1 A grim struggle for competition.

After a period of subdued performance the country economy has began to show strong signs of recovery with the manufacturing sector recording improved performance over the last years.

In 2004 and 2005, the economy registered an impressive growth of 4.9 and 5.8 percent respectively, while the Gross Domestic Product (GDP) grew from US$10 billion in 2001 to US$14 billion in 2005.this is far from 1997 when the economy registered a negative growth.

The manufacturing sector has been an active player in this recovery. From a low annual growth of 1.6 percent in 2001,it registered an impressive 5 percent in 2005,a revision from 4.5 percent growth recorded in 2004. At the same time the value of output Rose by 12.8 percent from a revised sh445.1 billion in 2004 to sh502.1 billion in 2005.

The positive changes have been made despite the sector struggle against escalating global oil prices,a strengthening shilling affecting exports.poor infrastructure,high tax levels and inflation rate and a stringent regulatory framework. Other debilitating factors have been an upserge of cheap imports, corruption and speed money, and above all political uncertainty coupled by rising insecurity among other factors.

Definitely things are looking up, and players in the sector see this upturn as a sign of good things to come. However they are of the opinion that sustaining this upward trend of economic growth will require deliberate policies aimed at improving the business climate and making local industries more competitive.