UNIVERSITY OF NAIROBI
SCHOOL OF ENGINEERING DEPARTMENT OF MECHANICAL AND MANUFACTURING ENGINEERING FINAL YEAR PROJECT REPORT [FME 561 & 562] PROJECT TITLE: DEVELOPING A FOCAL POINT FOR THE ENHANCEMENT OF THE 24 HOUR ECONOMY IN THE MANUFACTURING SECTOR IN NAIROBI. CASE STUDY: VISION 2030 PROJECT CODE: GM002 SUPERVISOR: ENG. G. M. NYORI COMPILED BY: MAHMOUD IBRAHIM HABIB F18/1725/2007 KABIRU DENNIS GATHOGO F18/2714/2007 This project report is submitted in partial fulfillment of the requirement for the award of the degree of Bachelor of Science in Mechanical Engineering.
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DECLARATION We, the undersigned, declare that this project is of our original work and has not been submitted for a degree award in any other institution of higher learning or published anywhere else.
MAHMOUD IBRAHIM HABIB
F18/1725/2007
Signed………………………………….
Date: ……………………………
KABIRU DENNIS GATHOGO
F18/2714/2007
Signed…………………………………...
Date: ………………………………
This project has been submitted for examination with the approval of our project supervisor
Project supervisor: ENG. G. M. NYORI Signed ………………………………….
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Date: ……………………………….
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ACKNOWLEDGEMENTS
First, we thank the Almighty God for guiding and giving us strength, peace of mind and grace that has brought us this far. During the preparation of this project, we came across many people who have been instrumental in helping us complete this project. We would like to extend our sincere gratitude to them and truly appreciate them for their untiring support. However, in an elite category that demands mentioning are the following persons: Our project supervisor, Eng. G.M. Nyori- we are very grateful for the encouragement, guidance, criticism, concerned assistance, patience and friendship that you gave us from the beginning of the project to its successful completion. We would like to thank The Chairman‟s office (Dept. of Mechanical &Manufacturing Engineering) for the earnest help you granted us including access to previous projects and research materials. Our special thanks to the ministries and companies that were part of our survey for granting us access to the very useful information and resources to do this project. We are grateful to all our family members and friends who supported us all the time to the completion of this project. To all, we say thank you and God bless you.
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ABSTRACT Kenya‟s economic capacity is underutilized in terms of many resources. Furthermore, much of the efforts done by the government (Ministry of Industrialization) on improving the manufacturing sector are mainly on the development of micro, small and medium industries (MSMIs) rather than how to enhance the very promising 24 hour economy of the already existing manufacturing industries in order to fully utilize the resources available to ensure improved productivity. The objectives of carrying out this project were to investigate the level of government involvement in the adoption of a twenty-four hour economy in the manufacturing industry in Nairobi, study the factors that hinder the adoption of the twenty four hour economy in manufacturing, investigate on the causes of low demand for locally manufactured goods, investigate the effect of technology in the manufacturing sector, investigate on the other sectors affecting the implementation of the 24 hour economy in the manufacturing sector in Nairobi and develop a focal point for the enhancement of a 24-hour economy for the manufacturing sector in Nairobi. Background information on manufacturing companies was obtained from progress reports, websites among others as cited in the introduction and literature review. We visited manufacturing companies in Nairobi, relevant ministries and suppliers where we gave them questionnaires to fill and also conducted interviews with so as to get the relevant information. After collecting the questionnaires we analysed them and came up with tables and charts showing the problems the companies were facing, government‟s involvement and other sectors affecting the implementation of the twenty four hour economy. The findings indicate that the government, through the planning and industrialization ministries has a very big role to play in encouraging the taking up of 24-hour manufacturing by coming up with favourable policies. The manufacturing companies should also invest in technology and research and development for value addition and product diversification.
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ABBREVIATIONS ACA – Anti-Counterfeit Agency AGOA – African Growth and Opportunity Act ATM – Automated Teller Machine BDS – Business Development Services BPO – Business Process Outsourcing COMESA – Common Market for Eastern and Southern Africa EAC – East African Community EU – European Union GDP – Gross Domestic Product HIV – Human Immunodeficiency Virus KEPSA – Kenya Private Sector Alliance MDGs – Millennium Development Goals MSMIs – Micro, Small and Medium industries MTP – Medium Term Plan NCBDA – Nairobi Central Business District Association NEMA – National Environmental Management Authority NGO – Non-Government Organization R & D – Research and Development SMEs – Small and Medium Enterprises STI – Science, Technology and Innovation UNEP – United Nations Environmental Programme WHO – World Health Organization
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LIST OF FIGURES Figure 4.1: Percentage restriction of the imports by the Government....................... 40 Figure 4.2: Percentage of goods sold locally and exported .......................................... 45 Figure 4.3: Likely causes of drop in demand for locally manufactured products .... 46 Figure 4.4: Response as to whether 24 hour manufacturing will help the other sectors ............................................................................................................ 48 Figure 5: Effect of other sectors ..................................................................................... 49 Figure 4.6: Police on patrol ............................................................................................. 53 Figure 4.7: Traffic jam in Nairobi ................................................................................. 56 Figure 4.8: Means of transport ....................................................................................... 57 Figure 4.9: ATM outlets .................................................................................................. 60 Figure 4.10: Health care services ................................................................................... 62
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LIST OF TABLES Table 4.1: Response rate ................................................................................................. 37 Table 4.2: Respondents by category .............................................................................. 38 Table 4.3: Experience in the industry ............................................................................ 38 Table 4.4: Awareness of Gov’t involvement in promotion of 24 hour economy ....... 39 Table 4.5: Strategies in Research and Development and their outcomes .................. 43
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Contents DECLARATION ....................................................................................................................................... 2 ACKNOWLEDGEMENTS ......................................................................................................................... 3 ABSTRACT .............................................................................................................................................. 4 ABBREVIATIONS .................................................................................................................................... 5 LIST OF FIGURES .................................................................................................................................... 6 LIST OF TABLES ...................................................................................................................................... 7 CHAPTER ONE ............................................................................................................................................. 10 INTRODUCTION ....................................................................................................................................... 10 1.1
BACKGROUND INFORMATION ................................................................................................ 10
1.2
INDUSTRIAL MANUFACTURING ............................................................................................. 10
1.3
JUSTIFICATION FOR THE 24 HOUR ECONOMY ....................................................................... 11
1.4
PROBLEM STATEMENT ........................................................................................................... 12
1.5
OBJECTIVES OF THE STUDY .................................................................................................... 13
1.6
SCOPE AND LIMITATION OF THE STUDY ................................................................................ 13
CHAPTER TWO ............................................................................................................................................ 14 LITERATURE REVIEW ............................................................................................................................... 14 2.1
VISION 2030 ........................................................................................................................... 14
2.2
24 HOUR ECONOMY............................................................................................................... 18
2.3
ANALYSIS OF OPPORTUNITIES ON IMPROVEMENT IN MANUFACTURING ............................. 22
2.4
EMERGING ISSUES AND CHALLENGES ................................................................................... 25
CHAPTER THREE .......................................................................................................................................... 32 RESEARCH METHODOLGY ....................................................................................................................... 32
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3.1
INTRODUCTION ..................................................................................................................... 32
3.2
RESEARCH DESIGN ................................................................................................................. 33
3.3
THE DATA ............................................................................................................................... 33
3.4
STUDY AREA ........................................................................................................................... 34
3.5
POPULATION .......................................................................................................................... 34
3.6
SAMPLE .................................................................................................................................. 34
3.7
DATA COLLECTION INSTRUMENTS ........................................................................................ 34
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3.8
DATA COLLECTION PROCEDURE ............................................................................................ 35
3.9
TREATMENT OF DATA ............................................................................................................ 35
3.10
CONSTRAINTS.......................................................................................................................... 36
CHAPTER FOUR ........................................................................................................................................... 37 SURVEY FINDINGS AND DATA ANALYSIS................................................................................................. 37 4.1
RESPONSE RATE ...................................................................................................................... 37
