insufficient parts of which most of all is sourced in japan. also they want to take advantage of the tax incentives given to likes of gm kenya.if you look at the prices of gm and toyota-gm are cheaper and toyota cannot match those prices.since their cars come fully assembled while gm they come in parts-ckds.so in the coming years the competition will be intense-since now the chinese are coming.they have all realised importing is not competitive but assembling it is the word.

http://www.businessdailyafrica.com/Corporate+News/US+firms+step+up+race+for+Kenya+high+end+market/-/539550/1244618/-/9t2kqv/-/index.html

this is one sector going through a nightmare at this moment.every imaginable risk/issue is right at their doorstep.KAM it needs to do extensive and heavy lobbying.

PanPaper ready for reopening
Nation
(http://www.nation.co.ke/business/news/PanPaper+ready+for+reopening+/-/1006/1247384/-/1s02bmz/-/index.html)
The closed Pan Paper mills will be reopened next month.

According to industrialisation Permanent secretary Karanja Kibicho, the government is ready to clear debts owed to short term lenders to pave way for new management to take over.

PanPaper went under as a result of unpaid power bills and bank loans, with the short-term lenders, Barclays Bank, KCB, Bank of Baroda and Eco Bank appointing a joint receiver to manage the factory.

According to records tabled in Parliament, the paper mill owes KCB Sh689 million, Barclays Bank Sh331 million, Bank of Baroda Sh200 million, Eco Bank Sh47.5 million and Development Bank of Kenya Sh67 million.

The banks have, on a number of occasions, resisted the move to reopen the mill before their debts are cleared.

The PS pointed out that the delay in the reopening of PanPaper was caused by the former leadership, which was tasked with the revival.

Mr Kibicho called on suppliers to start delivery to the factory in readiness for reopening.

The government has already released Sh1 billion for the factory’s revival, which Treasury says was used to pay electricity bills and salaries for the team that was working there.

Management of the factory said Mill Number Two, which processes pulped paper was vandalised beyond repair.

Production of paper at the mills, which had started in the early part of 2010 has stopped for lack of raw materials especially chemicals.

Cadbury retains Nairobi as hub for East Africa business
BDA (http://www.businessdailyafrica.com/Corporate+News/Cadbury+retains+Nairobi+as+hub+for+East+Africa+business+/-/539550/1252840/-/y6hca2/-/index.html)

Cadbury’s Kenya, recently bought out by US-based Kraft Foods, will retain Nairobi as its hub for manufacture and distribution of food beverages targeted at the lucrative east African market.

Country director, Marion Gathoga, said its factory in Nairobi is currently undergoing a major upgrade that included the establishment of automated production lines of dry power and food drink products as well as an ultra modern distribution centre.

“The investment will position Kenya as a focused manufacturer of food beverages supplying the broader East Africa market,” she said on Friday without revealing the budget for the upgrade.

Prior to the acquisition of Cadburys by Kraft Foods, word had been rife that it would be relocating to other markets that offered friendlier operating environment such as affordable energy.

The fears of possible relocation were further heightened by a decision by Kraft Foods to cull non-profitable Cadbury operations globally as part of a strategy on cost-cutting and stirring efficiency.

Ms Gathoga however said the company would retain Kenyan as its gateway to the region where ongoing integration initiatives have opened bigger markets.“Kenya is a key market in our business unit and has been consistently growing in volume over the last two years,” she said.

As part of operational restructures the company last year dropped the manufacture chocolate in Kenya and instead moved production to South Africa. Consumers of the company’s chocolate products in Kenya now depend on shipments either from South Africa or Egypt.

“We are reviewing our category based strategy to include some of our Kraft products aligned to consumer needs,” the official said. Ms Gathoga said an initial group of 23 workers had been laid off from the factory in Nairobi as part of the organisation reforms.

“We will be introducing new skills in the business through internal training and recruitment to achieve a high performance organisation,” she said.

Cadburys Kenya has 300 employees, nearly half of them casuals. The chocolate line had two shifts of 50 casuals each, putting their number at 100.

PanPaper ready for reopening
Nation
(http://www.nation.co.ke/business/news/PanPaper+ready+for+reopening+/-/1006/1247384/-/1s02bmz/-/index.html)
The closed Pan Paper mills will be reopened next month.

According to industrialisation Permanent secretary Karanja Kibicho, the government is ready to clear debts owed to short term lenders to pave way for new management to take over.

PanPaper went under as a result of unpaid power bills and bank loans, with the short-term lenders, Barclays Bank, KCB, Bank of Baroda and Eco Bank appointing a joint receiver to manage the factory.

According to records tabled in Parliament, the paper mill owes KCB Sh689 million, Barclays Bank Sh331 million, Bank of Baroda Sh200 million, Eco Bank Sh47.5 million and Development Bank of Kenya Sh67 million.

