The State of Manufacturing in Kenya

Last week saw SYSPRO,  and Strathmore university launched a report on the ‘State of Manufacturing in Kenya’.

SYSPRO is a global provider of industry-built Enterprise Resource Planning (ERP) software for manufacturers and distributors and together with Strathmore University, they drew the report from close to 100 companies  in 12 sectors of the production and manufacturing industry in Kenya.

Manufacturing contributes to 9.2% of Kenya’s GDP. it is forecasted that by 2030, it will contribute upto 20% of Kenya’s GDP. So how do we get there and what is hindering the growth in the manufacturing industry?

As mentioned before, the main things that ails the industry are:

  • Lacks access to an efficient and effective labour force
  • inadequate infrastructure
  • political uncertainties
  • corruption
  • high cost of power
  • poor business environment

The Report

Most  manufacturing companies are medium size (56%) but small and medium make up 77% of the population sample (World Bank, 2003).  According to the Kenya Association of Manufacturers (KAM) , the Food and Beverages Sector has a 22% Membership


Most financing is self-funding schemes e.g., bank loans, invoicing  and shares. 60% of companies invest more than half to three quarters in expansion.

Reasons for capital financing:

  • New Product and development
  • Advertising and marketing
  • /Software/ Computer Systems
Capital Investment Area Count
New Product Development 47
Advertising and Marketing 42
Hardware and Software 32
Computer Systems 32
Packaging and Processing 27
Operations Technology Systems 27
Market Niche Products 26


So how is the state of automation?

Only 53 companies had plans to upgrade their hardware and software

Challenges posed to their upgrading plans:

  • software costs was a major hindrance.
  • hardware costs followed technical skills and expertise gap

Expenditure on ICT and Automation Count (%)
Hardware Machinery 70
Customer Relations Management 51
Enterprise Resource Planning (ERP) 48
Other Application Software e.g. Accounting, Payroll 42

Desirable objectives for ICT and Automation

Most desirable objective considered for recent  automation project was to improve business efficiency followed by improvement in product quality

Desirable Objectives Count (%)
Improve Business Efficiency 83
Improve Product Quality 78
Reduce Downtime 56
Reduce Production Time 55
Reduce Staff Costs 52
Improve Cycle Time 48
Improve Staff Health and Safety 46

Value Chain

Approximately 70% of the companies were involved in manufacturing and production with the least being support and product traceability of the value chain.

Only about 46 % of companies run full 8 hours a day while 47% run between 6 to 8 hours.

50% of companies run 3 to 5 days a week thus may affect 24 hour economy envisioned

Value Chain Domain Count (%)
Manufacturing and Production 70
Distribution and Movement 49
Inventory Management 35
Valuation and Costing 31


Potential future ICT and Automation areas?

Top three areas earmarked as future ICT improvement areas:

  • Upgrading of ICT infrastructure e.g., internet/intranet, security;
  • Company Financial or accounting software; and
  • Warehouse management systems.
Future Automation Improvement Areas Count (%)
Upgrading ICT Infrastructure e.g., Internet, Intranet, Security etc. 52
Company Financial or Accounting Software 50
Warehouse Management Systems 39
Time / Attendance / Workforce Labour Management 38
Enterprise Resource Planning (ERP) 33


Where are ERPs applied in Manufacturing Industry?

33 companies had not installed ERP Systems leaving 63 of the rest having installed ERP Systems with 10 companies not using any hardware or machinery.

Production Domain Count (%)
Inventory Management 52
Manufacturing and Production 42
Valuation and Costing 36
Movement and Distribution 36
Requirements Planning (MRP) 34
Order and Replenishment 24
Planning and Forecasting 24


Barriers for ICT and Automation?

26% of the respondents consider:

  • Better training for technology partners locally would minimize barriers to implementation.
  • Improved availability of technologies locally
  • Making automation and robotics technology cheaper
  • Availability of skilled / technical workers
Barriers to Automation and Robotics Technology Count (%)
High costs associated with Automation and Robotics Application 32
Updating the Technologies is difficult and expensive 22
Lack of Implementation Technical Skills 21
Technologies not available locally in the Industry 19
Government Policies e.g. Tax Exemptions, Bans etc. 16


So, how can companies increase manufacturing production?

It is noteworthy that provision of qualified or trained personnel would be suitable for increasing manufacturing production in the industry, followed by provision of exemptions, grants and subsidies and purchase guarantees.