Hundreds of thousands of Kenyans in the manufacturing sector could be rendered jobless in the near future due to increased digitisation, a new report has warned.
This, the report by the Kenya Association of Manufacturers and the Overseas Development Institute, as global manufacturing continues to draw capital from developing countries to developed ones.
The study took an in-depth look at the effect of technology such as artificial intelligence and machine learning will have on Kenya’s manufacturing sector and found the country was ill-prepared for the fourth industrial revolution.
“Deployment of digital technologies and robotics in manufacturing will destroy some jobs and tasks but will also create new jobs and tasks in manufacturing sectors that produce and supply parts for these new machines,” said the report.
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However Kenya, like other developing countries, still lags behind developed countries in adopting digital technology for both production of manufactured goods and management of value chains.
This means that as more industries blur the line between physical and digital processes, manufacturers and investors will seek out opportunities for reducing labour costs and increasing productivity, turning back to developed countries. “A persistent digital divide in Kenya in the context of growing digitalisation globally can lead to increasing re-shoring of manufacturing jobs and to the concentration of future production of digitally-enabled goods in developed countries,” said the report. It further notes that Kenya might already be de-industrialising prematurely, with the manufacturing sector’s contribution to GDP shrinking from 12 per cent in 2007 to eight per cent last year.
The country has one of the highest labour costs in the region and this could work against it as manufacturers opt to outsource business processes to machines either locally or in other economies.
“One such international impact pathway is through reshoring of manufacturing tasks from labour-intensive to capital-intensive regions,” said the report.