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close this bookExporting Africa: Technology, Trade and Industrialization in Sub-Saharan Africa (UNU, 1995, 434 pages)
close this folderPart II. Country studies
close this folder10. Kenya
View the document(introductory text...)
View the documentIntroduction
View the documentThe textile and clothing industry
View the documentFood processing
View the documentThe pharmaceutical industry
View the documentThe metal industry
View the documentThe cement industry
View the documentPulp, paper and packaging
View the documentLeather and footwear industry
View the documentSummary
View the documentNotes
View the documentBibliography

Summary

This study has examined the role of technology, government policy, marketing strategies, management, labour productivity, ownership structure and the size and structure of the domestic market as determinants of Kenyan firms' export performance. The enterprise case studies were drawn from the textiles and clothing, food processing, pharmaceuticals, metal, paper and packing materials and leather and footwear industries.

Technological dynamism was found to be one of the most crucial factors determining efficiency and export competitiveness. Most firms that had failed to modernize their industrial processes found themselves unable to increase or maintain their export market shares. Other factors were subcontracting export arrangements, the availability of domestic raw materials and competitive labour costs.

Successful exporting firms in the textile, clothing, leather and shoe industries were those which had either adopted relatively modern technology or been able to establish special niche markets. A textile firm, for instance, which specialized in creative designs for women's cultural garments had been able to establish a stable export market. Another firm's impressive exports were due to a contract with an international firm to supply high-quality balls. The firm's competitiveness also depended on locally available leather and low labour costs. A recent shift to synthetic materials and inflexible labour contracts had adversely affected its competitiveness in the last few years.

In the cement industry, one of the two firms was able to export because it had adopted a more modern and fuel-efficient technological process which reduced costs and produced high-quality cement. Liberalization of prices and imports also helped the firm to increase its profitability and lower costs to international market levels.

The case studies show that private firms with foreign ownership and expatriate management tended to have higher efficiency, technical competence and managerial capabilities. Foreign ownership provided the necessary link to the outside world. This was vital for firms' ability to keep up with changing technological processes. The expatriate management played a key role in the adoption of new technologies, training labour and servicing the new equipment.

Specialization and economies of scale emerged as rather insignificant considerations. Most firms relied on specified varying orders from some traditional customers. This was, for instance, shown in the shoe and ball manufacturing firms and two textile firms. These firms' ability to cope with a range of quality requirements and changing customer needs was important.

The study also shows that those firms that had developed a competent and disciplined indigenous workforce, backed by close supervision' were able to maintain their competitiveness in both local and export markets. Continuous training of the workforce was found to be vital in view of the rapidly changing technologies and increasing quality control requirements. The ability of some pharmaceutical firms to enter the highly competitive export market was due to modern equipment, the adoption of more efficient production processes, the use of experienced expatriate pharmacists, and government incentives.

It was also evident that some Kenyan firms which established production facilities between the 1950s and 1970s have continued to export to neighbouring countries in part because these countries have not been able to establish similar facilities, due either to the small size of their markets or the high costs of installing such facilities. In such cases, the market share of the Kenyan firms in these countries was not necessarily based on modern technology or superior quality but rather because they happened to have some manufacturing capacity which was absent in some neighbouring countries. This was, however, a temporary situation which was rapidly becoming quite rare.