Majority of Kenyan manufacturing enterprises are yet to recover from the adverse effects of Covid-19 as the cost of credit bites.
According to a report by technology firm Syspro and the Institute of Certified Public Accountants of Kenya (ICPAK), only seven percent of manufacturers have recovered from the adverse effects of Covid19, while 43 percent claim they expect to see their businesses recover in 2022, and 36 percent in the year 2023 and beyond.
Supply chains were disrupted and the need to invest in such processes as automation and e-commerce became apparent.
According to the report, whose responses were drawn from over 100 financial leaders across the industry, while over the past 18 months 65 percent of businesses were focused on curbing expenditure to survive the pandemic, while 31 percent sought to invest in technology to boost their revenue.
“We saw businesses eager to diversify and largely favour uptake of enterprise technologies and expectedly, the re-engineering of supply chains to improve business-to-business (B2B) trading came in a close second,” said Edwin Makori, chief executive of ICPAK.
Manufacturing was one of the hardest hit sectors of the economy, with real value added contracted by 0.1 percent compared with a growth of 2.5 percent in 2019.
The Kenya Economic Survey 2021 captures the reduced demand for manufactured products locally and internationally.
Interestingly, 30 percent of the respondents indicated that they recorded a return on digital investments, 28 percent got no return, seven percent were not sure if they received any returns, while 31 percent were still planning on investigating. In comparison to international manufacturing entities, however, the uptake of digital technologies by local firms was still low.
Doug Hunter of Syspro Africa said although there has been a global move towards diversification of digital transformation in the manufacturing and distribution sector, Kenya’s uptake has been much slower. About 51 percent of respondents said government support over the past 18 years would have put them in a better position to leverage new technologies to boost their economic output.
The return on digital investment depends on how companies deploy the technology they acquire, with user experiences influencing how technology is used and eventually affect the return on investment. So customer friendly and not how much is spent in ICT infrastructure is key.