4.2
FINDINGS ................................................................................................................................ 38
4.3
ANALYSIS ................................................................................................................................ 51
CHAPTER FIVE ............................................................................................................................................. 65 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ......................................................................... 65 5.1
SUMMARY OF FINDINGS. ....................................................................................................... 65
5.2
CONCLUSIONS ........................................................................................................................ 67
5.3
RECOMMENDATIONS ............................................................................................................. 67
5.4
Areas of further research ....................................................................................................... 68
References .......................................................................................................................................... 69 Appendix: Questionnaire .................................................................................................................... 70
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CHAPTER ONE INTRODUCTION 1.1
BACKGROUND INFORMATION
Nairobi business contributes enormously to the economy of Kenya. In fact, Nairobi is considered a business hub for East and Central Africa. Most companies that have operations in this region have headquarters located in Nairobi, including international organizations and multi-national companies. Coca Cola, General Motors, Google and even the United Nations' regional headquarters are located in this city. Those looking to establish a new business find that Nairobi is an ideal location because of its infrastructure and liberal markets. Government policies have encouraged business growth and a stable Nairobi economy. Its modernity, state-ofthe-art skyline, improved technology, highly educated and trained manpower, and diverse and vibrant market have elevated Nairobi to become the business hub of the region. Nairobi, alone, contributes 60 percent of Kenya's GDP. Its companies are both public and private entities, including service based, agricultural and manufacturing industries. Population of the study-The population is the total collection elements about which one would wish to make some interference. It is the compared set of individuals, case or objects which some common observable characteristics from which a sample may be taken for statistical measurement. [6]
1.2
INDUSTRIAL MANUFACTURING
Kenya has a large manufacturing sector serving both the local market and exports to the East African region. The sector, which is dominated by subsidiaries of multinational corporations, contributed approximately 13% of the Gross Domestic Product (GDP) in 2004. Improved power supply, increased supply of agricultural products for agro processing, favourable tax reforms and tax incentives, more vigorous export promotion and liberal trade incentives to take advantage of the expanded market outlets through AGOA, COMESA and East African Community (EAC)
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arrangements, have all resulted in a modest expansion in the sector of 1.4 % per cent in 2004 as compared to 1.2% in 2003. [1] The rising levels of poverty coupled with the general slowdown of the economy has continued to inhibit growth in the demand of locally manufactured goods, as effective demand continues to shift more in favour of relatively cheaper imported manufactured items. In addition, the high cost of inputs as a result of poor infrastructure has led to high prices of locally manufactured products thereby limiting their competitiveness in the regional markets and hampering the sector's capacity utilisation. However, the recent introduction of the EAC Customs Union provides Kenya‟s manufacturing sector, the most developed within the region, a greater opportunity for growth by taking advantage of the enlarged market size, economies of scale, and increased intraregional trade. Manufacturing in Nairobi consists of many small and medium-sized industries. These include industries manufacturing steel products, plastic goods, soaps, flour, vegetable oil, canned fruit and fruit juice, horticulture, and dairy and poultry farming. Bulk trading of Kenyan coffee (the Kenyan coffee auction) also takes place weekly at the Nairobi Coffee Exchange. Although Nairobi trade is based on an agricultural economy, the most vibrant industry is the service-based industry with Business Process Outsourcing (BPO) as the latest entrant into the market. The service industry contributes 59.2 percent of Nairobi's GDP as compared to 24 percent from agriculture, followed next by the manufacturing industry.
1.3
JUSTIFICATION FOR THE 24 HOUR ECONOMY
There are both economic and social justifications for a 24-hour economy. The leading major justification is the availability of slack capacity – Kenya‟s economic capacity is underutilized in terms of many resources. Among the main aspects of this are the following: i. Human resource utilization. Many people are unemployed and under employed. This is a serious socio-economic issue that creates an idle resource, one that can and does result in subsequent negative externalities such as crime and destitution. Employment creation is, therefore, a major justification. ii.
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Equipment. A lot of equipment, including machinery and space, is idle at night and on weekends. It can be utilized during these times by second and third shifts of the workforce in many instances.
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iii. Economies of scale. A 24-hour economy helps to ensure economies of scale – i.e., the more one produces, the lower the cost of production per unit. iii. Economies of scope. There would be economies of scope – one can do more with what one has at any given time. For example, opening factories at night will cause other businesses to remain open in order to service the factories, from food suppliers and restaurants to taxi-cab services and banks. v. Economic and multiplier effect. The extra money made through extra shift-work will obviously enter the consumer and savings economies, leading to increased demand for goods and services and increased investment. This will help lead to the creation of more jobs, which can then also become a part of the 24-hour system. vi. Greater capacity utilization. The country would start to work more efficiently as an economy, at all levels, than is presently achievable. This is a desirable goal, especially as it would lead to the creation of a more stable political, economic and social system. vii. Decongestion of traffic. The implementation of the 24-hour economy will help lead to the decongestion of vehicular and pedestrian traffic in cities and towns, as people would be working at different hours of the day, the night and the week. viii. Synchronization with the global economy. The fact that the world is divided into several time zones means that different parts of the world operate at different times. When one half is in night and most people are asleep, the other half is in daytime and generally active. Kenya having a 24-hour economy will allow the country to take advantage of both sides, dealing with each side when it is at its most active, day and night. This will help make Kenya more competitive and well-positioned for greater economic growth.
1.4
PROBLEM STATEMENT
Kenya‟s economic capacity is underutilized in terms of many resources. Furthermore, much of the efforts done by the government (Ministry of Industrialization) on improving the manufacturing sector are mainly on the development of micro, small ;
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and medium industries (MSMIs) rather than how to enhance the very promising 24 hour economy of the already existing manufacturing industries in order to fully utilize the resources available to ensure improved productivity. We therefore saw the need to take up this project and develop a focal point on how the manufacturing industry can enhance its 24 hour economy. This project intends to investigate the extent of adoption of the twenty four hour economy in the manufacturing sector in Nairobi.
1.5
OBJECTIVES OF THE STUDY
The objectives of the study are: a) Investigate the level of government involvement in the adoption of a twenty-four hour economy in the manufacturing industry in Nairobi b) Study the factors that hinder the adoption of the twenty four hour economy in manufacturing c) Investigate on the causes of low demand for locally manufactured goods. d) Investigate the effect of technology in the manufacturing sector. e) Investigate on the other sectors affecting the implementation of the 24 hour economy in the manufacturing sector in Nairobi f) Develop a focal point to enhance the adoption of the 24 hour economy
1.6
SCOPE AND LIMITATION OF THE STUDY
The research was limited to Nairobi. It includes administering written questionnaires to manufacturers, engineers, engineering consultants, suppliers and other players in the manufacturing industry. This is because eighty percent of the manufacturing g industries in Kenya are located in Nairobi and also the proximity of the researcher to them. Most companies undertake their operations in Nairobi and their offices are located in Nairobi even though some of them have branches outside Nairobi. Manufacturers of all categories were intended to widen the area of study so as to have a sample that would represent the entire population of the manufacturing industry. In addition, the main limitation of the study was time, lack of co-operation from respondents and finance.
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CHAPTER TWO LITERATURE REVIEW 2.1
VISION 2030
The long term national development goal is envisioned in the “Kenya Vision 2030” which envisages “A globally competitive and prosperous nation with a high quality of life by 2030.” It comprises three pillars, namely, Economic pillar which targets economic growth to be 10% per annum over the next 25 years, social pillar “a just and cohesive society enjoying equitable social development in a clean and secure environment,” and political pillar for “ issue-based, people-centered, result-oriented, accountable democratic political system.” The Kenya Vision 2030 is to be implemented in successive five-year Medium-Term Plans, with the first such plan covering the period 2008–2012. At an appropriate stage, another five-year plan will be produced covering the period 2012 to 2017, and so on till 2030. As the country makes progress to middle-income status through these development plans, it is expected to have met its Millennium Development Goals (MDGs) whose deadline is 2015. Some of the goals have already been met. The Vision 2030 spells out action that will be taken to achieve the rest. [10] Kenya‟s manufacturing sector is among the key productive sectors identified for economic growth and development because of its immense potential for wealth and employment creation as well as poverty alleviation. The sector continues to provide impetus towards achievement of millennium development goals (MDGs); particularly goal one on eradication of extreme poverty and hunger, goal seven on ensuring environmental sustainability and goal eight on Global Partnerships for Development. The sector is expected to register growth of 10% in the medium term period (2008 2012) through further penetration of local, regional and global markets. Industry comprises of manufacturing; mining and quarrying; electricity, gas and water supply; wholesale and retail; services sector; education; agriculture and forestry; and fishing activities. The sector plan focuses on manufacturing, construction mining and quarry activities. [16] Manufacturing is the art of transforming raw materials into either intermediate goods or finished products through mechanized processes.