The banks have, on a number of occasions, resisted the move to reopen the mill before their debts are cleared.

The PS pointed out that the delay in the reopening of PanPaper was caused by the former leadership, which was tasked with the revival.

Mr Kibicho called on suppliers to start delivery to the factory in readiness for reopening.

The government has already released Sh1 billion for the factory’s revival, which Treasury says was used to pay electricity bills and salaries for the team that was working there.

Management of the factory said Mill Number Two, which processes pulped paper was vandalised beyond repair.

Production of paper at the mills, which had started in the early part of 2010 has stopped for lack of raw materials especially chemicals.

Huge news for Webuye. That town literally depended on the fortunes of this mill.

Yip, without Pan Paper, Webuye is a ghost town.

Glad is backup again, however this raises issues with the running of the company-will it be run down and then resuscitated again.we need to have competent people running some of these govt.companies.

Fierce competition looms in the light and heavy commercial vehicle industry as a Chinese automaker announces plans to put up a local multibillion-shilling assembling plant.
First Automobile Works (FAW) has received the approval to start building a $20 million (Sh2 billion) motor-vehicle assembling plant at the Coastal city of Mombasa in February next year.
FAW’s increased interest in East Africa comes after China’s biggest automaker established an assembling plant in South Africahttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.standardmedia.co.ke/business/InsidePage.php?id=2000045306&cid=14&story=Chinese%20auto%20giant%20to%20invest%20Sh2b%20in%20assembling%20plant#) at a cost of $100 million (Sh10 billion) to serve the southern Africa.
The proposed Kenyan-based assembling plant is expected to act as a springboard for the automaker as the company eyes the wider East African Community (EAC) market, which has a combined population of 130 million people and an estimated $41 billion gross domestic producthttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.standardmedia.co.ke/business/InsidePage.php?id=2000045306&cid=14&story=Chinese%20auto%20giant%20to%20invest%20Sh2b%20in%20assembling%20plant#).http://www.standardmedia.co.ke/images/saturday/buscap221011_01.jpgOne of First Automobile Works special truck designed for cargo handling. A Chinese firm has received the approval to build a $20 million motor vehicle assembling plant in Mombasa.

EAC’s on-going integration efforts are also being seen as a major ingredient to transform the region into an economic powerhouse.
Consequently, EAC market appears to have suddenly become a centre of attraction to a growing list of multinationals, some of whose boards have resolved to set up regional offices to facilitate their operations. These firms include, among others, Nokia, IBM, HP, Google, General Electric, soft drinks maker, Coca-Cola Company and auto-dealers, Toyota and General Motors.
FAW, which is seeking to tighten its grip on the regional market, sees the assembling plant as a prudent strategy in reducing the price of its trucks and enhancing its competitiveness.
The company is hoping to drastically cut truck prices by 15 per cent and pass on the benefits to its consumers. The new investment is encouraged by the fact that by assembling locally, the firm stands to enjoy duty free as opposed to 25 per cent charged on fully built units.
Japan and India auto giants currently dominate the light and heavy commercial vehicle industries.
Through its local franchise Trans Africa Motors, FAW expects to manufacture 500 units every month for the East African market.
"We are already gazetted as assemblers and plans are in advanced stages of starting an assembly plant," explained Mr Ali Zubedi, the Managing Directorhttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.standardmedia.co.ke/business/InsidePage.php?id=2000045306&cid=14&story=Chinese%20auto%20giant%20to%20invest%20Sh2b%20in%20assembling%20plant#) of Trans Africa Motors.
"With an assembling plant, our prices will be more reasonable."
FAW’s entry is set to loosen the strong hold of Thika-based Kenya Vehicle Manufacturer, the Association of Vehicle Assemblers Ltd of Mombasa, General Motors East Africa and Foton East Africa who are positioning themselves to reap from the booming construction and building, transport and commercial industries.
The Chinese based automaker produces over two million units of light and heavy commercial vehicles every year in collaboration with other auto dealers, notably Voxwagen, Audi, Toyota and Mazda.
http://www.standardmedia.co.ke/business/InsidePage.php?id=2000045306&cid=14&story=Chinese%20auto%20giant%20to%20invest%20Sh2b%20in%20assembling%20plant

Kenya athletics brand has ambitions to take on Nike
CNN
(http://www.cnn.com/2011/10/19/world/africa/kenya-running-brand/index.html?hpt=iaf_mid)
http://www.kourage.org/wp-content/uploads/2011/06/home_6_kourage_logo_on_t-shirt_cut.jpg


Kenya is known for producing some of the world's greatest runners and now a company wants to get them noticed wearing a brand from their country.

A group of young entrepreneurs have launched what they say is the nation's first running brand and they have high hopes of one day transforming Nairobi into the running apparel capital of the world.

