Analysis of the performance of the garment industry in Nairobi and its contribution to export trade after trade liberalization

Abstract

The garment industry in Kenya is a mature industry in sense the sense that it has developed processes in the manufacture of garments and there is a fair competition. The garment industry has been identified by the Kenyan government as having a huge potential for leading the country into the next phase of industrialization. Garment Manufacture had been primarily oriented to the domestic market and had for a lot of years been sheltered from foreign competition by both quantitative and qualitative competition on the import of garments. However, the large scale smuggling in of second hand clothing popularly known as "mitumba" has periodically diluted such protection. This has brought a lot of concern about the performance of the Kenya's garment industry but there is still scarcity of information on how the firms in the industry are performing and their contribution to the export trade even after the introduction of the African Growth and opportunity Act (AGOA) which offers garment manufacturers opportunities to expand trade and investment. This study follows a line of investigation that analyzes the performance of the garment industry in Nairobi and seeks to answer why the garment industries are not breaking even in the International market and what can be done to improve their competitive advantage in the export market. A survey was conducted on the garment industries in Nairobi including those firms outside Nairobi but have offices in Nairobi. The quantitative data was analyzed using descriptive statistics, which included tables, percentages, frequencies, ranks, and mean scores to achieve the set objectives. The study discovered the local manufacturer has potential to compete successfully in the global market but can do so only when certain factors are put in place: ie The business environment must be continually improved in order to build up existing production and technical learning as well as attractive new investment. This also includes government and private sector awareness of relevant international trade policies, like garment quota, so that government can effectively negotiate levels, which allow growth and investment. o Another factor that came out strongly was the transaction costs, which link local manufacturers to international markets need to be lowered, and the process streamlined. Foreign buyers, indirect exporting opportunities via subcontracting and the presence of per-existing private networks that can facilitate entry to particular countries and markets can reduce transaction costs through the use of private mechanism like trading intermediaries. The third factor that was also made known from the study was that technical training within the firms needs to be an outgoing process so that the Kenyan manufacturers can remain competitive. Companies need encouragement to adopt systematic research and development with staff and facilities dedicated to these tasks, and they must tap into the international network of technical information. Access to credit for the garment manufacturers should also be re-examined if the industry is to perform excellently in the international market. , Lastly, the infrastructure, particularly ports and roads, need to be improved to eliminate the barriers which limit the garment industry from performing exceptionally