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The manufacturing sector in Kenya comprises of: 1. Food and beverages 2. Tobacco 3. Leather products and footwear 4. Timber 5. Wood products and furniture 6. Paper and paper board 7. Pharmaceuticals and medical equipment 8. Chemical and allied 9. Plastics and rubber 10. Metal 11. Motor vehicle assembly 12. Electrical and electronics
2.1.1 CURRENT INDUSTRY SITUATION Industrialization remains an integral part of the country‟s development strategies. The manufacturing sector is mainly agro-based and characterized by low value addition, modest employment, poor capacity utilization and weak linkages to other sectors. The intermediate and capital goods industries such as metallurgical, petro chemical, pharmaceutical, machinery, telecommunications and electronics are also underdeveloped. Most manufacturing firms are family owned and operated. The bulk of Kenya‟s manufactured goods (95%) are basic products that include food, beverages, building materials, basic chemicals, among others. Only 5% of manufactured items, such as pharmaceuticals, are in skill-intensive activities as per the economic survey of 2007. Compliance to standards to enhance access to markets for some industries especially micro, small and medium industries (MSMIs) remain a challenge. [2]
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2.1.2 SECTOR PERFORMANCE The manufacturing sector has remained at about 10% over the last 5 years; with the entire industrial activity share of GDP has remained at about 15-16%. The sector reported an annual growth rate of 5.5% between 2003 and 2007. Manufacturing activities account for the greatest share of industrial production output and form the core of industrial activities. The sectors real value added was 6.2 per in 2007 compared to 6.7 per in 2006. The growth was primarily driven by manufacture of beverages, grain mill products, cement, coffee and cigarettes. The total output value rose to Kshs. 603.7 billion in 2007 from Kshs. 558.3 billion in 2006 representing an 8.1 % growth. The sub-sectors which recorded growth were meat and dairy products, canned vegetables, fruits, fish, oils and fats, beverages and tobacco, petroleum. The growth was mainly attributed to opening of new processing plants, diversification of products, increased capacity utilization, construction boom and key measures put in place to cushion manufacturers against influx of sub-standard goods into the market. The sector is an important source of employment for the country‟s labour force as it is one of the key employers. It currently employs 1.88 million people in the formal and informal sectors. Employment within the formal sector grew by 2.3% in 2007 (from 254,900 people in 2006 to 261,300 people in 2007). The proportion of employees in the formal manufacturing sector of total employees averaged 15.7% between 2003 and 2007. In 2007 nearly 50% of manufacturing firms in Kenya were employing 50 workers or less. [3] Manufacturing activities are heavily dependent on the types of technologies locally available. There is a wide disparity in technology capacity and capability between the country and the industrialized nation; making competitive production and participation by Kenyan companies in the globalized market difficult. This is partly due to inadequate assessment of the potential technological areas that Kenya can competitively participate in and develop market niches for her products. Locally manufactured goods comprise 25% of Kenya‟s exports. However, the share of Kenyan products is only 7% of the US $ 11 billion in the regional market. Furthermore, most of Kenya‟s manufactured products are not competitive in the market due to high cost of production and stringent international market compliance standards. The east African market is dominated by imports from outside the region, an indication that there is a large potential to improve Kenya‟s competitiveness in the region by replacing external suppliers gradually.
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The Kenya Ministry of Industrialization has worked out a manufacturing sector plan which provides an implementation mechanism of the first medium term plan (MTP) 2008-2012 of the Kenya vision 2030. The sectors overall goal in the MTP is to increase its contribution to Gross Domestic Product (GDP) by atleast 10% per annum. The sector plan focuses on manufacturing, construction, mining and quarry activities. The plan proposes a number of projects and programs, including policy measures aimed at addressing the challenges faced by our local manufacturing industries. [11]
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2.2
24 HOUR ECONOMY
The twenty-four hour economy plan is a Public/Private Sector collaborative initiative of the Ministry of Nairobi Metropolitan Development in conjunction with major stakeholders such as the Nairobi Central Business District Association (NCBDA), the Kenya Private Sector Alliance (KEPSA) and other private organizations. Making Kenya a competitive nation is the main objective of the Vision 2030 development plan. However, the specifics of doing so provide a major challenge. The development of a planned 24-hour economy can serve as a good starting point. By harnessing our most available resource, (time) we can make the Kenyan economy more competitive, thereby attracting more investors, both domestic and international. Vision 2030 also specifically mentions the setting up of a 24-hour economy as a target of development, with the intention of positioning Nairobi as an all-around 24-hour, globally competitive business and tourism city whose residents would enjoy a high quality of life. Being able to work twenty-four hours a day, seven days a week will ensure that other resources are utilized more fully, creating greater job opportunities for our workers, especially the youth, who constitute a major portion of the working-age population. A lot of resources are left idle at night, particularly machinery, other technical equipment, and space. When everybody goes home at more or less the same time after an eight- or twelve-hour day, our combined productivity is not necessarily as high as it could or should be.[12] History indicates that the greatest economic growth is driven by an increase in productivity. A fully operative twenty-four hour economy will enable us to increase productivity by allowing us to do more with the available space, manpower and technology. In a country not rich in mineral resources there is a need to focus more on the one resource that every country has – time. A good starting point for a proper twenty-four hour economy is the identification of markets, both domestic and foreign, that will absorb the extra goods and services that we foresee ourselves producing through the extra hours we add in the economy through added work shifts. We can begin to identify and create these extra markets by improving our national image and the quality of our goods and services. It is imperative, therefore, that we follow a properly planned course: increase the working hours, improve quality, create markets, and improve national image. What a 24-hour economy means is that the eight-hour working day can be performed at any time during a twenty-four hour period for any given work situation. This can ;
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mean working in shifts (the normal practice being three shifts of eight hours each per day), or it can simply refer to the ability to work during otherwise „off-hours‟. Even shifts can be shorter than eight hours each, but that depends on the organization or company for which one works. These „off-hours‟ include weekends, lunchtimes, early mornings, and late evenings, and may last an hour or longer. „Shift-sharing‟, „worksharing‟, and „flexi-time‟ are other concepts of an all-around economy that can be incorporated into the 24-hour economy. „Flexi-time‟ is another powerful concept and possibility for the 24-hour economy, as it allows one to work during the times that are most convenient for one, as long as all the due hours are put in by the end of the work week. In addition, it is possible for employees to share shifts („shift share‟ or „work-sharing‟) and work as if on a parttime basis, allowing for two or more workers to do the same job but at different times of the day or week. It means that one works fewer hours per week and gets paid less accordingly, but it allows for staff retention and diversification, especially during harsh economic times. Work-sharing is common practice in Germany and Switzerland, and is becoming more popular in Japan, where it has helped companies and employees to weather the storm of economic downturn in recent years. This system can also be referred to as „shift rotation‟, although there are some slight differences. It enhances staff retention and permits employees to have adequate off-time while yet contributing to the overall productivity of the organization. Both methods are very well suited to a 24-hour work system. [17] The main objective of the initiative is to unlock the potential of the Kenyan economy, increase productivity and production, and create employment. As envisaged by the Vision 2030 plan, Kenya is expected to move closer to the status of an advanced economy where a 24-hour market system is more the norm. The 24-hour economy is not a new idea. Some sectors of the economy, such as the security and health services, already operate 24 hours a day all year long. What is needed is for more sectors of the economy such as manufacturing to adopt the strategy. This would help to create the appropriate synergies and momentum that will aid in propelling Kenya towards the desired global middle income economic status by the year 2030. While the 24-hour economy is neither a new concept nor a new phenomenon, it is certainly one that needs to be looked at anew in order to have the right conditions in place for the good of the people and the entire economy, especially as a new Kenya emerges. The 24-hour economy has been in operation in many countries around the world for a number of decades now, albeit more so in selected cities and regions even in those
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countries than in the entire country. Similarly, there have been several aspects of the economy, in virtually all countries, which have been operating on a 24-hour basis for many years, and many of these are well documented. These include hospitals, police stations, hotels, international airports, radio and television stations, and others. However, all these are open either out of necessity, or as a result of being more or less of an emergency nature, rather than due to the demands of round-the-clock living. This latter is the major driving force behind the development of a 24-hour economy. In the present study, we looked at 24-hour economy as it has it has developed in a number of countries around the world, including the United States, the United Kingdom, the Netherlands, Japan and Moscow in Russia. In this region, Nairobi and Kampala are known to have a thriving 24-hour system particularly in the transport and entertainment industries. From these experiences, we can learn to avoid the pitfalls and mistakes encountered in those sectors, while at the same time extracting the good points to duplicate and/or adapt to Nairobi‟s manufacturing sector. It will also allow making informed deliberations and to apply any new measures not necessarily seen anywhere else that are deemed possible. The most noticeable 24-hour activity is the opening of large supermarkets and chain stores around the clock for some and into the late night for others. However, several other activities do occur on a 24-hour basis in a variety of sectors. Some of the activities include: 1. Bank ATM services 2. Many banks open beyond 4 p.m. and for several hours during the weekends 3. Hospitals, clinics, pharmacies and other medical services 4. Bars, restaurants and fast food places 5. Long distance transport trucks 6. Trade activities within airports, seaports and border points 7. Private security services 8. Power and lighting provision companies 9. Nightclubs and other entertainment outlets 10. Television and radio broadcasting stations 11. Retail marketing outlets 12. Manufacturing plants 13. Telephone and communications service operators Currently, the transport sector, particularly cross-country bus transport and largehaulage trucks, which ferry people and goods all over the country at all hours of the
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day and night. City public transport routes numbers 15(to Lang‟ata), 125(to Ongata Rongai and Kiserian), 46(to Kawangware), 4(to Riruta), 9 (to Eastleigh) and 58(to Eastlands) in Nairobi are also active virtually all night long. Security services (police, trained guards, night watchmen), medical services (hospitals, ambulances, pharmacies, etc.), and nightclubs are further examples of the on-going informal 24-hour economy in Kenya. Many have been working in the offhours, however, in response to the needs of society for essential services, which has been the case for many decades. In addition, quite a number of sectors and industries are easily amenable to 24-hour operations.