"There are a lot of Kenyan athletes and you always see them wearing Nike and Adidas and not something from their own country," said Hussein Kurji, who designs the clothing and heads up the Kenyan operation of Kourage Athletics.

"We do have quite a good track record when it comes to running, so why not match that with an equally big clothing brand," he added.

Kourage says it creates running apparel that's 'designed, manufactured and managed in Kenya by Kenyans.'

The name of the brand forms the backbone of the company's ethos.

"Kourage is all about having the courage to do new things, try new things, be brave and go out and do what you would not normally do," Kurji said.

The brand officially launched in July producing just over 1,000 t-shirts. While initial orders are still low the team plans to eventually make everything from running shorts to hooded sweatshirts once they have more capital.

But they are quick to point out that they're not just selling apparel.

"Our shirts are beautiful. We use the softest fabric available; employ a modern fit and fantastic graphics, but what sets us apart are our ideals," said Chris Markl, the brains behind Kourage.

"By purchasing a Kourage shirt one is investing in Kenya's future. A future that is built upon business and international trade not foreign aid," he continued.

Africa growth vision

Florida-based economics professor and running enthusiast, Markl spent years getting Kourage off the ground. He even rode 1,800 miles on his bike from Canada to Mexico to raise the initial start-up funds.

Markl first became interested in the idea of producing an ethical clothing line when he was researching textiles factories in Honduras as part of his Ph.D.

"I always wondered why 'ethical' clothing lines were so focused on concentrating operations in America or Europe. There are incredible designers and entrepreneurs in impoverished countries," he said.

"To create real economic development, an apparel company needs to create as many economic linkages in a poor country as possible," he continued.

Kenya's 'silent crisis'

The Kourage team pride themselves on being one of the most ethical athletic apparel company in the world, according to Markl.

The clothes are produced by Viva Africa, a Kenyan-owned and operated factory, employing around 200 people, mostly women. The factory makes everything from police uniforms to high-end fashion.

However, the most important thing Markl says is that working conditions are fair and the employees are happy.

But the small team, who all hold down a variety of other day jobs, dream of one day opening up their own factory and headquarters in Nairobi.

While Kourage haven't approached any athletes yet, they hope that in 10 to 20 years Kenyan runners in the Olympics and other major sporting events will be wearing their brand.

They also have plans to approach smaller youth organizations in the country who have a focus on sports.

The group says there aren't many Kenya-based fashion outlets and that most clothing comes from South Africa.

Kourage hopes their industry model could help change the face of business in Kenya by inspiring the younger generation.

"It shows that you don't have to go to India or China to be successful. This could help boost the economy and generate income and jobs," Kurji said.

"We hope the entrepreneurship spirit of Kourage will show other young talent that if you have the courage and you persevere you can achieve what you want to."

I went to their website (www.kourage.org/?page_id=4#ecwid:category=0&inview=product4479285&mode=category&offset=0&sort=normal), they produce only t-shirts as of now until they receive more capital, and the price is $39 bucks for all shirts, shipping and handling is free to US and Kenya and it's shipped by sea from Kenya..

http://images.ecwid.com/images/411430/15148848.jpg http://images.ecwid.com/images/411430/15148851.jpghttp://images.ecwid.com/images/411430/15148855.jpghttp://images.ecwid.com/images/411430/15148845.jpg
http://images.ecwid.com/images/411430/15148862.jpghttp://images.ecwid.com/images/411430/15148858.jpg

Images from their factory...

http://www.kourage.org/wp-content/uploads/2011/06/authentically_kenyan_01_first-pict_cut.jpg
http://www.kourage.org/wp-content/uploads/2011/06/home_5_factory_cut.jpg
http://www.kourage.org/wp-content/uploads/2011/06/authentically_kenyan_IMG_7404_cut.jpg
http://www.kourage.org/wp-content/uploads/2011/06/authentically_kenyan_IMG_7437_cut.jpg
http://www.kourage.org/wp-content/uploads/2011/06/authentically_kenyan_IMG_0767_2_cut.jpg

^^
I believe that if we had not swallowed the IMF/WB recommendations back in the 90's, Kenya's textile industry would rival the likes of Mauritius. Glad we are getting things back on track.

^^
I believe that if we had not swallowed the IMF/WB recommendations back in the 90's, Kenya's textile industry would rival the likes of Mauritius. Glad we are getting things back on track.


+1. This is really good news, come to think of it, it would be awesome watching world reknowed kenyan athletees dorning kenyan made sports apparel.

