ERP provider SYSPRO has together with Strathmore University has released research findings from a study that saw close to 100 Kenyan companies drawn from 12 manufacturing in Kenya interviewed.
The study by Strathmore University explored productivity and competitiveness of the manufacturing sector in Kenya, the role of new technologies in improving the sector and the state of adoption and use of these new technologies.
The findings were presented at a launch event attended by Ms Betty Maina, the Principal Secretary, State Department of Investment and Industry in the Ministry of Industry, Trade and Cooperatives. It demonstrated that the most important initiatives that can increase competitiveness both for local and export markets according to the manufacturers are;
Favourable taxes and favorable regional preferential treaties
Reduction in cost of production
Upgrading the current technologies deployed
Increasing production efficiency.
Speaking at the launch of the research findings, Prof. Ismail Ateya, Principal Investigator and Dean of Research and Innovation at Strathmore University noted that over 85% of companies interviewed were either semi-automated or fully-automated with a majority still holding on to outdated production units. This is because of high cost of spare parts, unavailability of locally manufactured spare parts and inability to differentiate quality from fake until used. Counterfeits, he noted, were a large hindrance to local purchasing. High software and hardware costs as well as the lack of skilled labor were cited as major hindrances to technology adoption. Manufacturers interviewed proposed to have tax incentives for technology purchases, better training for local technology partners, improved availability of new technologies locally, availability of affordable automation and robotics technology as well availability of skilled technical workers.
In addressing the issue of affordability for manufacturing software solutions, SYSPRO’s Head of Channel, Pravir Rai said, “Keeping IT costs low is very important for businesses particularly SMEs. A lot of software solutions in the market are unaffordable because they come with inbuilt capabilities that a business may not necessarily need at a given time. With SYSPRO’s ERP solution, we offer choice and flexibility. A company doesn’t need to buy a whole stack of applications if all it needs is just 1 or 2 modules to begin automating its business. SYSPRO is divided in modules that ensure it is not only affordable but also scales to meet the operational needs of a business as it grows. We have found this to be very popular with SME Manufacturers.”
Besides technology, the study revealed that more than half of the manufacturers interviewed felt that the government could still do more to make the sector competitive and attractive to potential investors. Development of infrastructure, provision of exemptions, grants and subsidies as well as purchasing guarantee from the government were highly rated. Support for apprenticeship, graduate internships and technical courses in universities was identified as a major initiative that would make local manufacturing an attractive business venture. It was noted that over 50% of the respondents felt that Kenya’s manufacturing sector would have difficulty competing with counterparts in other developed countries that have advanced education and training systems.
Other notable factors that need to be urgently addressed include high cost of capital financing, which remains a major hurdle in the manufacturing sector, and energy which was reported as the main external factor that adversely affected business operations in the last 2-3 years. Political climate, taxes, cheap imports and exchange rates were rated as negatively impacting business operations while technical skills, labor wages, climate conditions and visa requirements were rated as having the lowest adverse effect on the business operations comparatively.
Regarding future projections and strategic planning, companies interviewed prioritized product development, advertisement and marketing, computer systems, hardware and software as potential investment areas to improve business operations in the next financial year.
SYSPRO is a provider of industry-built ERP software for manufacturers and distributors. The SYSPRO solution ERP can be accessed on the premises, in the cloud, and via mobile. SYSPRO has more than 15,000 licensed companies in over 60 countries including Kenya and across six continents. SYSPRO launched a regional hub in Kenya in 2017 and its ERP solution, SYSPRO ERP, customers in Kenya include Brookside Dairy, Basco Paints, Sadolin Paints, Cooper K-Brands Ltd and Kenya Vehicle Manufacturers.