2.2.2 THE MANUFACTURING SECTOR. Many Kenyan manufacturing industries have been operating on a full-time 24-hour basis for many decades. It is instructive that a large percentage of these manufacturing industries are located in rural areas where the concept of a 24-hour economy is largely ill understood. These include the factories that produce some of the basics if everyday life, especially in the food industry. Sugar factories (such as Mumias Sugar Company), tea producers such as Brooke Bond (now part of the Unilever Group) and Kenya Tea Packers (Ketepa), coffee millers and producers (e.g. Finlays and Dormans), dairy factories (Kenya Cooperative Creameries, Brookside, Delamere and others), millers and bakers (Festive, Broadways, Elliot‟s, Supa Loaf, etc.), British American Tobacco and general food processors such as East Africa Industries and Sara Lee have been working nights and weekends for many years. A number of manufacturers of other household and consumer goods also work on a 24-hour basis in order to meet the demands of daily living. The harmonization of all this activity in a total, streamlined and efficiently planned 24-hour economy is what has been missing, resulting in an informal and non-coordinated economy which jerks and shifts according to the whims of owners, managers, employers, and workers. The country‟s higher education institutions have been turning out lots of bright young „knowledge workers‟. These knowledge workers (such as engineers, software developers, web producers and others) can operate for 24 hours. Since working at all odd hours can present certain problems in the health of an individual, it is incumbent upon the country to take advantage of its young population structure by incorporating the ideals of the 24-hour economy into its future planning. Young people are generally better able to weather the effects of off-hours work. [18]
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2.3
ANALYSIS OF OPPORTUNITIES ON IMPROVEMENT IN MANUFACTURING
(Ref. 8: Strategic plan 2008-2012) 2.3.1 The establishment of the ministry of industrialization. The establishment of the ministry of industrialization provides an opportunity to mobilize and prioritize resources for industrialization. It also brings to the fore issues affecting industrialization in Kenya and provides a medium for solutions. 2.3.2 Opportunities under Kenya vision 2030. The vision aspires to transform Kenya into a middle income, rapidly industrializing country by the year 2030. Under the economic pillar, the manufacturing sector has been identified as one of the six key priority sectors in raising the attainment of national GDP growth rate to 10% by 2012. In this regard, the manufacturing sector is expected to increase its contribution to GDP of at least 10% per annum. This provides an opportunity for the ministry to take leadership for the development of a “robust, diversified and competitive manufacturing sector”. 2.3.3 Emerging focus on value addition activities. Kenya is an agro-based economy which exports primary products. There is shift to secondary products which have a wider market demand, fetch high incomes and opportunities for employment creation. Furthermore, value addition will boost growth in the agricultural sector by stimulating agroprocessing activities. 2.3.4 Availability of key domestic raw materials for local industries. Kenya is endowed with natural resources which provide raw materials for local industries. Some of the sectors that provide the raw material include agriculture, forestry, mining and fisheries. Usage of local materials is expected to reduce of wastages and improves competitiveness of locally manufactured products. It is envisaged that through use of locally available raw materials, the local content of Kenya‟s products will increase significantly thereby contributing to the medium term goal of 2012 of reducing imports in key local industries by 25%.
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2.3.5 A strategic geographical location. Kenya‟s strategic geographical location makes it a major gateway for trade and investment to the Eastern and Central African region, making it a regional hub for investment and communication. The port of Mombasa serves Kenya‟s hinterland as well as Uganda, Rwanda, Burundi, the Eastern Democratic Republic of Congo and Southern Sudan. The main airport, Jomo Kenyatta International Airport, is strategically located to serve major markets within Europe and the Middle East, as well as other African countries. As a result, the country hosts a number of international organizations that includes the headquarters of UNEP, UN-habitat, Lake Victoria Commission and numerous non-governmental and multinational organizations. This scenario provides the country with enormous opportunities to develop investment and industry. 2.3.6 Accreditation and membership to various regional economic and international bodies: Scale, enhanced competitiveness through increased competition, improvement in Membership to regional economic and international bodies provides accessibility to wide range of products and wider market access. This provides an opportunity for economies of transfer of technology and attraction of foreign direct investments. 2.3.7 The presence of Kenyan missions abroad: Market access can be enhanced through utilization of economic opportunities availed by existence of Kenyan missions in other countries for information gathering on export markets, consumer tastes and preferences, quality standards requirements and other market intelligence.
2.3.8 Availability of human resource development institutions Kenya has many educational institutions, both private and public, which provide quality education. Over the years the institutions have been able to train a pool of qualified personnel who are useful for industrialization. Moreover, several middle level training institution are partnering with local and foreign universities to offer degree programs thereby deepening available opportunities for higher learning and acquisition of skills.
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2.3.9 The emergence of a dynamic consumer tastes and standards. Consumer tastes and standards are dynamic and entail production opportunities to industrialists. This will encourage manufacturing firms to innovative in order to satisfy the changing consumer taste and standards. 2.3.10 Emergence of consumer lobby groups. Emergence of consumer lobby groups provides an opportunity for quality control by creating awareness on substandard goods. These lobby groups question the quality of products and ethical production practices in industry. Manufacturers therefore, have to strive to meet international product quality standards. The effectiveness of the Vision 2030 strategy will depend on how well it recognizes and interfaces with other plans aimed at achieving it, such as the Nairobi Metro 2030 strategy. Nairobi Metro 2030 is part of a wider effort aimed at moving Kenya into a middle-income economy by 2030. Its vision is to transform the Nairobi Metropolitan Region into a World Class African Metropolis. The vision is pursuant to the achievement of Vision 2030.