Soda Ash producer Tata Chemical Magadi Ltd has opened the country’s largest export manufacturing facility and Africa’shttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.standardmedia.co.ke/business/InsidePage.php?id=2000045573&cid=14&story=Tata%20Chemicals%20opens%20Sh10b%20soda%20ash%20plant#) largest soda ash producer.
Speaking in Magadi, Tata Chemical Magadi CEO, Michael Odera, said the Sh10 billion plant would produce premium grade soda ash for the local as well as the export markets.
The plant, which has the capacity to produce 600,000 tonnes of soda ash annually, is the only inland producer of livestock and industrial salt.
"The $100million plant will produce premium grade soda ash for the local and the export markets. The official opening will also mark a 100th year celebration since inception. This plant will further boost our production capacity and meet international demand," Odera said.
The new plant was commissioned in 2007 and will be officially opened next month. Odera explained that the new plant was built to allow the firm tap into international market and become a strong global player.
Soda Ash is used in the manufacture of glass and is important in the production of detergent and industrial chemical.
Over 95 per cent of the product will be exported to South East Asia, Indiahttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.standardmedia.co.ke/business/InsidePage.php?id=2000045573&cid=14&story=Tata%20Chemicals%20opens%20Sh10b%20soda%20ash%20plant#), Africa and Middle East through the port of Mombasa.
http://www.standardmedia.co.ke/business/InsidePage.php?id=2000045573&cid=14&story=Tata%20Chemicals%20opens%20Sh10b%20soda%20ash%20plant

A consortium of Chinese and local investors is setting up an Sh8 billion cement grinding plant expected to open early next year, tapping growing local and regional demand for the product.




The firm now known as Savannah Cement will break into the highly competitive regional market that has seen the entry of two new manufacturers in the past three years, as the existing players have raised their production capacities.

The new plant in Athi River is expected to be complete by December—a year after the planned timelines following the relocation of the initial site from Kitengela town when residents objected to its establishment, to the current premises within the Export processing Zone (EPZ).

Benson Ndeta, the chairman at Savannah Cement and a former chair of the government-controlled East African Portland Cement, says his firm was keen on satisfying supply shortfalls since demand for cement is projected to overtake the installed supply within the next two years.

“A cement plant is a very capital intensive investment that would take as much as three years to complete, which means that the installed capacity will fall below demand in the next two years,” said Mr Ndeta, adding that the growth of the construction industry promises sustained demand.

“Year-on-year growth of cement in the region is projected to exceed 14 per cent which the installed capacity cannot match,” Mr Ndeta said, revealing that 30 per cent of the company’s production would be sold in the countries outside the five East African countries.

Savannah Cement is a joint venture bringing together Savannah Heights—a consortium of local investors, Wan-Ho, a Chinese investment firm and Catic Cement sharing the stakes at 40 per cent, 40 per cent and 20 per cent respectively.

The entry of Mombasa Cement and Simba Cement over the last two years, with a joint installed capacity of 1.4 million metric tonnes has raised competition in the cement market, where Larfage-owned Bamburi and EAPC have maintained dominance while Athi River Mining (ARM) completes the list of top three.

Only ARM among the three major players has gained on market share while sales for both Bamburi and EAPC have remained nearly flat, an indication that they have ceded market shares to the newer entrants.

Bamburi has an installed capacity of 2.3 million tonnes, EAPC has about 1.5 million tonnes while ARM has about 650,000 metric tonnes—though it is keen to double the output in 2013 when its next plant will be complete.

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Analysts at the Standard Investment Bank project Bamburi and EAPC will control just under half of the cement market in view of rising competition by 2015, since the newer entrants are able to price their products more competitively owing to the cheaper technology that they have used.

Market estimates place the energy costs at about 40 per cent of the entire production costs for the older plants—a factor that Savannah will be keen on capitalising to have the ‘lowest production costs’ in the market, according to Mr Ndeta.

Catic had initially planned to go solo on a cement production in the Kitengela plant before the resistance from the community occasioned an about-turn that saw the entry of the local investors, and the subsequent relocation of the plant to EPZ.

Savannah Cement plans to invest an additional Sh15 billion ($150 million) in a clicker plant in the second phase, expected to fall within the next three years and dependent on the market.

Mr Ndeta says the firm will head-hunt a chief executive to head the operations of the new cement maker rather than advertise, because the firm ‘has an idea of whom it wants’.
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Tata Africa will next year build a Sh2 billion motor vehicle assembly plant in Kenya to tap East African demand and challenge Chinese assemblers eyeing the country.




The Indian multinational is expecting to churn up to 5,000 units of pick-ups and light commercial trucks as the twin brands emerge the fastest selling units in the region.

It joins Chinese car makers Chery Automobile and Beiqi Foton Motors in seeking a piece of the locally assembled units in a market that has been dominated by Thika-based Kenya Vehicle Manufacturer (KVM), the Association of Vehicle Assemblers (AVA) Limited of Mombasa and General Motors East Africa (GMEA).
Tata moves will shift the business rivalry between China and India to East Africa as the twin nations have competed vigorously over trade, energy investments, even border tensions.

