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End of the production line for Kenyan shoemakers?

Cheap shoes from China have nearly crippled Kenya's shoe manufacturing industry. Shoemakers there blame the government for failing to protect local jobs.

The sun set hours ago over Asili House in the bustling city of Nairobi, but Peter Njenga is finishing work on a pair of shoes that a customer wants for a wedding.

He does not mind the late hour because he is grateful for the work. "We have to rely on close friends and sympathetic stores to survive in this trade," says Njenga, while gently sticking a heel onto an expensive-looking shoe.

In a country that has witnessed a massive influx of cheap synthetic shoes from the Far East, Njenga is the last of a rare breed of African craftsmen. He has managed to survive by laying off his employees and cutting down on overheads.

Njenga is unaware that the continued survival of his business – 'Permic Leather' – and his dreams of expansion may be thwarted by the outcome of negotiations at the World Trade Organisation (WTO).

Industrialised countries are putting pressure on African governments to drop import tariffs and open their markets to manufactured products from industrialised countries.

In Kenya this would mean that more shoes would flood the market, destroying local businesses without bringing any economic benefits to the country.

At the sixth ministerial meeting of the WTO in Hong Kong this week, one of the debates will centre on how to cut tariffs and increase non-agricultural market access (NAMA). The stakes are high, because African governments say they are being enticed to make concessions on non-agricultural goods in order to gain leverage in crucial negotiations on agriculture. The Kenyan government says this push and pull process makes it difficult to establish a consistent trade policy.

Negotiators from the richer countries have been arguing that the main benefit of tariff reductions in the non-agricultural sectors will be an increase in trade between developing countries. But others argue that the negotiations are biased towards the interests of industrialised countries.

Anti-poverty campaigners also argue that developed countries such as the United States and the European Union historically used high tariffs to protect their own manufacturing sectors during the industrialisation process, but are now denying poor nations the same opportunity.

Kenya, like many other poorer countries, has suffered massive de-industrialisation and employment problems as a result of its national debts and the high costs of repaying loans. It now fears that the negative aspects of the NAMA proposals would close off the option of using tariffs flexibly, and prevent it from building a strong local manufacturing capacity.

Another issue is that tariff revenues in Kenya currently account for around 20 per cent of total government revenue. A drastic reduction or removal of tariffs on manufactured goods coming into the country would mean a serious loss for Kenya's public income.

It is not the first time that Njenga has faced stiff competition. In 1998 he had to close down his factory and sell his machines, when shoes from a rapidly industrialising China began to arrive on the scene.

"None of the main shoe outlets in Nairobi wanted to stock our shoes. They all went for the cheap imports and suddenly I found myself and eight employees with nowhere to sell," he says.

But he re-opened two years later.

"The shoes from China and Dubai were so fashionable and had such a good finish that most customers went for them. But they have come to realise that they do not last very long and that is what I am capitalising on," explains Njenga, who started his career in 1977, and is one of the few traditional shoemakers left in Nairobi.

He says the government has let them down by failing to protect local industries. "They should have given us some preferential treatment in order to survive. What we need are incentive schemes and exceptions from taxes".

Njenga is shocked at the idea that WTO talks might end up opening the domestic market to more intense competition and he is angry that the Kenyan government might allow more people to be exposed to job losses and starvation. But the Kenyan government has promised that it will not agree to WTO policies that contradict its development goals.

"Kenya as a nation must be given time to identify products that could be exposed to global competition and those that should be exempted," says James Kiiru, a senior official at the Ministry of Trade and Industry. "Should the proposed agenda on tariff reductions during the Hong Kong meeting go unchallenged, Kenya would end up losing a lot of revenue."

Dr Mukhisa Kituyi, Kenya's Minister of Trade and Industry believes that the government has a difficult path to tread: "The envisaged negotiations on non-agricultural products must therefore aim to facilitate the achievement of industrial development in general, continuous and increased viability of local industries, increased industrial job creation, and sustainable government revenue collection derived from trade in industrial products".

If Kenya is forced to liberalise, Njenga wonders how he will survive. He would not be able to offer any employment or generate other benefits for the economy, Finishing the hand-made leather shoes, Njenga cleans up his work area, ready to go home. He wonders if they will be one of his last pairs. They have taken him most of the day to make and will sell at around US$35. He is left in the dark as to what will come of the WTO debates, and of his business.

John Kamau is a senior writer with Kenya's Sunday Standard.

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12/13/2005

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