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2.4
EMERGING ISSUES AND CHALLENGES
[Ref 15: 2nd Annual progress report] The performance of the manufacturing sector has been on the decline for a considerable period of time and its contribution to the GDP has remained stagnant at 10%since the 1960s. Some of these challenges are sector specified whereas others are cross cutting hence requiring closer collaborations between sectors. The following are the issues and challenges that have contributed to the decline growth:2.4.1 Narrow export base and low value addition. Most industries are still engaged in the production of low value-added and limited range of products due to limited technological capability and limited information on international trade opportunities. Over-reliance on the few traditional exports has, over the years, led to destabilizing fluctuations in foreign exchange earnings. This is despite the country pursuing an export led growth strategy. These factors have contributed to limited scope for product diversification and expansion of the export base. The narrow product range and focus on a few markets have restricted the growth of Kenya‟s exports. The Kenyan manufacturer, especially the MSMI, is faced with challenge of meeting increasing global customer demands on packaging that encompass aesthetics, convenience, sizes, labeling, environment, and cost effectiveness among others. Kenya is known to produce quality products that are unable to compete even in our local market shelves with imports – of the same and sometimes inferior quality – such as fruits, honey, juices, and soaps because of poor and unattractive packages. 2.4.2 Influx of sub-standard, counterfeits and contra-band goods. The entry into the local market by substandard, counterfeit and contraband products has unfairly reduced the market share for locally manufactured products. Counterfeit trade has also discouraged innovation initiatives and reduced the government revenue base, while some products are a health hazard to consumers. Although the Anti-counterfeit Act 2008 became law, the different aspects of counterfeits are handled in a disjointed manner, using several pieces of legislation. There is need expedite the establishment
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of an Anti-Counterfeit Agency (ACA) to address this issue in a harmonized and effective manner. 2.4.3 Poor, inadequate and costly infrastructure. Inadequate, unstable and costly supply of energy in Kenya has led to low productivity, high production and distribution costs; and uncompetitive products and services. This has resulted to investors installing power regulators and/or large power generators. Further, the poor dilapidated state of infrastructure, especially road and rail, has aggravated the problem. The concentration of road networks in a few urban areas with limited feeder roads in regions with resource endowments has resulted in the agglomeration of industries in areas with good road networks thus further creating disparities in regional industrial development. Limited in the availability of clean water in the required quantities and quality levels are a major constraint to industrialization. Making the situation worse is the fact the development of water supplies has not been matched by a corresponding increase in facilities for sanitary disposal of wastewater, leading to increasing pollution and general environmental degradation. Destruction of water catchments has compounded the inadequacy of water for domestic and industrial use and energy generation. Similarly, the discharge of waste water, agricultural and domestic runoffs into water bodies leads to high pollution levels. The poor management of sewerage disposal and waste products from industries is adversely affecting the environment. In addition, the main sewerage systems suffer from constant breakages and leakages. 2.4.4 Informality, poor sustainability and graduation of MSMIS. The MSMI sector contributes substantially to the GDP and employs millions of Kenyans. However, majority of the micro and small industries are informal and characterized by a high mortality rate. The MSMIs business environment is exacerbated by the fact that Business Development Services (BDS) are not readily available and affordable to most MSMIs. Due to the concentration of formal (large) firms in major towns, and the informality and rural base of most MSMIs, there are weak linkages, inadequate BDS and few subcontracting arrangements with the medium and large firms. In addition, the growth and graduation of the MSMIs have difficulties in realizing their potential due to a number of factors; - Poor market access
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-
Restrictive legislation and regulation High cost of credit Poor infrastructure Restricted access to land
2.4.5 Low technology and innovation uptake The bulk of the firms in Kenya‟s manufacturing sub-sector use relatively old technologies. Moreover, only 7% of its manufacturing technologies are sourced within the country. The rest, 93% is imported, thus making importation of affordable and modern technology a major challenge. Therefore, for the manufacturing sector to become competitive there is an urgent need for establishing modern engineering design and development units locally. The lack of knowledge, high cost and fear of change has led to low technology uptake. Similarly, there are weak linkages between the technology and research providers and the market. Further, low funding for R&D has also contributed to poor adaptation of technology. In addition, there is lack of institutionalization of incentives for promotion and efficient use of existing knowledge and creation of new knowledge that would spur entrepreneurial activities which will increase the capacity and competitiveness of local firms. Inadequate awareness of the role of intellectual property rights in fostering socio economic development is hindering the commercialization, registration and protections of new innovations in the manufacturing sector and patent mining for technological development. 2.4.6 Weak policy, legal, regulatory and institutional framework. Registration of businesses (incorporation/business name) is still centralized in Nairobi. Similarly the commercial courts are in Nairobi and lack capacity of expeditious disposal of cases and disputes. Though the single business permit has been introduced and has thus reduced the number of local licenses, it is still costly and cumbersome to register and operate a business in Kenya. Efforts to develop a „one-stopshop‟ for business licensing, registration and taxation by the Kenya Investment Authority have not been finalized. Further, there is lack of capacity within the judiciary to handle e-trade related litigation.
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Weak governance creates inefficiencies and bureaucratic delays in service delivery because of rent seeking. This has increased the cost of doing business, led to mistrust, and uncertainty in taking up trade opportunities. 2.4.7 Inadequate capacity to meet product quality standards and ISO certification Rapidly changing consumer needs, preferences and quality requirements, both locally and internationally are creating a strain for many Kenyan manufacturers, especially MSMIs. ISO certification can guarantee international competitiveness but awareness among MSMIs on the process and benefits is still low. However, the capacity for many Kenyan manufacturers to undertake and implement ISO certification requirement is low. In addition, the capacities of certifying organizations are inadequate and the process of certification is still too costly a majority of Kenyan firms. 2.4.8 Declining local and foreign direct investments In the last decade, both local and foreign direct investment (FDIs) in Kenya has been on the decline, whereas the investment rates of neighboring countries have been rising. This could be attributed to Kenya‟s poor business environment, which has caused many business enterprises to scale or close down, or simply relocate to other countries with better business environments. In addition, local investments have declined due inadequate mobilization of local resources for investment and poor incentives. 2.4.9 Weak industrial linkages and collaboration The sector requires collaboration and synergistic linkages with several agencies including Government ministries and departments, the private sector, the civil society and development of the industrial sector. However, there are no formal mechanisms to support these arrangements. These need to be developed, strengthened and sustained. 2.4.10 Limited access to financial services. High cost and lack of access to formal financial services such as credit products and trade guarantees have inhibited the competitiveness and growth of MSMIs both in rural and urban areas. In addition, insurance premium are generally too high and unaffordable to most businesses. The current financial products available are mainly short and medium term
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loans; however, industrial development requires long term financing. This has limited the availability of finance for industrial development. Besides, the level of interest rate spread is high and this has kept the cost of doing business in Kenya relatively high. 2.4.11 Limited technical and managerial skills Strategic management and technical skills are not developed in a wellstructured and coordinated manner and are virtually absent in MSMIs. There is also a mismatch between available technical skills and market demands due to poor linkages between training institutions and industry. 2.4.12 Weak public private partnerships. The Government policy embraces the private sector as the engine for economic growth. Nevertheless, there is disharmony and a lack of constructive dialogue between the private and the public sectors. This absence of partnership opportunities has contributed to skewed development initiatives, duplication of efforts and the development of policies that are not responsive to the needs of private sector. 2.4.13 Insecurity. The high crime rate has forced manufacturers to hire extra security, install CCTVs, and other security devices and this has increased production and distribution costs. The high crime rate has partly contributed to the relocation of investors to other countries and reduced foreign direct investment. 2.4.14 Unbalanced regional industrialization. Kenya‟s manufacturing sector is mainly agro-based. Most of the industries are located in urban and pre-urban areas whereas the raw materials for these industries are sourced from rural areas. The concentration of industries in urban areas has resulted to lack of dispersion of industries to rural areas, leading to regional disparity in development, rural-urban migration and sub-optimal utilization of natural resources. 2.4.15 Inadequate capacity for quality service delivery. The sector is faced with several challenges affecting its performance, including inadequate field representation, limited ICT connectivity and inadequate budgetary provisions for effective service delivery.
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2.4.16 Low adoption of ICT industries. The low levels of penetration and high cost of ICT infrastructure has hindered access and usage leading to low access to markets and technological information and increased cost of marketing and communication. 2.4.17 Overlaps and ambiguity in mandates and functions. Lack of clear boundaries on the mandates and functions of ministries and agencies has caused distortions in the value chain, weak sectorial policies, overlaps and conflicts in policy implementation. The ambiguities have been detrimental to the development of the sector in terms of coordination and improvement of manufacturing and market efficiencies. 2.4.18 Environmental challenges. Air and water pollutants have in recent years resulted in an increasing health burden on the population. Unfortunately it is the poor who are particularly vulnerable to industrial pollution and who often live and work in close proximity to polluted environments. Air pollution results mainly from industries and although the quality of air in Kenya is not regularly monitored, it is estimated that it is below the WHO recommended levels. For example, the PM10 pollution level in Nairobi is estimated at 42µg/m3; attributed mainly to high concentration of industries and vehicles in the city. Pollution and waste flows threaten the health of important ecosystems. The need for efficient production and end of production chain management will lead to improved management of pollutants and wastes if we are to obtain the clean and healthy environment envisaged in vision 2030. 2.4.19 Effects of global recession. The global recession has negatively affected local industrial performance. The recent upsurge in energy prices, exchange rate fluctuations and selloffs at stock markets, has increased production costs, significantly reducing the profits or even leading to losses. This has forced firms to lay off workers, especially casuals. In most cases the firms have had to scale down on their operation in order to contain the situation. This whole scenario is reflected in the current high commodity prices. The unemployment situation is worsened. The local economic scenario has been aggravated by a drop in donor inflows, which gas negatively impacted on government and NGO revenues. The crunch in public sector revenues has led to increasing government ;
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borrowing, which has in turn put pressure on interest rate to remain high and thus further worsened the cost of doing business in Kenya. 2.4.20 Post-election violence. The post-election violence destabilized the labor and other factors of production, hence the production and supply chains. Production was interrupted as it was not possible for workers to report to work due to lack of transport, displacement and insecurity in most parts of the country. Property and business premises were burnt, leading to huge business losses. The Kenya Association of Manufacturers estimated that the economic losses due to the post-election violence amounted to about Kshs 170 billion in the first six months. Increased production and distribution costs resulted from interrupted fuel supply and hiring of extra security personnel. Investor confidence was lost due to resultant poor image of the country. 2.4.21 HIV/AIDS pandemic It is a widely acknowledged notion that good human health is an important factor of production as it affects productivity of the labour force in the different economic enterprises, including manufacturing. The prevailing pandemic has profound social and economic implications. As a result, this has lowered productivity in manufacturing enterprises through the loss of manpower and diversion of financial resources to consequent additional health care expenses. 2.4.22 Gender issues. The existing laws on gender parity provide for equal rights and privileges for both men and women. It has been established that, for the various activities within the manufacturing sector, women contribute substantially to the labour force but are confined to lowly-paid jobs. To address this dichotomy, an effective gender sensitive approach in designing and implementing various interventions in manufacturing programmed initiatives should be developed, focusing on both equality and equity. Emphasis should be on how gender dimensions can be harnessed for enhanced industrial productivity.
