Kenyan Wood Industry is Growing

June 3, 2016

Team Finland Business Delegation visited Kenya in May 2016, led by the Finnish Minister of Agriculture and Environment Mr. Kimmo Tiilikainen. The visit focused on forestry and wood industry, and it was highlighted by the 25th Anniversary Seminar on the Kenyan-Finnish Forestry cooperation.

Several trends in Kenya are contributing to the growth in demand for timber. Kenya’s economy has been growing 5-6% per year (5.6% in 2015) and is expected to continue to grow fast. The population is currently 48 million and a constantly growing share of the population lives in cities. The growing middle class wants to purchase better homes and furniture.

For example, the demand for furniture has been growing some 10% per year. Until now, a large share of the furniture has been imported from China. Both the government and the Kenyan private sector intend to shift significant part of the demand for furniture from the Chinese suppliers to Kenyan producers. Nevertheless, the Kenyan furniture industry is still at a very modest stage, and requires significant investments. Kenya also needs to produce and import good-quality timber for the furniture industry. The Kenyan government is addressing this issue with an objective of increasing the forest cover by 10% and improving economic conditions for investors. Presently, the total forest plantation area is 220 000 hectares (ha), of which 138 000 ha are public and 90 000 ha private. Main plantation species are cypress, pines, eucalyptus, and some indigenous species.

Kai Merivuori of Finnish Sawmills Association, Ramses Malaty from the Embassy of Finland in Nairobi, and Emilio Mugo, Director of the Kenya Forest Service.

The growing demand for furniture-quality timber provides opportunities for Finnish sawmills, which presently are exporting growing volumes of furniture-quality spruce sawn wood, e.g. to China. Comparable to China, there is a construction boom in Kenya. Housing, as well as new office, hotel and other commercial building starts have been growing. Although concrete, steel and glass are dominant structural and surfacing materials, the use of wood as a construction material is becoming more frequent. The market for prefabricated houses and building parts has so far been small but growing. This provides opportunities for both the Kenyan and the Finnish wood industry.

Indufor helps companies and financiers in advising and planning in exports and industrial investments (sawmilling, panel industry, further processing, bioenergy), as well as sourcing raw material. We provide all related services; analysis, calculations, projections and due diligence.

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