The mushrooming of housing complexes, office buildings and shopping malls in Kenya and Tanzania has escalated the need for decorative paint and coatings in these countries, according to new study from Frost and Sullivan. The new study, "Supply and Demand Analysis of the Decorative Paint and Coatings Market in Kenya and Tanzania" reports that as a result of rapid urbanization, the domestic construction industry will soon begin competing in the global arena, creating significant demand for better quality decorative paints.
New analysis from Frost and Sulllivan's "Supply and Demand Analysis of the Decorative Paint and Coatings Market in Kenya and Tanzania," finds that the market earned revenues of more than $123.3 million in 2011 and estimates this to reach $188.5 million by 2018.
As part of the plan to make Kenya a middle-income country by 2030, the Government approved the National Construction Authority Bill to initiate new construction projects and improve the quality of existing infrastructure. Meanwhile, the Tanzanian government’s strategic plan over 2012-2017 includes the expansion of housing units.
"Such proactive government policies will encourage middle-income housing and in turn, the adoption of higher quality paints that are easy to apply and maintain," said Frost and Sullivan’s chemicals materials and food research analyst, Bhavisha Jaga.
Economic growth in neighboring countries will further compel manufacturers with export market share to increase production capacity. However, fluctuations in the exchange rate cause instability in the Kenyan and Tanzanian paint and coatings market.
Exchange rate volatility assumes higher significance in these markets since 60%-90% of the raw materials are imported from the European Union and Asia. Sale volumes decreased due to the depreciation of the Kenyan shilling by 13.5% in 2010 to 2011 and the steep oil and titanium prices (which account for 60% of the total production cost) passed onto the consumer.
High domestic inflation in Kenya and Tanzania has also raised manufacturing costs substantially, with consignment delays further holding up manufacturing.
"To evade fluctuations and inflation, manufacturers can place orders for raw materials in advance at a particular price," said Jaga. "In addition, expanding the supplier base will reduce the lead time taken in receiving raw materials."
"Supply and Demand Analysis of the Decorative Paint and Coatings Market in Kenya and Tanzania" is part of the Chemicals and Materials Growth Partnership Services program, which also includes research in the following markets: Southern African Market for Green Materials in Construction and South Africa Automotive Refinish Chemicals. For more information go to www.frost.com.