“We are looking at establishing an assembly plant in either Kenya or Tanzania in the short-term, but Kenya appears to have better infrastructure,” said Naresh Leekha, the executive director of Tata Africa.

“Local assembly will give us a price advantage that we expect will lift our market share in the commercial trucks market from the current fourth position to the third position.”

Tata has emerged as a major supplier of vehicles to the booming construction market, including tippers and concrete mixers.
It sold 800 trucks in the year to March—ranking among the top players in this segment alongside Simba Colt, DT Dobie, and CMC Motors.

Mr Leekha said that Tata could alternatively buy a significant stake in the existing assembly plants such as KVM and AVA if their shareholders are willing to sell.

Toyota Corporation has also expressed interest to acquire half of AVA to assemble Hino trucks and buses locally and tap the rising demand for heavy commercial vehicles in the region. So far, the auto dealers ship in built vehicles in what has denied them room to lower prices because of high freight and duty charges.

Pricing headroom

Duties on locally assembled units are zero per cent against 25 per cent for fully built units, giving assemblers like Tata greater pricing headroom to deploy its low cost business model.






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The new assemblers are looking to use Kenya as the launching pad for entry into the regional common market, reaffirming Nairobi’s position as East Africa’s economic hub.

The expansion of Tata’s operations is set to benefit smaller auto dealers such as Marshalls East Africa, Banbros and Ryce Motors Bamboos who have been distributing the Indian manufacturer’s vehicles for years.

Chinese vehicle manufacturer Foton is building a $15 million (Sh1.5 billion) assembly plant in Nairobi while Chery Automobile has a $50 million (Sh5 billion) plan.

The entry of Tata, Chery and Foton in this segment is set to stiffen competition against Japanese and western brands such as Isuzu, Nissan, and Toyota.

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So many auto companies investing in assembly or manufacturing plants. It would be so neat if Kenya became an auto manufacturing hub in East Africa. Sort of like Thailand in Asia.

Pan Paper Mills recalls over 600 employees
Nation
(http://www.nation.co.ke/business/news/Pan+Paper+Mills+recalls+over+600+employees++/-/1006/1264450/-/15ek5wvz/-/index.html)
More than 600 workers of Pan Paper Mills have been recalled, as the factory opens its initial two phases for paper manufacturing.

More employees could be recalled any time soon, as production increases and remaining sections are reopened, according to the managing director, Dr Wafula Muliaro.

Before the factory closed down, it employed 1,500 workers permanently and 600 casuals.

Dr Muliaro said two of the three main machines are already in operation with 40 tonnes of paper being produced after every 12 hours.

He added that the factory has an installed capacity of 120,000 metric tonnes per of various grades of paper per annum, but that the current capacity is 80,000 metric tonnes.

For the factory to operate at optimum capacity, 560 metric tonnes of pulp wood is required daily, 85 metric tonnes of waste paper, 25,000 litres of furnace oil and other chemicals like starch and soda ash.

Dr Muliaro said the remaining mills are likely to resume operations any time next week.

“Our engineers are working round the clock to make sure that all machines are running,” he said.

Kenya approved to manufacture AIDS drugs – report
AlertNet (http://www.trust.org/alertnet/news/kenya-approved-to-manufacture-aids-drugs-report)

The cost of HIV/AIDS medicine is expected to drop by 30 per cent in Kenya, enabling more people to access life-prolonging drugs, after the World Health Organization (WHO) gave the green light to a local company manufacturing generics, The Star newspaper reported on Wednesday.

Universal Corporation’s antiretroviral (ARV) drug, Lamozido, was included in a list of approved medicines published by the WHO last Friday, the report said.

This recognition, known as prequalification, will enable the company to bid for international tenders to supply drugs to governments and non-governmental organisations, who in turn give them to people living with HIV/AIDS.

The most important of these is the Global Fund to Fight AIDS, Tuberculosis and Malaria, which is the largest multilateral donor to the HIV/AIDS response in developing countries.

Universal Corporation is also seeking to have a children’s version of the drug approved, the report said.

Kenya has a shortage of ARVs, according to Kenya's minister for public health and sanitation, Beth Mugo.

Only two-thirds of the 600,000 Kenyans who need ARVs are taking them, the newspaper said.

Kenya becomes the fourth African country to manufacture ARVs.

Lukenya-based National Cement has announced plans to set up a Sh10 billion clinker plant in Kajiado district.




The factory, which will process limestone, is expected to be commissioned by the end of 2012.

The project financed through a KCB and Standard Chartered syndicated loan is expected boost the newest cement maker’s capacity and cut reliance on imported clinker.

Its management expects that the clinker plant will cut the company’s cement production costs and give it a competitive edge in the market dominated by Bamburi and East African Portland Cement.

National Cement also projects that the plant, by eliminating the need to import limestone — a core input in the manufacture of cement — will lower its input costs while saving the country up to Sh14 billion ($150 million) in foreign exchange.

