High Profit Investment Opportunities in the Book Publishing Industry in Kenya
January 22, 2012 by Muli wa Kyendo
Filed under Business Opportunities
Long seen as the least attractive industry to invest in, the book industry in Kenya is now looking up and has so far grown to become Shs 12 billion industry, thanks to the government’s free primary education, subsidized secondary education and donor funding to the education sector. The government is now the single largest buyer of books – mainly school text books.
Children in a school in Kenya
A few years ago, it was difficult to sell more than a handful of book – including text books. The maximum number of copy sales for a well-selling book per year was only 3,000 copies. And even with the entry of Europe-based marketing organizations such as Africa Book Collective, the situation didn’t change much.
Dramatic Growth
Today however, there has been dramatic growth. According to industry sources an ordinary text book will sell more than 200,000 copies while story books that are not school text books will sell more than 20,000 copies. Since most of the school text books cost an average of Shs400 (as compared to Shs40 when the industry was down), it is obvious that publishers are frolicking in great wealth.
Regional Market
What’s more, the market is growing and will remain in the growth mode for a long time. Consider for example that nearly 60 per cent of Kenya’s population of some 40 million is youth and the average population growth rate is 3 per cent, and you will be looking at a very high growth rate industry.
And it’s not just Kenya. Publishers are looking at markets in surrounding countries such as the South Sudan which only recently became and independent state after breaking away from North Sudan and changing its official language and writing from Arabic to English with Kiswahili playing a main role.
Rwanda too, is another example of the regional market. Recently it changed it official language from French to English to benefit from trade with the neighboring, economically powerful, former British colonies of Kenya, Uganda and Tanzania. Again Kiswahili, the national and official language of the Eastern Africa countries, is now playing a key role.
In deed, 60 per cent of all textbooks sold by the Kenyan companies go to this wider eastern Africa market, bought either by the governments of NGOs.
Example of Loghorn Kenya
A good example of the potential for the widened market industry is Longhorn Kenya. Its revenues more than doubled to Sh1.1 billion for the year ended June 2011 from Sh527 million in 2010, much of it coming from sales of textbooks. Net profits soared to Sh146 million last year, about six times more than the Sh22 million it made in the 2010 financial year. Total assets of the company stood at Sh706 million last year.
McMillan Publishers, now Moran Publishers, is another Kenyan publishing company that has also reported high profits – Sh200 million.
Longhorn Kenya is set to list its shares at the Nairobi Securities Exchange later this year, making it the first firm in the book publishing industry to go public.
