Kenyan manufacturing at risk if government and firms do not prepare for digital future – new report

Kenyan manufacturing risks further de-industrialisation if the government and firms do not adapt to new digital technologies such as robotics and artificial intelligence, a new report by the Overseas Development Institute (ODI) and the Kenyan Association of Manufacturers (KAM) has found.

Despite fears that rapid automation and digitalisation could reduce the number of jobs in the manufacturing sector, new research shows how digital technologies can, in fact, boost job creation by increasing production, which can lead to higher exports.

However, the report warns that for this to happen the government and firms must embrace digitalisation by building digital capabilities in the country, fostering competitiveness within companies and supporting an inclusive digital transformation.

The report, ‘How to grow manufacturing and create jobs in a digital economy: 10 policy priorities for Kenya’, sets out a roadmap for a successful digital transformation of Kenyan manufacturing. The report calls on governments to better prepare for the future by providing financial support to help manufacturers access and take advantage of the Internet and other ICT technologies.

KAM Chief Executive, Ms Phyllis Wakiaga noted that technological advancements are changing the way the global market is operating hence the need to adopt the new digital technologies across all sectors of the economy.

“Technological developments have changed the operations of the global market, which means that Kenya has to keep up with these trends in order to realize the Big 4 Agenda and Vision 2030. 

It is important that the collaboration between the National and County Governments, Industry and Academia is strengthened to fully unlock our potential in the digitalization age. Additionally, fostering research, development and innovation will boost the competitiveness of Industry,” added Ms Wakiaga.

Dr Dirk Willem te Velde, co-author of the report, and director of Supporting Economic Transformation at ODI said: “Without additional and comprehensive actions by government and firms, Kenya will not be prepared for the digital economy and would, therefore, risk eroding its manufacturing base. 

While Kenya leads the way in Sub-Saharan Africa in terms of digitalisation, it remains far behind many other regions, which means it may not attract manufacturing production and jobs associated with these new technologies”.

Dr Karishma Banga, the lead author of the Report and Research Officer at ODI, said:‘Our research shows there are good examples of manufacturing firms in Kenya that have been able to successfully leverage digitalisation to grow their business. 

This can include product diversification, expansion into regional markets, productivity improvements and lowering the cost of production. Effectively scaling up digitalisation in manufacturing will require public-private collaborations to provide long-term financing for Kenyan manufacturing firms.’

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