Manufacturers borrow Sh17b more on low interest market
Business
By
Graham Kajilwa
| Oct 13, 2025
A relaxed monetary policy saw manufacturers borrow Sh17.2 billion more in the second quarter of this year, even as growth in the sector slowed down compared to the same period in 2024.
Data from the Kenya National Bureau of Statistics (KNBS) shows that in the three months ended June 2025, the sector’s real gross domestic product (GDP) expanded by one per cent compared to 3.2 per cent in the same period last year. However, loans to the sector increased to Sh598.3 billion.
“Credit advanced to the enterprises in the manufacturing sector increased from Sh581.1 billion as at June 2024 to Sh598.3 billion as at June 2025,” reads the KNBS Quarterly Gross Domestic Product statistical release.
According to the data, the food subsector, which makes up a larger part of the country’s manufacturing business, recorded mixed performances in the period.
READ MORE
Coffee sales at Nairobi exchange hit Sh36b
How debt burden is denying the sick, children critical services
PS Muoria: Dual training turning youth into job creators, not job seekers
Freighters lobby in Sh10b deal to digitise logistics sector
Why IMF is yet to seal deal with Kenya
Old Mutual boss now joins ANCA leadership council
Battery cages or deep-litter floor for your layers?
Pay to pass:Treasury gives green light to Dongo Kundu tolling plan
General insurance claims ease as sector shows signs of recovery
State calls for advisers as it moves to open pipeline jewel to investors
While milk delivered to processors increased significantly by 24.1 per cent to 272 million litres from 219.2 million litres in the second quarter of 2024, on the other hand, production of soft drinks declined by 6.7 per cent to 143.9 million litres in the period under review.
“Similarly, sugar production contracted by 43.8 per cent to 107,300 tonnes from 191,000 tonnes in the second quarter of 2024,” the data set reveals.
“Tea production declined by 5.3 per cent to 146,300 tonnes during the review period.”
For non-food sector, cement production increased by 21 per cent to 2,469,700 tonnes in the second quarter of 2025 compared to 2,040,400 tonnes in the same quarter of 2024.
Production of galvanised sheets rose by 11.3 per cent to 77,200 tonnes in the review quarter, while assembly of motor vehicles expanded by 20.8 per cent to 3,350 units compared to 2,773 units assembled in the second quarter of 2024.
In the period, the country’s GDP grew by five per cent, compared to 4.6 per cent in the same period in 2024.
“The growth was mainly supported by growths in agriculture, forestry and fishing activities (4.4 per cent), Transportation and Storage (5.4 per cent) and financial and insurance (6.6 per cent),” says KNBS.
“The growth was also supported by rebounds in Construction and Mining and Quarrying activities that rose by 5.7 and 15.3 per cent, respectively, after contracting in the second quarter of 2024.”
A corresponding data set from the Kenya Association of Manufacturers (KAM) for the same period (April to June 2025) details the reasons behind the slow growth experienced in the period. KAM’s barometer for the period shows that a majority (53.3 per cent) of manufacturers expressed a negative outlook on the economy, attributing it to high taxation, low demand, illicit trade and political instability.
“In quarter two of 2025, the majority (53.33 per cent) of the manufacturers surveyed held a negative view of the country’s economic outlook, indicating a challenging business environment. This signals reduced investment, lower production and limited growth for the industry,” says KAM.
The association adds that 7.1 per cent of manufacturers were optimistic about growth in the next six months, while 42.6 per cent remained pessimistic, citing low demand and high operational costs. “76.9 per cent of manufacturers reported rising raw material costs driven by taxes, freight charges and global geopolitical tensions,” the association says.
On how the rest of the six months look (July to December), the outlook is uncertain.
“While 50 per cent of manufacturers hold a neutral view, only 7.14 per cent are optimistic, and 42.6 per cent remain pessimistic, pointing to concerns of potential stagnation in sector growth,” says KAM.