Kenyan manufacturing risks further de-industrialization if the government and firms do not adapt to new digital technologies such as robotics and artificial intelligence according to a report released by the Overseas Development Institute (ODI) and the Kenyan Association of Manufacturers (KAM).
New research shows how digital technologies can, in fact, boost job creation by increasing production, which can lead to higher exports despite fears that rapid automation and digitalization could reduce the number of jobs in the manufacturing sector.
However, the report warns that the government and firms must embrace digitalization by building digital capabilities in the country, fostering competitiveness within companies and supporting an inclusive digital transformation.
The report, ‘How to grow to manufacture 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,”she said.
“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.
“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,” said Dr Dirk Willem te Velde, co-author of the report, and director of Supporting Economic Transformation at ODI.
‘Our research shows there are good examples of manufacturing firms in Kenya that have been able to successfully leverage digitalization to grow their business,” the lead author of the Report and Research Officer at ODI, Dr Karishma Banga
This can include product diversification, expansion into regional markets, productivity improvements and lowering the cost of production. Effectively scaling up digitalization in manufacturing will require public-private collaborations to provide long-term financing for Kenyan manufacturing firms.