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Why Ethiopia is overtaking Kenya in the race to become the 'New China'
(EBC; October 17, 2017) - It is expensive to start and run a manufacturing factory in Kenya compared to at least 28 other African countries, a new study shows.
The study, by the Centre for Global Development, rates labor and capital costs per worker as top reasons for the country's unattractiveness.
As per its findings, the labor cost per Kenyan worker is Sh218, 725 compared with Bangladesh where it is Sh86, 230 and Sh93, 872 in Ethiopia.
The researchers have found out that Ethiopia, already leading the way as Africa's 21st century center for manufacturing, has the best likelihood of being the "New China".
With labor costs rising faster than gains in productivity, and with the strengthening of their local currencies, large manufacturing firms have started exploring opportunities for production in the country.
Other reasons attributed to the high factory running costs include a lack of infrastructure such as transport networks, low levels of education and unstable electricity.
"This can get worse with poor policy structures," one of the researchers, Alan Gelb, said in the report.