The company has invited the public to give views on the proposed limestone mining site at Merruishi Location next week, a statutory requirement before actual mining activity is approved by the environmental watchdog, NEMA.

National Cement, owned by the Devki Group, seeks to cut reliance on imported clinker for its newly-commissioned grinding plant which will also raise its cement output to a million metric tonnes per year, up from 400,000 MT.

Narendra Raval, the managing director at National Cement, said that his company had invested in a Sh10 billion clinker plant within the quarry site in Kajiado-— which will feed the cement factory in Athi River besides raising its production capacity.

“We expect that the clinker plant within the Merruishi mines will be in operation by the end of next year but the finished clinker will be used in the cement factory in Athi River,” said Mr Narendra.

The Environment al Impact Assessment report on the proposed mineral exploitation puts the limestone estimates at about 300 million metric tonne and can sustain a large clinker production plant (with a daily production capacity of up to 7000 metric tons) for over 100 years.

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Upon the of the limestone processing plant, National Cement will stop importation of clinker-—a roasted mixture of limestone and other minerals forming a key component in the manufacture of cement.

Players expect that the excess clinker production plant will be sold to other cement makers before National Cement doubles its cement grinding capacity, scheduled in the coming two years, pending growth of its market share.

The commissioning of the clinker plant is expected to raise the stakes in the cement market, where National Cement trading as Simba entered the crowded market on a pricing strategy- and relying on local clinker will give it further legroom to lower its prices.

In its application to NEMA, the company said the community had approved the lease of 1,500 acres of the limestone-rich land, and did not anticipate resistance from the members as had been the case in a prior attempt earlier this year.

So far, the firm has been importing about 35,000 tonnes per month since the cement grinding plant was commissioned early this year at $70 per ton (about Sh6,800), translating into Sh2.8 billion per year.
Clinker is the biggest single commodity cost in the manufacture of cement, accounting for up to 50 per cent of the production expenses, especially in this era of sharp declines in the value of the shilling against the World major currencies— which imports are paid in.




The input cost for clinker has precipitated heightened interest in establishment of clinkering plants by the different players in the local scene.

Limestone mines

East Africa Portland Cement Company (EAPCC) has become the latest cement maker to announce that it was also seeking to acquire limestone mines in Kitui County upon the disposal of 1000-acre parcel of land in Athi River, also in a bid to stop relying on imports.

Lafarge-owned Bamburi Cement has also announced plans to cut clinker importation, but is currently up to 80 per cent reliant from its local plant.

So far, only Athi River Mining has been able to produce enough clinker for its cement plant-a factor that helped it put a lid on its production costs and offer competitive prices on the commodity while ensuring larger-than-average margins.

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Haco delays food business venture over expensive loans
BDA (http://www.businessdailyafrica.com/Corporate+News/Haco+delays+food+business+venture+over+expensive+loans/-/539550/1281056/-/711435z/-/index.html)

High interest rates and jitters over the coming general elections have forced Haco Tiger Brands to put on hold plans to venture into food manufacturing until 2013.

The company planned to start manufacturing of packaged food products such as pasta and rice this year to reduce its reliance on hair care products, which face stiff competition from cheap imports and counterfeits.

Haco was relying on bank financing for the venture, which has been made difficult by rising cost of credit that has increased by at least six percentage points to more than 20 per cent since last month. (READ: CBK raises base lending rates yet again)

“We had planned to start food manufacturing by borrowing from local banks but the high interest rates are discouraging,” said Polycarp Igathe, the managing director of Haco. “We are also waiting to see the outcome of the next general elections. No investor wants to make large capital investments in an uncertain business environment,” he said.

Haco’s Nairobi food plant is aimed at saving the company the 25 per cent duty that is levied on imports of finished goods — giving the firm space to cut its prices and make it competitive in packaged food market dominated by firms like Proctor and Allan, Nestle Kenya, and Premier Foods.

The firm has been importing the products, including breakfast cereals, canned beans and pasta from its parent company, Tiger Brands based in South Africa.

Tiger Brands acquired a 51 per cent stake in Haco Industries in 2008 from Mr Chris Kirubi as a as a springboard into East Africa while the Kenyan firm saw it as an opportunity to boost its capacity and brand portfolio.

Tiger Brands manufactures pharmaceuticals, hospital equipment, food, and personal and home care products.

Haco plans to invest hundreds of millions of shillings in the food manufacturing plant, a move that would put it on a fierce battle with firms such as Proctor and Allan, Nestle Kenya, and Trufoods.

This is a signal that Haco is planning to set off a vicious price war at a time its rivals are planning multi-billion shilling expansion plans to grow and defend their market shares. Kenya’s rising population and a growth in earnings among middle class households are the key drivers behind the increased interest in food manufacturing.

