Leather Products
deterred many foreign firms from setting up shop. The foreign investment flowing in has been directed mainly to horticultural products and has been more focused on trade logistics than on manufacturing. World Investment Report 2008 identifies Kenya as East Africa’s least effective suitor in attracting foreign direct investment (FDI) (UNCTAD 2008). To improve its export prospects and take advantage of the managerial expertise, capital, and technology that have accompanied FDI, Kenya needs to improve its attractiveness to foreign investors. Origin and Course of Development Kenya’s footwear industry has roots that go back several decades. Bata, a shoe manufacturer and retailer originally located in an area now in the Czech Republic, was a pioneer in this high-volume, low-margin business. Bata was one of the first non-British European companies to open manufacturing in Kenya, attracted by the cheaper inputs and less expensive labor. At the time, there was no evidence of strong government endorsement of economic growth as a top national priority. Bata’s investment was thus an independent decision made by a foreign company rather than an element in a national development plan. During World War II, Bata established a small tannery in Limeru, north of Nairobi, to process leather for the manufacture of footwear for the British army. Because the labor costs in Africa were low, the company decided to relocate production there. By the late 1940s and early 1950s, the East African Bata Shoe Company, a subsidiary of Bata (which had become a Canadian multinational in the meantime), was an important shoe producer in Africa. Bata’s goal was to become East Africa’s largest shoe producer and serve the region’s growing market. Bata’s shoe production fluctuated between 6 and 14 percent of Kenya’s exports during the 1950s and reached 30 percent in the 1960s and 1970s (Swainson 1980). Its focus was on low-cost synthetic leather shoes made of textiles and rubber, which accounted for 6 million of the 8 million shoes produced in 1975; the remaining 2 million were leather. Bata imported rubber from plantations in West Africa. In response to demand for shoe production, the leather industry grew considerably, and, within three decades, more than 30 medium to large registered tanneries were supporting the shoe industry.
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