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CHAPTER THREE RESEARCH METHODOLGY 3.1
INTRODUCTION
Research is defined by the shorter oxford dictionary as the act of searching closely or carefully for or after a specified thing or person; an investigation directed to the discovery of some fact by careful study of a subject and a course of critical or scientific inquiry. [7] The outcome of a research project maybe intended to solve a problem existing in society or business, or to gain information which will be critically analysed prior to its practical application in problem solving process. Research methodologies should be both sound and appropriate. Unsound or untested methods of conducting research may result in: Time wasting Incorrect or insufficient information Misleading conclusions being drawn based on interpretation of the so called resource findings The data collected was to be used to fulfill the objectives of the study as well as to test the hypothesis. This chapter lays down the procedure that was adopted in this research. This chapter illustrates; the study area, the population, sample, data collection instruments, data collection procedures, data analysis and presentation and constraints encountered during this study.
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3.2
RESEARCH DESIGN
The research used the descriptive survey method for collection of the required data. In descriptive research the problem is structured, well understood and the research problem to be solved is set out clearly. [4] A survey is an attempt to collect data from the population in order to determine the current status of that population with respect to one or more variables. It requires the collection of quantifiable information from the samples that describe the phenomena by asking individuals about the perception on certain variables. [5] The research design is the conceptual structure within which research is conducted. It is the blue print for the fulfillment of the objective of the study. It is also the outline plan that sees forth the conditions for the collection, measurement and analysis is done in order to generate the answers to the research problems. The design in this study was appropriate in enquiring from the manufacturing industries on the challenges they face on implementing the 24 hour system and the strategic plans on achieving in achieving this in line with vision 2030.
3.3
THE DATA
The two type of data used in this research are primary and secondary data. 3.3.1
The primary data
The primary data comprise data collected using a questionnaire circulated to stake holders in the manufacturing industry in Nairobi. These were manufacturing companies in Nairobi, Suppliers of locally manufactured good (i.e., supermarkets, wholesalers) and organisations related to manufacturers. 3.3.2
The secondary data
The secondary data in this research was drawn from relevant information existing in the public domain relative to the improvement of the manufacturing economy as well as in other industries, sourced from a range of publications, including but not restricted to newspapers, the internet, textbooks, journals and conference papers.
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Press reports, information downloaded from the internet, content located in technical and legal textbooks and the work of other researchers presented in conference papers have provided substantial support during the preparation of this research. Information specific to local manufacturing economies, upcoming factories, major challenges hindering growth in the industries and the policies are not readily available but all the mentioned factors have been widely reported by numerous researchers.
3.4
STUDY AREA
The research considers the manufacturing industry in Nairobi.
3.5
POPULATION
The population of this study consists of the following groups:
3.6
Manufacturing companies Suppliers Ministries Engineers Related organizations
SAMPLE
The sample was selected using the non-random techniques of convenience sampling. A short list was drawn up from all the related sectors (manufacturers, suppliers, ministries and organizations)
3.7
DATA COLLECTION INSTRUMENTS
The data for the research was procured through the unstructured questionnaire administration method and interview method.
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3.7.1
Questionnaire
This was the main method of collecting data for this study. A combination of closed ended and open ended questions was used. They were administered to the manufacturers, engineers, suppliers, supermarkets and related organizations. They were all served with a similar questionnaire since they are related in their activities. 3.7.2
Interviews
Unstructured interviews were used to find out from the manufacturers, their accountants, marketers, security companies like the G4S, suppliers ,supermarkets, engineers, technicians and other related organizations (the Kenya Association of Manufacturers, Kenya bureau of statistics, federation of Kenya employers etc.) as well as lecturers in the school on engineering, fellow students in the department of mechanical and manufacturing. The approach was used to enhance the carrying out of the study since what could not be verified through questionnaires was checked through interviews.
3.8
DATA COLLECTION PROCEDURE
The data collection for the study was undertaken by means of administration of the questionnaires and oral interviews. The questionnaires were hand delivered and their collection was done at the convenience of the respondents. In most of the situations, the respondents were prompted and cooperative. Collection was done later in situations where the respondents were faced with unavoidable circumstances.
3.9
TREATMENT OF DATA
The data was analyzed to determine the general opinion and perceptions prevailing in the 24 hour economy in manufacturing industry in Nairobi. The data was analyzed and interpreted based on the information collected and responses to questions posed
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during personal interviews, which were drawn from observations made in the manufacturing industry and literature review. The data was analyzed quantitatively and qualitatively. The qualitative data obtained by way of the open ended (unstructured) questions were presented by way of discussions. Quantitative data collected with the aid of questionnaires was analyzed using descriptive statistics in the form of frequency distribution tables. Graphical presentation of the analyzed data was then undertaken by way of bar and pie charts to facilitate ease of interpretation to the researcher as well as ease of understanding by the readers.
3.10
CONSTRAINTS
The major constraints to effective compilation of data in this study were: Some of the questions in the questionnaire were left unanswered Scarce of statistical information regarding which companies are already operating on a 24 hour basis Most of the questions could not be answered by just any person in the industry; they needed top managers which were hard to meet or answer the questionnaires There was no enough funding for intensive research on the project.
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CHAPTER FOUR SURVEY FINDINGS AND DATA ANALYSIS 4.1
RESPONSE RATE
Forty five questionnaires were circulated to manufacturing industries and other players in the sector such as the Ministry of Industrialization, Ministry of planning, and also some of the supermarket chains that had tried the 24-hour economy concept in their operations with a request to each of them to participate in the survey. Table 4.1 indicates that of the 45 questionnaires circulated, only 32 questionnaires were returned properly filled representing 71.11% response rate which is above average and very encouraging. Table 4.1: Response rate
Questionnaires circulated
Questionnaires returned
Response rate
45
32
71.11%
As for the 29.89% non-returned questionnaires, these can be attributed to the unwillingness or the inability of the respondents to timely complete them at the researcher‟s convenience. Another reason for the non-return is the negative attitude of potential respondents and the perceived chore of having to complete questionnaires from any source, or alternatively a poor attitude towards research.
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4.2
FINDINGS
The results in Table 4.2 illustrate that 78.125% of the respondents were from the manufacturers, 9.375% from the ministries involved and the rest from the suppliers of manufactured products. We also did verbal interviews to the general public so as to get their opinions on the implementation of the 24-hour economy in manufacturing. 4.2.1
Categories of the respondents
Table 4.2: Respondents by category
respondents
frequency
Percentage
Manufacturing industries
25
78.125%
Ministry staff
3
9.375%
Suppliers
4
12.5%
Total
32
100%
4.2.2
Experience in the manufacturing industry
Table 4.3: Experience in the industry
;
Time period
Frequency
Percentage
1 – 4 years
3
9.375%
5 – 9 years
6
18.75%
10 – 14 years
15
46.875%
15 and above
8
25%
Total
32
100%
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Table 4.3 shows that 46.875% of the respondents had an experience of working in the manufacturing industry of between 10-14 years, 25% had an experience of 15 years and above. 18.75% of the respondents had an experience of 5-9 years while 9.375% had an experience of between 1-4 years. The above results show that the respondents had enough experience to know what was happening in the manufacturing industry hence we could rely on their feedback. The period the respondents have been in the industry was determined using interviews. 4.2.3 Awareness of the Government’s involvement in the promotion of 24 hour economy in manufacturing. i. ii. iii.
All the respondents were aware of the government‟s involvement in promotion of the 24 hour economy in Nairobi. From the questionnaire together with the interviews carried out, a total of 60 respondents were obtained The sample clearly showed that the government is not too involved in the promotion of the 24 hour economy in the manufacturing industry.
Frequency
Percentage
Quite involved
7
11.66
Fairly involved
18
30
Not good enough
32
53.33
Poorly involved
3
8.33
Total
60
100
Table 4.4: Awareness of government involvement in promotion of 24 hour economy
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Government’s Role in protecting local manufacturing industries
4.2.4
In this section, the respondents were asked to state what role they felt the government was playing in protecting the local manufacturing industry and the policies that had been put in place to ensure a successful implementation of the twenty-four hour economy in the sector. Some of the responses were: i.