A third automaker planning an assembly plant:cheers:

Toyota plans 2 assembly plants in Mombasa
Capital FM (http://www.capitalfm.co.ke/business/2011/11/toyota-plans-2-assembly-plants-in-mombasa/)

Japanese car maker Toyota has announced plans to set up two production facilities in Mombasa as it seeks to increase its market share in Kenya.

The company is set to put up production lines to manufacture Hilux pickups and Hino trucks locally, a decision the company expects to endear it to local consumers.

Toyota Kenya Managing Director Hylton Bannon said the move is in line with a new strategy to lower operational costs by having to import the cars, as well as reduce dependency from the manufacturing plant in Japan.

“By bringing production facilities to Kenya, we will lower our costs and it will enable us to be a lot more competitive,” Bannon said.

The car manufacturer currently commands 26 percent of the new car sales market and is looking to grow this to 27 percent next year through enhanced marketing.

Kenya’s new vehicle market has shrugged off effects of the weak shilling and rising inflation to record a 7.2 percent growth in units sales, putting the sector on course to surpass its target of selling 12,000 cars this year.


Toyota Kenya will also look into shipping second hand vehicles directly from Japan.

He was speaking during the unveiling $2 million (Sh180.7 million) Toyota showroom in Westlands bringing its total number of outlets to 10. Toyota Kenya is on an aggressive expansion strategy to bring its services closer to customers across the country with branches and dealerships planned for growing economic centres.

Bannon said Toyota plans to open another one in the Gigiri area of the city at the same cost next year, to improve customer service.

Great move, they are following the Chinese who are setting up a plant in Kenya!:cheers:

L'Oreal's East African Adventure

The East African,
18 December 2011,
By Scola Kamau.

It is a warm December evening and more than 30 clients are waiting in line at Hair Art & Barber Salon, along Nairobi's Kimathi Street.

Paula Rosita, a 34-year-old office administrator in a Nairobi company, is one of those in the salon having her hair done. She spends $61 to treat her hair, for pedicure and manicure every month.

"I can't help it because I need to look good all the time. It's a must in my profession," she said.

Rex Kimani, a hair specialist at the salon, serves more than 50 clients a day, with the numbers increasing during the holiday season.

"It is just like a restaurant where people have to go every day and eat. Women need to look good all the time," explained Mr Kimani.

Some of the products Mr Kimani uses include L'Oreal's Dark and Lovely and Interconsumer Products owned Nice and Lovely and Haco's TCB.

Rosita is part of emerging middle class -- that the African Development Bank estimates to be about seven million in Kenya and 15 million in East Africa -- who have spare income to spend on foreign brands for facial make up, hair care and even sunscreen.

These are the consumers that L'Oreal, one of the largest cosmetics company in the world, had in mind when it commissioned its production facilities in Kenya two weeks ago.

L'Oréal has been operating in South Africa since 1963, and its presence in the Africa, Middle East zone now comprises nine subsidiaries, a hair and skin care products plant in Midrand, and a research and innovation testing centre in Johannesburg.

Its products have been widely available in the market, either through distributors or consumers importing for their own consumption, but the decision to open up a factory in Kenya to serve the wider East African market, and in Nigeria for the West African market reflects a realisation among the global cosmetic industry that black beauty in Africa is the next big thing as growth in the developed markets mature. The manufacturing plant in Kenya will act as a regional hub to serve Uganda, Tanzania, Rwanda, Burundi and Ethiopia.

This is a realisation that hit L'Oreal in 2000, when it acquired SoftSheenCarson, a leading manufacturer of products targeting African American women such as the popular Soft n Sheen and Dark and Lovely, but whose entry to the sub-Saharan market had not been a major priority. This opened opportunities for imitator brands such as Unilever's Fair & Lovely and Interconsumer's "Nice & Lovely".

Since the year 2000, Africa's population has expanded by 200 million people to cross the one billion mark this year -- a population that is also very young with a median age of 19.7 years, compared to 32 for Brazil, Russia, India and China.

"Overall, out of 100 Nigerians, 55 are under 20 years-old," wrote Simon Freemantle a research analyst at Standard Bank of South Africa in a note to clients. In East Africa, the population of under 20 year-olds is nearly 80 per cent. It is also estimated that 150 million Africans have entered the middleclass since 1990, and 15 million more will do so by 2015.

As the regional economies grow, consumers, especially black African women, have a great tradition of spending a lot of time taking care of their beauty and braiding imaginative hairstyles.

According to L'Oreal, the three major markets are hair care, particularly straightening and relaxing products (nearly half of women say they use these products once a month) in addition to body care and deodorants.

"In terms of other personal care products, African women favour moisturisers for the body and concealers for their complexion," said Patricia Ithau, CEO, L'Oreal East Africa.

