How local sourcing by giant firms can cut unemployment

 Kendi Mirithu, founder and chief executive Alkay Consulting. [Esther Dianah, Standard]

Many multinational corporations have embraced local sourcing initiatives towards sustainable economic development and local job creation.

Kendi Mirithu, an entrepreneur in the solar panel industry, underscores the transformative potential of such strategies. “If all multinationals operating in Kenya embraced local sourcing of raw materials, we would mitigate the scourge of joblessness,” she says.

This thinking resonates deeply within Kenya’s economic landscape, where unemployment remains a pressing challenge.

“I think even a 60 per cent local sourcing can go a long way in creating opportunities in the local job market,” says Mirithu, founder and chief executive Alkay Consulting.

 “Local sourcing by multinationals can create jobs for a lot more people in the value chain...this is not limited to multinationals, but also Kenyan companies sourcing from outside.’’

Unilever, a longstanding multinational presence in Africa, has set an ambitious target to source 70 per cent of its raw materials locally by 2025.

Mirithu points to Unilever’s Emerge Accelerator Programme as an example of tangible impact, empowering women and individuals with disabilities to become suppliers to the company and thereby fostering economic empowerment at the grassroots level.

Financial access

Unilever’s initiative aims to impart skills, build capacity, and offer financial access opportunities while bolstering SMEs in the country.

To do this, it plans to spend 6.5 million Euros (Sh1.13 billion) by 2025.

Dominic Kimani, Chief Executive of Weetabix East Africa, echoes the sentiment of leveraging local sourcing whenever feasible.

“Approximately 85 per cent of our wheat is imported, with only 15 percent being sourced locally. We strive to prioritise local sourcing whenever it is feasible,” Kimani remarked, further highlighting that global wheat prices have doubled due to the ongoing Russia-Ukraine war.

In his remarks, while launching a small pack of Weetabix- a breakfast cereal, in a campaign dubbed “Fyatuka,” Mr Kimani attributed the disruptions in the global supply chains and the Russia-Ukraine war.

The chief executive further said that whenever raw materials are available locally, they give preference to local farmers.

Going by volumes of local production, local sourcing of goods and services by companies remains a challenge.

However, a shift to local sourcing may reduce the cost of logistics, currency risk, and the cost of raw materials.

MSMEs, accounting for up to 90 percent of private enterprises and 80 percent of employment in the country, still face a myriad of challenges, hindering them from competitively participating in the domestic and international markets.

Legal education

With a contribution to the GDP of about 40 percent, SMEs still lack resources - finance, technology, skilled labor, market access, and market information.

In May 2023, Unilever started an accelerator program to help women and people with disabilities run their businesses.

The incubator program explored sales, operation of companies, legal education, negotiating deals, and financing.

Mirithu says the incubation program taught them how to pitch to investors and also what is available for women out there.

Mirithu, who has a background in Human Resource Management, ventured into the solar solutions business in 2017 after many attempts at employment. For three years, she tried to stay afloat, despite the difficulties.

“I got my first financing for a project in 2020. And starting up, and coming from employment, taking charge of large sums of money was a bit challenging,” Mirithu, who offers solar solutions, said, adding that getting financing from local banks is a big challenge.

Another firm, Upfield, started sourcing canola, also known as rapeseed, locally in 2017 in partnership with Agventure, by growing canola in the foothills of Mount Kenya and Mau Narok.

Over the years, the number of contracted farmers grew from 500 to 7,500, hence creating employment opportunities.

These farmers have been trained in conservation agriculture farming.

This initiative has created a sustainable supply of Canola oil for Upfield, ensured sustainable production and revenue for thousands of farmers, and is providing quality nutrition for Kenyans.