Restriction of cheap imports – some of them thought the government was trying to restrict cheap imports from China, India etc.by either banning that particular product or by excessively increasing import tax to discourage imports of such products.
percentage don’t restrict
restrict
30%
70%
Figure 4.1:Percentage restriction of the imports by the Government
70% of the respondents thought the government is restricting cheap imports from abroad while the other 30% thought nothing was being done.
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ii.
Incentives to 24-hour manufacturers – the response to this was since working on a 24 hour shift would lead to increase in costs such as electricity, water and telephone bills, salaries and wages, etc. Businesses must be able to cover these expenses in order to justify staying open late. Usually this is done through greater sales, etc. However, government can encourage the growth of a 24-hour economy by providing such incentives by providing tax breaks (e.g. lower taxes and/or tax rebates for staying open longer than twelve hours per day), energy subsidies and wage subsidies, etc.
iii.
Lower tax rates for local company‟s raw material imports–the respondents thought some of the imports they imported for processing was actually reduced on taxes thus giving them an upper hand cost wise which reflects on other operations. This encourages manufacturers to increase imports of the raw materials which in turn can lead to companies increasing their shifts to 3 on a 24 hour basis.
iv.
Better policies in investment– the government reduces interest rate on loans taken for establishment of a manufacturing industry.
v.
Policies in implementation of technology – government encourage manufacturers on the implementation of technology both on the machining processes and the administration. This increases production and makes information conveying a lot faster down the managerial hierarchy.
vi.
Providing patent and arbitration for local inventions – such a practice protects the local manufacturing industry from foreign companies stealing the designs or ideas and using them for their benefits. It also ensures production is done within the country that can lead to its production in 24 hour shift if the market is properly established.
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;
vii.
Encouraging heavy involvement in regional trade organizations (improvement of market access) –e.g. EAC, COMESA and the EU.The government encourages or even organizes seminars and events for manufacturers and other related businesses or promoting local products in neighboring countries. This creates a market for local products which enhances the chances of companies operating on 24 hour shift due to the increased demand.
viii.
Provides a good business environment to operate in – they do this by beefing up the security i.e. increasing patrol cars during the night, having an emergency calling line for quick response, putting up street lights, creating good road networks In and out of the industrial area, working with NEMA to ensure a clean environment within the industrial area is maintained.
ix.
Encourages public-private partnerships – this is the process of deepening constructive dialogue with the private sector. This in turn provides opportunity for coordinated development initiatives while also avoiding duplication efforts and ensuring the development of policies that are responsive to the needs of the private sector.
x.
Funds big important projects – the government sometimes helps in funding big projects for industrial development as the current financial products are mainly short and medium term loans while industrial development requires long term financing. Though a high percentage of the respondents thought the government does not help much on the financial part, some thought there have been a few cases where the government has helped.
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xi.
Encourages companies to set up a research and development department– the government encourages research in companies which leads to modernizing the technology that is outdated and is used in most of the industries in Nairobi. This also includes collaborating with stakeholders to strengthen science, technology and innovation (STIs) institutions. Finally, the need to commercialize the research findings and value addition and product diversification which will create a larger market for local products thus the need for a 24 hour operation of companies.
Strategy
Outcome
Outcome indicator
Encourage technology Increased productivity adoption and implementation
Percentage increase in industrial productivity
Commercialization of research findings
Increased productivity
Percentage increase in industrial productivity
Value addition and diversification
Improved competitiveness
Percentage increase in market share
Table 4.5: Strategies in Research and Development and their outcomes
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xii.
Works on attracting/encouragingdirect andforeign industrial investments–the government does this by benchmarking local industries with international standards, develops a framework for industrial incubation, designing new approaches on provision of security, development of niche products i.e. products that Kenya do not manufacture, improvement of access to affordable finance and credit facilities/
xiii.
Promotes the local industry by giving them tenders for their projects – the government mostly issues big tenders (apart from the Thika highway) to local industries thus creating jobs and the need to operate in a 24 hour basis to meet deadline or avoid traffic jams in the case of road construction.
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xiv.
Establishes policies, legal and institutional framework for industrialization that helps in the 24 hour economy – a) Government is at the moment developing the National Industrialization Policy (NIP) and legal instruments that will provide a road map and give necessary guidelines on industrial development, linkages and collaborations. b) They are also trying to liaison with the ministry of finance on the development of an investment policy. c) They are also trying to develop and implement an industrial master plan d) Development of an industrialization bill is also in place e) The government is also fast tracking the enactment of an anti-counterfeit act. f) It‟s also working with the ministry of Finance to fast track the review of the restrictive trade practices, monopolies and price control act.
xv.Introduced the 24 hour port cargo operation which helps in companies getting raw materials faster – this, according to the respondents is a very crucial factor that determines all operations in a factory and meeting deadlines. It is also crucial if the manufacturing is to go on a 24 hour basis then the port will have to operate on a 24 hour basis as well. xvi.Recently introduced the online processing of financial tax documents–This is part of the implementation of ICTs that would ease congestion and make processes effective.
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4.2.5
Are products produced for local, export or both? both
export
local
28.125
percentage
9.375
62.5
Figure 4.2: Percentage of goods sold locally and exported
As clearly shown in the chart, 62.5% of the goods produced in Nairobi are for local market, 28.125% of the goods produced are both local and export markets while only 9.375% of the goods are only for the export market. This indicates the potential the local manufacturing industries have if efforts can be made on tapping the export market; this thus helps in manufacturing industries working on 24 hour basis in a 3 shift per 24 hours.
4.2.6
Causes for drop in demand for locally manufactured products
In this question, the respondents were asked to state what they think causes a drop in demand for locally manufactured goods or rather why people prefer other products than the ones produced locally. The responses were as follows: Poor quality of production ;
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Poor marketing tools Competition from cheap imported products Mentality of citizens on imported products (poor attitude on local products) Very high prices of local products Poor designing (lack of appeal)
Most of the companies were able to acknowledge these causes, they were then interviewed on their thoughts on what they think which among the causes affect the demands. This is as shown in the charts below
most likely
likely
least likely 58
lack of appeal
35 7 6
very high prices for local products
10 84 15
poor production quality
55 30 76
competition from cheap imports
22 2 28
poor marketing strategies
60 12 10
poor attitude of consumers
21 69
Figure 4.3: Likely causes of drop in demand for locally manufactured products
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46
i.
ii.
iii.
iv.
v.
vi.
;
From the chart, it can be observed that most of the local products lack appeal to the consumers with a 58% most likely and another 35% likely meaning most of the locally produced products need to be improved in terms of design in order to raise the demand for locally manufactured goods thus leading to the need for a 24 hour shift. It could be seen that high prices for locally manufactured goods is not the main reason why there is a drop in demand with 84% of the respondents thinking it‟s highly unlikely. Poor quality of production was also found to a main cause since 55% of the respondents thought it was likely, 30% went for the most likely while the remaining 15% thought it was unlikely since they produced goods that were of good quality. Competition from cheap imports was found to be the main cause of drop in demand for locally manufactured products as 76% of the respondents thought it was most likely and another 22% likely with only 2% thinking it is unlikely. Poor marketing strategies is one of the main causes as 60% of the respondents thought it was likely and 28% thinking it was most likely while only 12% thinking it was unlikely. This could be due to poor advertising and thus consumers not aware of the products and how good they are. Poor attitude of consumers towards local products was not thought of as a strong point as 69% of respondents thought it was least likely though 21% and 10% thought of it as likely and most likely respectively.
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4.2.7
Will the shift to 24 hour operation help other sectors?
In this question, the respondents were asked whether they thought the implementation of the 24 hour would help the other sectors of the economy in Nairobi. A chart showing how they responded is shown below:
unlikely
likely
most likely
2
23
75
Figure 4.4: Response as to whether 24 hour manufacturing will help the other sectors
From the chart, it can be observed that 75% of the respondents believed it is most likely other sectors in the economy would be improved from the various reasons that will also be analyzed ahead. 23% of the respondents thought it was likely while only 2% thought it was unlikely.
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4.2.8 How has technology affected the adoption of the 24 hour economy in the manufacturing industry? In this question the respondents were asked if how technology had affected the adoption of a twenty four hour economy. Some of the responses were as follows: i.
ii.
The connection of Kenya to the rest of the world through the optic fibre cable has led to faster internet speeds hence better communication and aiding in research and development. The use of Computer Numerical Controlled equipment has helped in automation and robotization in industries brought about by adoption of latest technology helps in: a) Reducing wastage since they are more accurate b) Faster production c) Better quality in produced goods d) Decreases lead time e) Flexibility of product design
Some of the technologies applied are automated handling equipment, computer aided design (CAD), computer aided manufacturing (CAM), Just-in-time manufacturing (JIT), and Total Quality Management (TQM). 4.2.9 What other sectors affect the adoption of the 24 hour economy in the manufacturing sector and how From the survey, the following was observed: Water and Waste Mgt. 4%
Health 9%
Security 34% Energy 30% Transport 23%
Figure 5: Effect of other sectors
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i.
ii.
iii.
iv.
v.
vi. vii.
viii.
