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High cost of production drives out textile investors from EPZs
18
Jul '08
Unreasonably high cost of production and the consequent impracticality of doing business in Kenya, is forcing a large number of investors and foreign companies to opt out of Export Processing Zones (EPZs) of the country.

In an exclusive interview with Fibre2fashion, Mr Thomas Puthoor, Chairman of Garment Manufacturers Association, Mobassa stated, “In the last couple of years, over 25 factories across Kenya have closed down while many others have shifted to other countries in Africa, leaving around 30,000 people jobless.”

Mr Thomas further added that the African Growth Opportunity Act (AGOA) was a gift given by the US government to Sub Saharan countries to boost their apparel industry and increase job opportunities for thousands of workers. Additionally, it also gave countries the chance to set up their own infrastructure for producing fabrics, accessories and other goods. Eventually, this should have generated more employment and revenue for the countries but unfortunately over the last 10 years instead of recording a growth, the industry was actually dying a slow death every day.

Hike in electricity and fuel prices have been eroding the profits of the companies making it impossible to sustain business operation despite labor advantage. Until the government takes an initiative to improve this situation and provides adequate support for the survival of the remaining factories, the industry is unlikely to recuperate from the damages already caused by increased prices of inputs.

Fibre2fashion News Desk - India


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