African nations are looking to drive economic development to ensure a better future for their citizens.
One example of such a country is Kenya, which has developed the Kenya Vision 2030 development plan.
This plan seeks to create “a globally competitive and prosperous country with a high quality of life by 2030.”
Kenya’s Big 4 Agenda has also been designed to develop the country’s economy and one of its pillars involves the revamping of the country’s manufacturing sector.
The goal of this is to increase the manufacturing sector’s contribution to Kenya’s GDP from 9.2% to 20% by 2022.
This will accelerate economic growth, create more jobs, and reduce poverty within the country.
However, this sector is currently small relative to other sectors like agriculture and services, and its share of the Kenyan GDP has declined over the years.
To support the growth of the Kenyan manufacturing sector, innovative approaches have been investigated and identified.
Investigating the Kenyan manufacturing sector
ERP provider SYSPRO and Strathmore University partnered to investigate the current state of the manufacturing industry in Kenya, as well as to determine what innovations and technologies could boost the sector moving forward.
Historically, reasons for Kenya’s manufacturing sector’s poor performance included a lack of access to an effective labour force, insufficient infrastructure, political uncertainty, corruption, and a poor business environment.
However, more recently, issues have included electricity issues, a lack of finance, and perceived competition from the informal sector are also among the biggest obstacles facing the sector.
Analysis of various manufacturing businesses found that manufacturing businesses were operating using outdated technologies, with siloed value chains, and suffering a lack of skills – both managerially and at a technical level.
For this reason, The Kenya Association of Manufacturers (KAM) launched the Manufacturing Priority Agenda (MPA) to work out where investment is needed in terms of skills and the creating of a beneficial environment for smaller manufacturing enterprises.
Technological issues
Micro, small, and medium-sized enterprises (MSMEs) comprise two thirds of all Kenyan manufacturing firms.
Most of these businesses have not been able to access the full benefits technology provides them – largely due to the costs involved.
This means that these manufacturing businesses are using outdated systems and technologies, and as a result they can’t keep up with modern global standards.
Some companies, however, were able to modernise their equipment and systems to keep up with global standards across the board.
Modern technologies are becoming cheaper and more efficient – allowing businesses with less capital to still access the immense benefits of high-quality manufacturing technologies.
For example, SYSPRO’s ERP systems are specialised for individual manufacturing industries and offer great value.
They are accessible to Kenyan manufacturing businesses and can help these firms take their processes to the next level in terms of long-term financial and productivity benefits.
Another issue faced by Kenyan manufacturing firms, however, is that they don’t have a strong relationship with the technology sector – meaning they are unable to access important technological assistance to deal with problems unique to Kenya such as an unstable power supply.
Research and results
The research team in this study surveyed 96 manufacturing businesses in 12 sectors and three Kenyan counties.
Some key insights include the following:
- Only 10.3% of the surveyed manufacturing businesses had fully automated systems; the rest were either completely manual, or only partially automated.
- The most important benefit these businesses wanted from automation was increased business efficiency.
- The main barriers to automation include high software costs and a lack of technical skills to implement automation.
- 34% of manufacturing businesses surveyed had no ERP installed.
View the below infographic for more insights.
The importance of an ERP
One standout result from the survey was that over a third of the businesses did not have an ERP installed.
ERPs offer large production advantages to manufacturers, particularly due to how they can provide businesses with a comprehensive view of their various business processes.
Without ERP systems, Kenyan manufacturers are significantly hampered relative to their international competition, who through using ERPs, have fully-automated systems and get the additional benefits of reduced production costs and increased productivity.
These were two of the biggest themes that those surveyed identified as being important to their businesses.
If your manufacturing business does not have an ERP installed, you should consider implementing one – as it will save your business money and improve efficiency via the automation of various tasks.