Why it’s time State embraced ‘rogue’ Kariobangi industries

By WINSLEY MASESE

Workers at Axes Aqual Scales, Kariobangi’s light Industries. The company makes counter scales. [PHOTO: WINSLEY MASESE/STANDARD]

Axes Aqual Scales is the maker of counter scales, the machine used to weigh products such as sugar, rice and cooking flour before being sold in local shops or retail outlets. 

Based at Kariobangi’s Light Industries, it’s among the small and medium enterprises fighting for space in the Kenyan market, probably to expand and increase profitability. Though the local buyers should form their greatest inspiration to build on, that is however not the case.

In the sprawling Kariobangi Light Industries there is a factory for almost everything. Everything is possible here, from iron sheets to hinges, to flour mills to candles, to bakery, to shoe polish and weighing scale.

Today, more than 500 factories share space with residential houses in the small zone set aside by the government, and the numbers keep growing.

These industries reflect Kenya’s genuine efforts to become an industrialised nation, and even though they are poorly organised and run, they are of crucial importance to the survival of many. 

Henry Nyabuto, director, Axes Aqual Scales observes that Kenyans do not trust their ability to make quality products. “They cannot buy from us but can buy the same items sold to an Indian at wholesale price, at a higher price,” he says. 

If only they could trust his products and buy them, then the Buy Kenyan build Kenya initiative could have registered a remarkable success to expand and increase its profitability, able to generate wealth and jobs for millions of Kenyans. 

IMPORTED PRODUCTS

The Buy Kenyan build Kenya initiative aims at promoting the consumption of domestic products to create employment and wealth for the country.

Besides the doubts Kenyans have towards locally manufactured products and made by fellow Kenyans, the high production costs is also likely to knock the products from the Kenya’s shelves in favour of imports.

For example, the World Bank estimates that the cost of producing one metric tonne of sugar in Kenya is about Sh81,700 ($950) compared to the global standard of Sh30,100 ($350). 

This, in itself gives reasons why the local millers will be hurt once the Comesa safeguards are removed, opening the door to cheaper imported sugar.

The feeling among sugar millers is that they will be driven out of the market in case countries such as Zambia and Malawi will sell their sugar locally, since their cost of production is much lower compared to Kenya’s.

The same scenario applies when it comes to the price of Kenyan made products as compared to imported ones, giving the latter a competitive edge in the market.

Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed knows that too well. “Kenyans are rational human beings who will have to consider the cost first before anything else. Besides, they cannot be forced to buy merely because the product is Kenyan,” he said. 

Adan stated that the Buy Kenyan build Kenya drive aims to create understanding on the costs of doing business in Kenya, with a view to reducing them.

“Despite the high energy costs, there are other compensating factors to help us compete with imported products such as labour,” he said, adding that Kenya can leverage on this to ensure the cost of goods is lower. 

The Kenya Association of Manufacturers (KAM) blames the hopelessness on high energy costs. For example, power tariffs in Kenya currently stand at $18.7/kw, compared to Ethiopia’s $3/kw and Tanzania’s $0.09/kilowatt. Egypt, Kenya’s neighbour on the north charges $0.05 per kilowatt.

“Consequently, the high cost of energy plays a huge role in making local production uncompetitive,” says KAM Chief Executive Betty Maina.  This has dampened the Buy Kenya Build Kenya call expected to give Kenyan goods a competitive edge over imports.

Moses Makayoto, a senior research scientist at the Kenya Industrial Research and Development Institute (Kirdi) agrees that Kenyan products face a challenge in realising the initiative.   One key challenge that might hold the initiative back is lack of appropriate tools. “Tooling is the mother of industrialisation and this is one area Kenya is lagging behind, to the detrimental of the Buy Kenyan build Kenya,” he reckons.

PRIVATE SECTOR REFORM

With proper tools, Makayoto observes that Kenyans will be able to make quality goods able to compete with imported ones. 

The only way Kenya can have a breakthrough in the initiative is if the Government and other stakeholders support the small and medium enterprises as they grow and expand.

Makayoto, the brainchild behind Mama Safi argues that multinationals will flirt with any upcoming innovation and probably buy it but they will not let it flourish at the expense of their products. 

“Though Mama Safi detergent was popular, cheap and therefore popular to many households, East African Industries (now Unilever East Africa) stopped producing it because it was competing against one of their own products, Omo,” he says. 

Consequently Makayoto believes that the solution to the Buy Kenyan build Kenya  drive will come from the SMEs and if only they improve the quality of their production by embracing technology.

The other feasible solution is through the implementation of the SME Act, to ensure that some of the challenges the players in the sector undergo are identified and addressed.  

However, Mohamed says the effort is to identify some of the challenges the private sector faces in doing business in the country.

“We want to have the private sector perform better and the initiative seeks to explore ways of getting solutions to some of the impediments facing them,” he said.