Kenya Country Report

Kenya paint market and industry growing into key East African hub

Wachira Kigotho, in Nairobi, looks at how East Africa’s construction industry is

growing

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Kenya paint market and industry growing into key East African hubWachira Kigotho, in Nairobi, looks at how East Africa’s construction industry is growing

Kenya has long been regarded as East Africa’s economic powerhouse, with residential and industrial construction

boosting sales of paints and coatings – and for now there seems to be no halt in this progress. Indeed, the last World Bank assessment of growth in this 45M people country, was that GDP rose by 5.6% in 2015.

A resulting construction boom of affordable housing units, up-market gated housing estates for the middle-class, as well as office complexes in Nairobi and regional centres, such as Kenya’s 46 county towns, have all boosted demand for paints, pigments, varnishes and other architectural coatings.

Much of this is made within the country. According to the Kenya National Bureau of Statistics (KNBS), Kenyan manufacturing of paints and other coatings rose by 6.2% from 47.8M lit in 2014 to 50.7M lit in 2015. This makes Kenya an important supplier within Africa as a whole, where the paint and coatings sector has been growing from the Cape to Cairo: sales have been predicted to hit 1.7Mt next year (2018), according to Information Research Ltd, the London-based global industry consultancy firm.

nn RISING POPULATIONThe crux of the matter is that the middle class population across Africa is increasing rapidly. Indeed, the middle class is projected to reach 1.1bn or 42% of the continent’s population by 2060, according to the African Development Bank’s report, ‘Tracking Africa’s Progress in Figures’. Kenya fits that bill – the World Bank said that Kenya’s population rose 2.6% in 2015 and is set to continue expanding fast.

Statistics gleaned from Kenya Economic Survey datasets for the past five years indicate production of paints, pigments, varnishes and allied coatings within the country have been increasing between five and 10% each year. Consequently, the KNBS predicts that similar growth is expected in forthcoming years.

Similar predictions have been highlighted by Frost & Sullivan, the global

research and consulting firm. In its report, ‘Analysis of the Industrial Paints and Coatings Market in South Africa, Nigeria, and Kenya’, (albeit released in 2014), Frost & Sullivan forecast that Kenyan industrial paints and coatings markets offered attractive growth opportunities between 2013 and 2017 and beyond.

“Our forecast points to a potential growth of over and above five percent per year, for years to come, supported by the building and construction industry”, said Samantha James, a Senior Marketing and

Corporate Communications Executive at Frost & Sullivan.

Bhavisha Jaga, a Frost & Sullivan Chemicals and Materials Research Analyst, who was the principal author of the report, predicted that by 2018, paints and coatings markets in Kenya and Tanzania combined would generate revenues amounting to US$188.5M, as a result of rapid urbanisation, spearheaded by construction of housing units, office buildings and shopping malls.

Most of this revenue will be tapped by Kenya-based paint manufacturing companies, which are major suppliers of paint and coatings across eastern Africa, noted Rakesh Rao, Chief Executive Officer of Crown Paints Kenya Ltd, the largest manufacturer of architectural and decorative paints, varnishes and coatings in Kenya. He told Polymers Paint Colour Journal that Kenyan companies were the major beneficiaries of infrastructure development, not just in Kenya but in Ethiopia, Rwanda, Tanzania and Uganda, where they have established manufacturing plants or sales and marketing partnerships.

“In the past few years, we have almost doubled our production capacity”, said Rao, whose company manufactures more than 30M lit of paint per year. He explained that in the past few years, Kenya has witnessed a thriving building and construction industry that includes megaprojects, such as the ongoing construction of Konza Techno City technology sector hub outside Nairobi and Lamu Port, towards the border with Somalia.

“Consequently, manufacturers and suppliers of paints, coatings, resins, varnishes, pigments and extenders have been competing for a share of the market in the country’s projects”, said Rao. And with infrastructure development on the rise, Kenyan paints and coatings companies are looking to diversify from their core business in decorative and architectural. In addition, companies are now targeting road construction projects by providing highway marking and reflective paint products, as well as producing automotive sealants and finishing paints for the vehicles that use these new roads.

At present, Crown Paints Kenya Ltd controls 65% of the market share in Kenya and, according to Rao, plans are under way to capture more than 75% market share by 2020. It has regional clout too, controlling 50% of the Ugandan market through its subsidiary Regal Paints Uganda Ltd, with plans afoot to increase that share to 70% by 2020. Crown Paints also has a presence in the Democratic

KENYA

“Our forecast points to a potential growth

of over and above five percent per year, for years to come, supported by the building and construction industry.

”

Kenya.indd 1 27/04/2017 11:13

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Republic of the Congo (DRC), Rwanda, Tanzania and South Sudan. Other Kenya-based paints and coatings companies that are thriving in Kenya and also exporting regionally, include Sadolin Paints Ltd, Basco Paints Ltd, Robbialac Paints Ltd, Solai Paints Ltd and Nasib Industrial Products Ltd. International trade data state that Kenyan manufacturers exported sold liquid polymer-based paints worth US$10M to all countries, as long ago as 2013, up from US$7.5M in 2010.

For the domestic sector, so far, so good. But it will need to be on its mettle to protect its local sales. Going forward, Kenyan paints and coatings manufacturing companies are likely to encounter new competition from foreign companies keen to seize a cut of Kenya’s market. That threat was all too clear during the ‘Big 5 Construct East Africa’ international building

and construction show held in Nairobi on November 2-3 last year (2016).

In attendance were foreign paints and coatings companies, some expressing interest in investing within Kenya by establishing manufacturing plants or forging commodity and ingredient supply partnerships with local players. They included Anchor Allied Factory Ltd, a Sharjah, United Arab Emirates (UAE)-based company that has a presence in the Middle East, the far east, southeast Asia, Africa, the Commonwealth Independent States (ex-USSR states), South America and Europe, and which exhibited a wide range of architectural paints, spray paints, sealants, varnishes, pigments and other coatings.

The Dubai, United Arab Emirates (UAE)-based National Paints Factories Company Ltd, a fi rm with a large stable

of architectural decorative fi nishes also seemed keen to establish supply partnerships with Kenyan counterparts. Commenting on its presence in Nairobi, Ali Amin Ismail, the company’s Export Sales Representative, told Polymers Paint Colour Journal: “We believe that Big 5 Construct East Africa will be the perfect gateway to explore the opportunities offered by the Kenyan market, as well as an excellent platform to promote our new products in the region”.

One potential vulnerability for Kenyan companies is the environmental health performance – they are still weaning themselves off from using lead in their products. According to Dr Faridah Were, a Toxicologist at the University of Nairobi, most paints and coatings manufactured or sold in Kenya have high levels of lead, exceeding recommended levels suggested by the World Health Organisation (WHO). “Most paints produced in Kenya have lead content beyond the 90 parts per million that is recommended by the WHO”, Were told Polymers Paint Colour Journal. That said, some larger Kenyan paint manufacturers, namely Crown Paints, Sadolin and Basco are in the process of reducing lead content from their products, as per the WHO guidelines, looking to hit the UN agency’s maximum allowed levels by the end of this year (2017). PPCJ

For more information: International News Serviceswww.internationalnewsservices.com

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