Kenyas Ministry of Industrialization and Enterprise Development said that an initial U.S. $300 million in new investment is required to reach the export earnings target. In particular, the ministry identified the need to purchase at least 50,000 sewing machines to complement and replace existing equipment that suffers from inefficiency and old age.

The investment plan is part of the countrys Textile and Value Chain Roadmap 2016-2020, which envisions building 5 million square feet of production space, employing 100,000 people and generating demand for approximately 500 million meters of fabric.

The roadmap estimates that at least 100 small and medium-sized textile enterprises will build 450 new production lines to manufacture yarn, textiles and apparel. This will necessitate the acquisition of new equipment and related technical capabilities that will require high volumes of lubricants.

However, according to the ministry, the countrys textile industry faces an inadequate supply of locally produced cotton, and what is available is of poor quality. As a result, 93 percent of cotton is imported to meet the industrys demands. This means the majority of export quality fabric manufactured in Kenya is made from imported fibers. Thus, the textile sector has to choose between high-cost imported material and low-quality local fiber, which requires additional processing. Either option increases the cost of doing business and could impact lubricant sales.

The ministry surveyed textile firms to determine the primary factors affecting their business. One of their primary concerns was the lack of customs enforcement and capability of Kenyas Bureau of Standards to regulate the inflow of inferior products. As has been reported in previous articles, this concern extends to the lack of control over the importation of inferior lubricants.

Effect on Lube Demand

For the lubricant industry, the acquisition of new equipment, along with a planned major upgrade to existing textile machinery, is likely to drive up demand for higher-quality products that can sustain higher speeds, minimize downtime and increase operating time. Kenya is estimated to have 52 textile mills, but only 15 are operational, and they produce only 45 percent of their nameplate capacity. The mills operate various types of machines for spinning, spool and pirn winding, warp knitting, hosiery production, weaving preparation, looms and textile finishing.

Demand for lubrication in the countrys textile industry has been hampered by the old and poor performing equipment, some of which the ministry notes are 30 to 40 years old and do not produce the product varieties or quality demanded by modern markets. The ministry added that besides using outdated technology, existing mills suffer from low levels of skilled labor and low productivity.

Upgrading is hindered by the difficult procurement procedures for importing equipment, the high cost of modern equipment and lack of credit, the ministry said. According to Cabinet Secretary Adan Mohammed, With tax rates reaching 18 percent, it can be difficult for enterprises to purchase new machinery. Replacing parts on old equipment is also expensive and sometimes unfeasible. He added that equipment purchases frequently are not accompanied by appropriate training; thus, the machinery often operates below its rated capacity.

Despite these challenges to Kenyas textile industry, which have a direct impact on the sectors demand for specialist lubricants, Mohammed is optimistic. He said that Kenya has capacity to reach the $1.5 billion export target by 2020 by maximizing production and upholding quality requirements through skills development.

Mohammed said the government will also improve the business environment to support the development of the textile and clothing industry and expand the benefits throughout the industrys value chain. Although the industry has not achieved its growth targets in the last few decades, it has made some progress that has contributed to increased demand for lubricants, especially between 2012 and 2016.

Textile manufacturing expanded marginally by 0.3 percent in 2016, and the production of twine, cordage and rope grew by 14.4 percent, said Zachary Mwangi, director general of Kenyas Bureau of Statistics. He said that blanket production increased by 1.5 percent in 2016, although the industry reported a 7.4 percent drop in woven fabric production and a 10.2 percent drop in knitting wool output. Manufacturing of wearing apparel grew by 17.2 percent in 2016 as a result of increased production of shirts and T-shirts, by 17.4 and 20.9 percent respectively, he said.

Although the average consumption figures for lubricants by each of Kenyas economic sectors within the past five years is not readily available, expansion of the textiles industry coincided with a notable increase in overall imports and exports of lubricating oils and lubricating greases. For example, imports of lubricating oils increased from 7,100 tons in 2012 to 10,800 tons in 2015, although there was a slight drop to 6,900 tons in 2013 and 6,800 tons in 2014 before it picked again in 2016. A similar trend was observed in lubricating greases, with imports rising from 1,800 tons in 2012 to 2,800 tons in 2015, before a negligible drop to 2,600 tons in 2016.

