Ban clinker imports to grow cement industry

Affordable houses are being built in Ngara, Nairobi County, on July 25, 2019. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • Since the country has enough clinker to meet local demand, the government should impose duty — or even a total ban — on clinker imports.
  • This will protect local industries from competition, create more jobs for Kenyans, and save the country billions of shillings in foreign exchange annually.

The government’s current development blueprint, ‘Big Four Agenda’, aims to, among others, expand manufacturing and increase its contribution to GDP from 9.2 per cent to 15 per cent.

OPPORTUNITIES

The other three goals in the Big Four are: To construct 500,000 affordable housing units; achieve 100 per cent food security and nutrition; and universal health coverage.

While the government has been working to realign its budget priorities to support achievement of the Big Four, its full realisation also heavily relies on private sector support. 

In this regard, the government has also put in great effort to facilitate a conducive environment for private sector growth through significant improvement in the ease of doing business, reforms in the Judiciary and review of labour laws, among others.

An expanded and thriving manufacturing sector is especially important to the agenda set out by President Uhuru Kenyatta, for whom the success of the Big Four forms an integral part of his legacy. 

This is because it will boost the government’s efforts to create more employment opportunities for the millions of skilled, educated jobless youth.

INTERVENTIONS

Kenya needs four million tonnes of clinker annually. With our production of 3.5 million tonnes, at Devki, and another four million tonnes by other companies, Kenya has the capacity to produce 7.5 million tonnes of clinker per year, which is enough for East Africa.

The country imports some two million tonnes of clinker every year, costing it more than Sh10 billion ($100 million) in foreign exchange. It spends Sh25 billion ($250 million) on importing clinker while a further Sh10 billion ($10 million) goes into steel imports of about two million tonnes.

But while the government’s efforts in the past 10 years to address bottlenecks that the manufacturing sector faces are appreciated, more need to be done if the sector is to optimally play its part in the realisation of the Big Four.

There are two vital quick gains for manufacturers in the cement industry that can be realised through strategic government interventions.

CEMENT PRICES

One, since the country has enough clinker to meet local demand, the government should impose duty — or even a total ban — on clinker imports. This will protect local industries from competition, create more jobs for Kenyans, and save the country billions of shillings in foreign exchange annually.

Taming clinker imports will also reduce cement prices and encourage more Kenyans to build affordable houses.

I urge the government to impose duty — even 25 per cent or more — on clinker imports or ban its importation, like the Tanzanian government did, to protect local industries and create more jobs for Kenyans.

Two, the government needs to effectively address the issue of electricity supply, which is another huge impediment to growth of the manufacturing sector.

PROGRESS

While tremendous progress has been made to reduce the cost of electricity, investors are still grappling with challenges such as acquisition of land for way leaves, which stalls construction of factories.

Mr Raval is the chairman of Devki Group of companies.