India can be a Sourcing base for africa

IVisit to Plast Pack Africa, 23-26 June 2004, Nairobi has revealed that Kenya holds many encouraging export possibilities for us. By focusing on Africa the attention of current generation of India’s Plastic entrepreneurs can be kept profitably engaged for the next decade. Such is the potential existing there today. Kenya is a beautiful country with normal cold weather throughout the year. There are more than 300 plastic processing factories. Out of these 70 factories are of big size i.e. each having more than 50 injection moulding or blow moulding or extrusion machines. There are no Small Scale Industry Reservations. Raw material consumption per month is approximately 7000 tonnes. Major supplier is Sabic. Reliance, though preferred, local manufacturers buy from other sources because of the erratic supply. Plastic industry in Kenya is growing at the rate of 15 to 20% per annum. This is next to the garment industry. The owners of above factories are Indians, especially from Gujarat, residing there since last two/three generations. They buy Taiwanese, Japanese, European and Indian machinery. Indian machinery and moulds are well accepted. They seem to have less quality complaints now as majority of machinery makers have improved their quality. Price is the main attraction. Kenya is signatory to WTO, so it has streamlined the duty structure by executing economic reforms. Custom duty for importing in Kenya and other taxes are as under:
Raw Materials i.e.
Polymers: Nil
Machinery: Nil
Finished Goods: 25%+
VAT:16% applicable (No other taxes)
Income Tax: 30% Local/Corporate
Income Tax: 37.5% for subsidiaries or branches of foreign companies
Income Tax individual: 10 to 30%
Repatriation of Capital and Profits: Allowed after payment of necessary taxes
Power: Rate - US cents 9 per Unit. Supply is erratic. Generators are recommended
Currency: 1 US Dollar = 80 Kenyan Shillings
Labour: Unskilled labour salary approx. Kenyan Shilling 4000/- (8 hours). A week has six working days. Employment contracts are to be signed. Terms and conditions of employment are spelled out in individual employment contract, which are voluntarily agreed upon between the employer and employee.
The contract can be short term or permanent.

Land: Rental sheds available @ 10 to 25 Kenyan Shilling per sq. ft. from private parties.

Plastics and Environment: In Kenya, there is no littering as it attracts fine and penalties. Roads are clean and no littering is seen. Anti-litter laws are enforced. There is problem for plastics carry bags, which may surface anytime because plastics are non-degradable. NGOs want biodegradable bags.

Market Size: Kenya’s population is 31.5 million. It is the common market for Eastern and Southern Africa (COMESA), which includes Tanzania and Uganda. Total market serves 380 million people.

Education: Literacy level 70% and majority know English language.

Life Span: 47 years. 6% affected by AIDS.

Port: Mombasa, which is a major port and link to other landlocked countries.

GDP: 1.5% growth last year.

Roads: Development started

Telecommunication: OK

Security: OK. One has to be careful after evening hours.
Mugging chances increase. Cases of thefts/robberies are frequent.

Work Permits: Not easy but available to investors - maximum three numbers. One for owner, one for finance and one for production person.

Our Scope: Good quality and technologically updated plastic machinery – Extrusion, Injection Moulding, Blow Moulding Dies& Moulds accessories in good demand. Packaging products, which are not manufactured there, can be imported into Kenya. Raw material is 100% imported approx. 84000 Tons. Mainly commodity polymers. Intermediate products – Good scope.
Kenya is open to source from India, depending on quality, service and competitive price. There is a huge underdeveloped market with great future potential. As on today, many Indian machinery manufacturers prefer to export as full payment comes without hassles. Setting up a factory there can also be considered because of good margin, provided one is able to manage.