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    Africa Report

    Housing, Furniture Boom to Drive Kenya’s Wood Coatings Market

    ...

    Housing, Furniture Boom to Drive Kenya’s  Wood Coatings Market
    Shem Oirere, Africa Correspondent02.11.19
    The future of Kenya’s wood coatings market looks promising despite persistent challenges in the country’s wood and wood products supply chain, which is characterized by increasing demand against a diminishing supply that could impact the overall demand for wood finishes in the East Africa country.

    There is growing optimism in the future performance of the wood coatings market as Kenya revives the stalled plans for the construction of two million additional housing units across the country’s urban areas with the first 500,000 housing units expected by 2022. The housing units are in addition to the increasing expansion of the country’s education sector to accommodate the increasing student population, that could also trigger long-term demand for quality wood coatings in Kenya in the drive to improve wood products’ aesthetic look, cushion them against environmental damage and also protect them from chemical attacks.

    Although challenges such as the delay to construct the 500,000 housing units means slow down in demand for wood coatings, the housing  sector is expected to be the key driver for wood protective chemicals in Kenya as the country strives to clear the backlog of nearly two million housing units, which is an equivalent of 61 percent of urban households living in slums in a country where the urbanization rate has grown to 4.2 percent.

    An earlier report by the Kenya Property Developers Association estimates annual housing demand in the country to 200,000 compared to the average 50,000 units coming online every year.

    Nevertheless, President Uhuru Kenyatta has revived government plans of ensuring construction of 500,000 affordable and decent housing units by 2022 as part of his ‘Big Four’ agenda to meet the needs of the country’s growing urban population. The surge in the construction of houses in Kenya is expected to trigger new demand for wood products that require different types of resins such as polyurethane, nitrocellulose, acrylics, unsaturated polyester.

    Paint manufacturers in the country are optimistic the plans to build additional housing units across the country’s urban areas will boost their business operations with some manufacturers affirming their readiness to meet the anticipated demand for quality paint products.

    “The Kenyan government has indicated interest in providing one million low-cost houses and we expect that this will create a significant demand for paint,” said Rakesh K. Rao, group chief executive officer of Crown Paints.

    “We already have a range of economy paints and other products to meet this demand,” he said. The company manufactures Crown wood finishes series such as aquavar varnish, multi-purpose clear varnish, oil varnish stains, polyurethane clear varnish, polyurethane wood seal, two-pack epoxy varnish and two-pack polyurethane varnish.

    Furthermore, Kenya’s furniture industry is growing and is expected to continue consuming substantial volumes of both interior and exterior wood coatings despite the challenge of huge deficits of wood products such as sawn timber and poles that the industry uses as feedstock.

    At the moment, Kenya is East Africa’s largest furniture market, estimated at $496 million, of the region’s total market value of $1.2 billion, and has been growing at 10 percent annually in the last five years.

    “Kenya is likely to take the lion’s share of the market even though its urban population is smaller than that of Ethiopia and Tanzania,” said a report by the Ministry of Industrialisation and Enterprise Development (MIED).

    The report attributes the growth of Kenya’s furniture market to increased urbanization, economic growth, growth in housing and office construction.

    “Product segments that are forecast to see the most growth in sales are kitchen and bedroom furniture, wooden seats and other seats and parts,” it added.

    The projected growth is likely to build on lessons derived from the 2017 decline in furniture manufacturing when the industry registered a 4.4 percent drop compared to the 12 percent, 14.8 percent, 22.5 percent, 22.5 percent increase recorded in 2013, 2014, 2015 and 2016 respectively. The Kenya National Bureau of Statistics attributed the decline to “a drop in the production of mattresses which went down by 6.3 percent.”

    Elsewhere, the MIED report has identified various supply and policy constraints that could stifle the growth of Kenya’s furniture market hence limit the demand for wood coatings. The constraints include the inability of the country’s forestry sector to meet local demand for timber forcing the consumers of sawn timber to rely on imports from other East African countries.

    “The import licenses for timber are nevertheless required but lack transparency and create opaqueness across the industry,” it said.

    “The sawmilling industry is fragmented and characterized by a lack of investment and the wood processing industry is also not operating optimally due to its oligopolistic structure, the protection it receives from import duties on equivalent products, and operational issues and inefficiencies,” added the government report.

    Apart from the industry-related challenges, Kenya’s wood finishes manufacturers are also recovering from the disruptive 2017 year when political uncertainty led to a cash crisis that made the companies operations quite challenging.

    Rao said 2017 “was one of the toughest years in the manufacturing industry due to the political environment that led to a slowdown in the economy.”

    “This led to a slow growth in the construction sector and a serious cash crunch in the market that slowed the payment cycle from all categories of customers leading to slow uptake of our products,” he said.

    Crown Paints said the increased cost of raw material by about 30 percent to 40 percent, made 2017 “a very difficult business year.”

    Other industry players that are eyeing a share of anticipated growth in wood coatings in Kenya include Basco Paints, Sadolin Paints, Robbialac Paints, Solai Paints and Nasib Industrial Products.

    Going forward, growth of the Kenyan wood coatings market, just like the rest of Africa, would depend on the soundness of the coating manufacturers business and operational strategy that would enable them survive the global volatile raw material prices while keeping their products affordable and also effectively address the increasing concerns about Volatile organic compounds (VOCs) originating from the coatings industry. 
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