Kenya remains one of the biggest retread markets in East Africa, controlled almost 100% by the Indian settlers.
Indian Strength Persists in East Africa
Interestingly, not only are the owners of retreading businesses Indians who settled in Kenya generations ago, but most of the rubber compound and equipment is also supplied by Indian firms.
Elgi, which has been present with its own production facility in Nairobi for more than two decades, is among the key suppliers of rubber compound and equipment. Meanwhile, other Indian compounds are also available including Midas, High Tech, Forbros etc. besides Malaysian brands such as Goodway, Suntex and Eversafe and the Brazilian brand, Vipal.
On the equipment side, the Coimbatore based retread machinery makers are the major machinery suppliers i.e Elgi, Rajmahaal, Glisten and Gemini.
It seems the Kenyan retread industry has learned to cope with the problem of low-priced imported tyres as retreaders have started importing tread rubber at highly competitive prices from India to beat the challenge of cheap tyres. At the same time, others are focusing on improving efficiency to save on overheads.
On the other hand, however, the presence of the Michelin Recamic process in the market indicates there is still a small segment of consumers willing to pay more for quality retreads.
The liquidity crunch is another major factor that is subduing market sentiments at the moment. The cash crunch was triggered when the Kenyan government demonetised high value notes leading to a shortage of cash in the market. Industry is of the view that the market will improve with ease in terms of cash flow after October, when old notes are completely out of circulation and the new currency is in full flow.
The Long-distance Standard Gauge Railway (SGR) operating between Nairobi and the port city of Mombasa has posed the latest challenge to the transport and retread industry for the last couple of years. A distance of almost 500 km was covered largely by trailers to bring supplies from the port earlier, but now all shipments are moved by the SGR in between both cities.
Now imports are cleared at the Internal Container Depot (ICD) in Nairobi, which has impacted the majority of long-haul business in Kenya, with long-distance fleets going out of business.
Though no authoritative figures are available, the impact is widespread among both transporters and retreaders as now trips are shortened and the number of tyres coming for retreading has dropped.
But all kudos to the India entrepreneurs as despite the challenges, they continue to survive and are running the show with hopes of a market revival.