Less lubricating grease was exported from Kenya, indicating a possible increase in domestic consumption by various economic sectors such as the textile and clothing industry. Mwangi said that grease exports decreased from a high of 43,700 tons in 2012 to only 200 tons in 2016.

Lubricant Suppliers

Although no government or industry records are available to directly link textile industry growth to lubricant business or trade trends between 2012 and 2016, analysts say a promising textile industry would be a major boost to lubricant suppliers in an economy like Kenya. Lubricant marketers range from big companies such as KenolKobil and Total to small and medium-sized suppliers, many of which distribute products from foreign-based manufacturers, mostly as sole agents in East Africa.

For example, U.K.-based Millers Oils Ltd. has two distributors in Nairobi: Arrow Motors Group East Africa Ltd. and Charley Automobile Ltd. Millers supplies lubricants for knitting and sewing machines, both scourable and non-scourable, needle oils and technical white oils.

Nairobi-based Comet is the other small to medium-sized lubricant supplier for the Kenyan textile industry, with its Comet Spin Finish-40 oil, Comet Knitting Oil, Comet Soluble Textile Oil 32 and Comet Soluble Textile Oil 32 Plus. Also, Devsons Industries Ltd. is the Kenyan agent for textile lubricants from South Africas Spanjaard Group. Finally, KenolKobil, Kenyas third largest oil distributor by market share, launched its Klube Grease AP last year, a multipurpose lithium grease for use in bottom roller bearings for textile machinery among its many applications.

A Look Ahead

Lubricant distributors, suppliers and blenders could reap a bonanza as Kenya looks to revive some of its nonoperational ginneries (where seeds are removed from cotton), which would require additional machinery and high-quality lubricants. Currently, only 8 of 20 ginning mills in the country are operational. The mills consist of twin lubricant- consuming rolls through which raw cotton is passed, the first step in the textile industrys factory processes. The rolls can be lubricated with oil or grease, according to cotton ginning experts.

The Ministry of Trade says Kenyas yarn spinning segment has an estimated capacity of 140,000 spindles, but only 30 to 40 percent are utilized in the production of acrylic yarn for local and East African markets. They also produce cotton yarn, blended yarns and sewing thread for the export market.

Lubricant consumers in Kenyas textile industry include Rupa Mills, a spinning mill that manufactures cotton yarns, blended yarn, acrylic sewing threads; Midco East Africa and Fine Spinners – both known for knitting works; Rivatex, Thika Cloth Mills, TSS Mills and UTI and Sunflag Kenya. Another 15 enterprises are registered to perform textile processes such as weaving, knitting, dyeing and finishing. These enterprises, whose lubricant consumption volume could not be immediately established, include Alpha Knits, Ken Knit, Kayn, Spin Knit, Bubco, Bedi and Supra Textiles.

Many of these enterprises are keen to upgrade existing equipment, according to the Trade Ministrys report. The report is based on a survey of textile industry players on the status of equipment maintenance, spare parts and equipment upgrading. The survey found that up to 50 percent of the companies perform regularly scheduled equipment maintenance, while the other half performed maintenance on an ad hoc basis. The ministry reported that respondents considered spare parts to be competitively priced, but they are no longer available for old outdated equipment.

A large share of the growth in Kenyas textile industry would be fueled by the African Growth and Opportunity Act (AGOA), enacted in 2000 by the U.S. The Act, which expires in 2025, enables several sub-Saharan African countries such as Kenya to access the North American market on a preferential basis.

Kenya became AGOA-eligible in 2001 and since then the value of apparel exports to the United States has increased from $6 million in 2000 to $332 million in 2014, according to Trade Ministry estimates. Approximately 70 percent of Kenyan apparel firms have a U.S.-dominant market orientation, meaning that at least 80 percent of their output is sold to U.S. markets.

Going forward, the ministry stated, Kenya is in a strong position to capitalize on AGOA, especially now that the country already captures more than one-third of all apparel exports from sub-Saharan Africa to the U.S.