"The Group's broad portfolio of brands puts it in a position to meet all these aspirations. In particular, L'Oréal can draw on a long history of expertise in ethnic hair and African skin thanks to its specialist research centre in Chicago."

As the economics of helping African women look good is starting to work, and global brands like L'Oreal, Proctor and Gamble, Avon, Biersdorf and Estee Lauder are starting to develop a crush on Africa, soon, Africa could translate into a market with a potential customer base across a wide spectrum of product categories in the region of 500 to 700 million people. This is more than double the US population, and near the size of all of Europe.Big firms lead

At the turn of the century, the big global firms almost never cared about spending on research to develop high value products for the black skin. The major firms that played in the African market were the likes of Unilever, which continues to sell popular low-priced products in Kenya.

"Unilever Kenya Ltd continues to lead sales and accounted for a 10 per cent value share in 2010," says a market research report from Euromonitor.

"This company benefits from offering a range of strong brands, including Vaseline Intensive Care, Lady Gay, Fair & Lovely and Dove. Lady Gay benefited from being an affordable, trusted brand in general purpose body care, and as consumers sought to save money by spending less on skin care, benefited from being seen as reliable and of good value."

According to Euromonitor, Unilever Kenya Ltd, Beiersdorf East Africa Ltd and PZ Cussons East Africa Ltd continued to lead the market due to their network in terms of distribution and the brand names of their many products in the Kenyan market. While Unilever leads with low-priced products for the masses, Beiersdorf has been the biggest entrant into the regional market. Today, it spends heavily on advertising to promote its up market brand, Nivea.

L'Oreal is entering a crowded field even in categories where it has competitive products. According to Euromonitor, the hair care is highly fragmented, with no player accounting for a value share of more than 4 per cent market share in 2010. The leading players include Revlon SA (Pty) Ltd with a 12 per cent value share, Sara Lee Household & Body Care Kenya with a 4 per cent value share and SoftSheen-Carson, Haco Industries Kenya Ltd andInterconsumer Products Kenya, each with value shares of three per cent in 2010.

Rising inflation has also led to a shift in consumer patterns.

"A growing number of consumers are opting to style their hair at home, rather than opting for salon treatments," says the report.

"This boosted sales for a number of product areas, with colourants, perms and relaxants and salon hair care all seeing the strongest current value growth in 2010 over the previous year, as a result of this trend. Colourants and perms and relaxants benefited from consumers getting together to style and colour each other's hair in order to save money, rather than visiting salons."

L'Oreal has been distributing its products in Kenya through traders. The company manufactures brands such as SoftSheen-Carson, Dark and Lovely and Blue Ice Deodorant.

These are products largely seen as targeting the middle-to-high income earners because of their pricing and distribution channels.But L'Oreal says its products are still not out of reach for the low-income earners, who can still spend on them when they have cash.

"You find that low income consumers are prepared to treat themselves to high quality products when they have a bit of money," said Ms Ithau.

It is not only L'Oreal taking this bet on quality products at a higher price to grow their revenues and market share in the middle and high income bracket. Other players such as Interconsumer Products, Beiersdorf (BDF) East Africa, Haco Tiger Brands, Unilever Kenya, Beiersdorf and PZ Cussons are doing the same. However, for the middle class with money, experts say colourants, perms and relaxants and salon hair care products are their choice. Kenya's regional company, Interconsumer Products Ltd, built from scratch by Paul Kinuthia, says it has also cast its eyes on the upper class.

"In two years, we shall launch a brand for the upper class only as we repackage the Nice & Lovely brand to improve quality," said John Mwangi, the firm's promotions and events manager.

Interconsumer found its niche targeting the lower and middle-income earners by pricing its products cheaper compared to foreign brands. The firm also introduced smaller packets, which allowed low-income earners to buy lotions for as little as 11 US Cents for 10 grams of facial creams and body lotions.

Beiersdorf (BDF) East Africa, makers of brands such as Nivea, has been aggressively advertising in niche markets. Last year, Beiersdorf, through its Nivea Brand, sponsored one of Kenya's leading rugby teams Harlequins. The sponsorship was worth Ksh3 million ($33,000) in brands and advertising in the local press.

The company targeted the middle and upper income class of males, who traditionally follow the game. The advertising was aimed at increasing the awareness of skin care lotions among men. For Nivea, the intention was to use the sponsorship to create more awareness. BDF earmarked over $5.2 million in 2011 to be used in upgrading its East Africa factory to improve warehousing facilities and reach the growing middle class. This is part of the company's $1.3 billion global marketing budget set aside for Nivea in 2011.

BDF East Africa managing director Mathieu Levasseur said the May launch of Nivea's Hydra IQ lotions has given the company a double-digit growth in six months. Nivea has a leading 17 per cent share in Kenya's body lotion market.

"The growth since the launch is better than expected. It shows around 20 to 25 per cent growth compared with last year," he said.