Localisation agenda key to job creation and Kenya's economic growth

Auto Springs East Africa worker manufacturing car parts at the plant, June 28, 2022. [Esther Jeruto, Standard]

Localisation not only involves employment but also the choice of suppliers and the level of adaptation to host country laws, customs, markets, and culture. It further supports production and consumption of local products.

Worth noting is that it is not a replacement of competitive imported products with uncompetitive locally manufactured products as often suggested. It is basically the identification of opportunities for competitive local production that substitute imported products, hence creating much-needed economic growth and employment opportunities.

The private sector in this case drives the localisation agenda, proportionately nurturing and sustaining growth of Kenya's economy.

If done correctly, localisation presents a major opportunity to address the decline in the country's manufacturing capabilities, develop the country's productive capacities and, in the long run, develop new export capabilities that are ultimately essential to the country's sustainable industrial competitiveness.

Over the years, many domestic market segments have been dominated by imports. This is evident across clothing, electronics and a range of fast-moving consumer goods market segments. This is mainly because local manufacturers have a limited role in these market segments and, as such, often fail to receive signals of new opportunities; hence resulting to a sustained import bias.

To correct such biases,would require a commitment to engage local manufacturers regarding market developments that would encourage them to invest in emerging opportunities.

A classic example of such a commitment is Unilever's approach to building local supply chains in support of its rapidly evolving quick-response retailing model. The model entails a local supply base that can operate within short lead times, shift its product range in alignment with home-care product trends, manufacture variable volumes, and guarantee the delivery of purchase orders on time.

But how have local companies responded to this opportunity in the face of cheap imports? More often than not, Unilever has been compelled to sensitise local manufacturing companies on its new business model which requires deep local capabilities and preparedness to commit orders to selected local manufacturers.

Such a move is what is now referred to as localisation. It does not represent a forced purchase of sub-standard local products but the exact inverse. It too entails the development of world class local manufacturers capable of meeting the standards of one of the country's leading quick response retailers.

Nevertheless, it is only local manufacturers who meet such standards that prosper.

The need to become internationally competitive is equally fundamental. What is expected of suppliers is to ensure that they are able to execute a long-term strategy of capability development and capacity extension with the aim of acquiring much support from customers.

Unilever has over time relied on its localisation strategy to secure a sustainable competitive advantage. The move to buy more products locally has substantially improved the organisation's capacity to drive its localisation agenda.

But it has not been easy. There are existing weaknesses within the products supply chain such as driving major structural changes in a complex operating environment. Yet certainly, the outcomes have significant potential.

To meet current challenges, Unilever has renewed its commitment towards localisation hence shifting more leadership, ownership, decision making and implementation to the local people and institutions with the capability, connectedness and credibility to drive change in their own countries and communities.