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Background and Challenges

Background

Kenyans in Rural and to lesser extent those in urban areas are struggling to find meaningful jobs despite higher levels of education, increase in graduates within the society and a wide variety of skills in the population. Core to this challenge is the lack of skills in initiating, developing and sustaining enterprises. There is severe lack of a critical level of formal entrepreneurship in the society.

Every large multinational enterprise was once a business start-up! CC Viwanda aims at developing an entrepreneurial culture among the African Youth and Women groups and seize available opportunities to build sustainable businesses.

Our intention is to create manufacturing start-up companies (Women, youth or other organized groups) that will pioneer the industrial and commercial changes required for a prosperous Africa.

Industrialization

In terms of industrialization, Africa is the least developed region in the world, constituting an insignificant share of the global manufacturing output. The manufacturing contribution to the GDP for most African countries is less than 15% with some as low as 5%[1]. In most of these countries, this manufacturing is concentrated on low technology products such as Textile, food, clothing and footwear.

With critical drive towards eradication of poverty, Africa’s industrialization is on the decline and in some countries like Kenya, poverty is on the increase. According to 2015 UNECA (United Nations Economic Commission for Africa), Africa’s progress in reducing poverty has been slow compared to that of developing regions as a whole. According to the report, between 1990 and 2010, Kenya had the highest rise in poverty levels in Africa at 28.4%. [2]

In addition to these challenges, Africa is going through what economists’ term as premature de-industrialization. I.e. where industrialization is shrinking in poor countries that never industrialized much in the first place. According to Dani Rodrik, in his paper – Premature De-industrialization – this is a major concern and challenge for Sub-Sahara Africa.

According to the AU industrialization report1:

“Industrialization is a critical engine of economic growth and development. Indeed, industrialization is the essence of development. That Africa remains the poorest region of the world, where 34 of the 50 least developed countries are located and in which poverty is on the increase, is a reflection of its low level of industrialization and marginalization in global manufacturing. There exists a strong linkage between industrial productive capacity, economic growth, and level of development. The developing regions and countries that are sharing in the benefits of globalization, making progress towards the attainment of the Millennium Development Goals (MDGs), and moving up on the ladder of development are the rapidly industrializing ones. Africa has not benefited much from the process of globalization and risks not meeting the MDGs in spite of its richness in natural resources. “

[1]  ACTION PLAN FOR THE ACCELERATED INDUSTRIAL DEVELOPMENT OF AFRICA –  AU CONFERENCE OF MINISTERS OF INDUSTRY; 1st  EXTRAORDINARY SESSION; 24 – 27 SEPTEMBER, 2007 MIDRAND; REPUBLIC OF SOUTH AFRICA; EXT/MIN/PA(I)

[2] UNECA MDG Report 2015; Lessons learnt in implementing the MDGs – ASSESING PROGRESS IN AFRICA TOWARD THE MILLENNIUM DEVELOPMENT GOALS.

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Solutions

Two of the primary pro-poor industrialization strategies have been described extensively namely:

  1. Agro-based industrialization – regarded as one of the key sectors in poverty reduction. It is mainly focused on rural areas with low-income population mainly dependent on subsistence agricultural practices
  2. Labour Intensive Industrialization – Involves use of labor intensive industries similar to what the Asian countries used in the 1960s and 1970s. This model is regarded to have worked well 30 years ago, but has its limitations at this point due to Global Competitiveness.

To overcome these challenges, Africa and Kenya in particular needs manufacturing as a key driver of economic growth and job creation. However, industry and manufacturing needs to be supported by solid infrastructure to enable efficient transfer of raw materials and finished goods to the markets.

With the rural electrification program, increased road infrastructure, SGR (Standard Gauge Railway) and efficient communication network, there is an increased possibility of having a competitive manufacturing sector within the rural and outlying areas in Kenya.

In addition, manufacturing will need to be integrated with service industry through business support. Kenya with its highly skilled and well trained personnel has potential to offer top-notch, world class business support services such as Marketing Communication, IT & Web Development, Software, Call-Center support and a wide range of other services that offer great support to a budding manufacturing sector.

Jua-Kali Sector

The role of informal sector and ‘Jua kali’ industry has been a major drawback in Kenyan Industrialization policy. These industries have to a larger degree dominated the manufacturing landscape and are coupled by lack of standards, poor regulation, capitalization and low productivity. It is therefore imperative that CC Viwanda solution offers a formal platform with the ability to produce goods for export and those that contribute positively to the fiscus.


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