Entrepreneurship Zone: 09 March 2023 :: Potential for Kenya to ramp up manufacturing of televisions and fridges

Thu Mar 9 07:17:04 CAT 2023

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Entrepreneurship Zone: 09 March 2023 ::  Potential for Kenya to ramp up
manufacturing of televisions and fridges

*          

Kenya has the potential to become a major producer of consumer electronics
and appliances, specifically televisions and refrigerators, to serve both
the domestic and surrounding markets, according to a study by Manufacturing
Africa, a UK government-funded programme supporting investment in the
manufacturing sector.

The thriving consumer electronics market in East Africa is expected to
reach $5.1 billion by 2030 due to population and income growth.

Televisions and fridges are the consumer electronics goods with highest
potential for manufacturing scale-up in the East Africa region (defined as
Kenya, Uganda, Rwanda, Tanzania, Burundi, South Sudan, Comoros, Djibouti,
Ethiopia, Malawi, Seychelles and Democratic Republic of Congo). These
products are relatively easy to assemble and they have sizable regional
markets, with televisions valued at $624 million and refrigerators valued at
$475 million in 2019.

There is potential to build a regional hub for electronics manufacturing in
Kenya. The country is deemed an attractive location for manufacturing due to
its abundance of export processing zones, higher purchasing power compared
to regional peers, a fast-growing economy with projected annual GDP growth
of over 5% from 2022 to 2027, and an educated and competitive workforce.
Kenya also accounts for 21% of total regional spend on consumer electronics.

By 2030, there could be an import substitution opportunity of $978 million
driven by the widening gap between demand and production for televisions and
fridges. Potential manufacturers could set up basic final assembly or
integrated manufacturing of televisions and fridges.

Televisions

Approximately 45% of the regional television market comprises entry-level
units. This prominence of budget-friendly brands could be due to the
cost-consciousness of consumers. In Kenya, high-end products have a slightly
larger market share, likely due to the higher purchasing power of customers.

The production of televisions in Africa is limited, with only basic
assembly capabilities present in East Africa. Currently, Egypt and South
Africa are the only African countries with integrated TV manufacturing
facilities. In Kenya, Uganda and Nigeria, basic assembly operations are
dominated by brands catering to the lower end of the market.

Refrigerators

The regional market for refrigerators is dominated by high-end brands,
accounting for 40% of the market. The higher market share of high-end brands
in the greater region compared to Kenya may be because of the lower
availability of more affordable private-label brands outside of Kenya.
Entry-level and mid-range brands make up 60% of the fridge market, with
local private-label brands being prevalent in the mid-range segment.

Refrigerator manufacturing has a larger presence on the continent compared
to televisions, however, it is limited in the East Africa region. Only two
global brands, Samsung and Liebherr, have a presence in the East African
Community. Smaller local brands primarily cater to their domestic market and
nearby countries.

- Howwemadeitinafrica

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