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From the chart, 33.6% of the respondents said that security was the major factor to aid in the adoption of this kind of economy. Everybody desires a good level of security in order to work or do anything. People need to feel secure whether it‟s at the workplace or their way to and from work. 23.3% of the respondents said that transport was also a major hindrance. Public transport needs to be smooth, efficient and on time at all hours. There also needs to be an overhaul in the transport network to get rid of traffic jams that take takes too much of man-hours that could be used at work. 30% of the respondents said that energy was also a major factor to consider. Currently Kenya has a shortfall in the energy supply and with the increased production, something needs to be done to meet the extra demand brought about by the extra hours. 9.2% had health as one of their concerns. There needs to be an effective and efficient health system that will cater to the workers needs all day and night and also respond to emergencies in time With an increased production, there is bound to be extra demand for water to be used in the industries and also a marked increase in waste products from the industries. 4.2% of the respondents said that there was need to revamp the current water and waste system for it to be implemented. From the secondary data, some of the factors that were also found to affect the adoption of the 24 hour economy in manufacturing were: Financial and investment services- there needs to be access to financial services for smooth flow of transactions. Also, access to loans is important so that businesses can expand their capacities. Social welfare- employees need to have places where they can relax mentally, physically and spiritually to prevent burnout caused by the extanded working hours.
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4.3
ANALYSIS
From the analysis above, a lot needs to be done so as to achieve the 24-hour economy. The many shortcomings in the manufacturing sector and other sectors affecting it need to be addressed to help in achieving the goals of the Vision 2030. From our study, in order to develop an effective 24 hour economy for Nairobi‟s manufacturing sector, the plan has to consider a variety of needs, and the requirements of people in all situations. This is important so that life continues to be appropriately livable even with the changes involved. With the successful implementation of these factors, it is easy to move to other sectors of the economy and the rest of the country.
4.3.1 The Manufacturing Industry Since our main focus was on the manufacturing sector, it is only reasonable that the sector itself leads in the adoption of a twenty-four hour economy. Currently, not all industries operate for twenty four hours due to the factors discussed in the previous chapter. There is need to come up with ways in which the sector can be a key player and make the most out of the Vision 2030. The various stakeholders should come together and plan for the sector as a whole, taking into consideration all companies and organizations. Some of the suggestions are: a) Institute 24-hour shifts (three eight-hour shifts, seven days a week) in all industrial activities b) Initiate night-shift allowance payments to attract off-hour workers c) Start and finish times of each eight-hour shift or its variation should be determined by the individual organization or company depending on how they are suited. d) Opening up industrial areas in the major towns of Nairobi metropolis operating 24 hours. e) KEBS to make sure all products and services are of high quality and competitive with the best global standards. f) KEBS should liaise with international regulatory bodies g) Invest in research on demand for products both locally and abroad h) Improve on quality in order to create extra demand and sell larger quantities of their products
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i) Invest heavily in creation of local(domestic) demand j) Provide adequate and safe transport for employees at night and other non-standard working hours k) Provide physical, fiscal and other incentives for the operators in the informal sector to stay at work for extended hours l) Connect the informal sector to the formal sector in terms of communications, financing, advertising and other logistical means so as to bridge the gap. m) Support the computerization of the informal sector n) Install safety and security equipment in all workplaces so as to create a conducive environment. Inspection and enforcement of health and safety must be enhanced. OSHA and NEMA related offices should operate 24 hours. o) New policy guidelines should be issued for night shift allowance and overtime p) Premiums by insurance firms to the industries can be controlled by legislation q) Dispute resolution in the industry should be sped up r) Wage payment should be pegged on productivity
4.3.2 Security From our survey, lack of security is the main stumbling block hindering full-fledged 24-hour operations in all economic sectors. This is the most important issue related to the performance of the 24-hour economy. Security is a special incentive that cuts across all aspects of economic activity. Everybody desires a good level of security in order to do any particular thing and government provision or encouragement of this is a specific duty that must not be under-estimated. A „uniformed presence‟ often is the only deterrent needed against criminal types to make people feel safe. In Nairobi, it is a common occurrence for people to be accosted and mugged as they alight from or board buses and other forms of transport in the wee hours of the morning and late at night. Some of the suggested solutions to improving the state of security in Nairobi are: a) Increase all forms of policing around the clock, including evening and night time foot and motor police patrols. b) Improve street and security lighting c) Install security and surveillance cameras on all streets. ;
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d) Make emergency response and rescue a part of all security training, operations and implementation e) Install emergency alarms in every building, for police, fire, paramedic response and others f) Provide uniformed security at every major transport inter-change and termini g) Introduce Metro Police forces in Nairobi h) Install direct links between the various emergency and security services including cameras (in liaison with private firms like G4S, KK Security, etc.) i) Establish central information dissemination points as part of public security system j) Install security cameras in all bus, train and matatu stops and at transit depots and stations k) Monitor security at bank ATMs, stations, traffic lights, etc. l) Increase the number and positioning of police stations and posts all over Nairobi Metropolis m) Improve housing, facilities and offices of police to assist with late-hour opening and patrols n) Increase 24-hour patrolling in all areas
Figure 4.6: Police on patrol
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o) Increase fire, emergency, safety, paramedic and first aid points in Nairobi p) Install automatic toll collecting and paying points at all toll stations (airports, highways, ports, etc.) to help develop a 24-hour operation in all such places q) Install CCTV cameras in all major buildings, along highways and other important roadways, and in alleyways and ensure that the contents are monitored and viewed by security authorities on a regular basis r) Create awareness of security s) Also creation of neighbourhood watches is an aspect of security that could go a long way in overcoming the burden of crime. This is done in collaboration with the police so that there is no misunderstanding as to who is doing what and why. They could be effective in both business and commercial neighbourhoods, and would be useful in augmenting Nairobi‟s often lax security system.
4.3.3 Government incentives Being open late or all night means more expenses for business enterprises, no matter the type. Costs include electricity, water and telephone bills, salaries and wages, etc. Businesses must be able to cover these expenses in order to justify staying open late. Usually this is done through greater sales, etc. However, government can encourage the growth of a 24-hour economy by providing such incentives as tax breaks (e.g. lower taxes and/or tax rebates for staying open longer than twelve hours per day), energy subsidies and wage subsidies, etc. Businesses operating late-night hours may rely on building good customer relations for keeping sustainable open hours i.e. client goodwill. But this is not enough especially in Kenya. This presents an opportunity for the government to step in and provide the necessary incentives for businesses to stay open late. Some of the measures that the government could use include: a) Lead by example by working 24 hours every day in all arms of the government and parastatals. b) Consider tax breaks and other incentives for new and existing investors c) Change the current laws to reflect a move towards a 24-hour system d) Legislate laws to make the 24-hour economy legal, practical and feasible in all economic sectors and regions e) Avail all government documents and application forms on the internet for quick and easy access to the public ;
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f) The judiciary should provide guidelines on the legal interpretation of issues and also hasten hearing of cases g) Give incentives to 24-hour investors h) Ease procedures of issuing permits to encourage greater investment. Issuance of licenses, permits and application forms for all services to be done around the clock in offices and on the internet i) Consider waiving fees or charge at a minimal rate for people in lower income brackets (SME.) j) Improve enforcement of council by-laws 24 hours k) Improve, increase and maintain communication networks round-the clock l) Liaise more closely with NEMA to provide a better living and working environment m) Engaging other stakeholders such as NGOs, Churches, Aid Organizations, Civil society so as to complement government efforts in provision of services. n) More emphasis on Private Public Partnership(PPP), collaborations and complementary action – in every sector of the economy. This can be by speedy implementation of the PPP process in government and taking advantage of the necessary collaborative activities e.g. cleaning up, public toilet facilities, e.t.c. o) The government can also, through the Ministry of foreign affairs: p) Synchronise the 24-hour economy of Nairobi with the global economy q) Create awareness of the new strategy in the international arena e.g. producing 24-hour promotional materials for the international market (pamphlets, info-papers, videos, etc.) r) Use the 24-hour economy to promote direct foreign investment s) Harmonise regulations governing hours of work with the EAC and other eastern Africa countries in order to make the strategy viable
4.3.4 Roads and Transportation One of the most important considerations in planning for an efficient 24-hour economy is the issue of transportation. Along with this, roads are a major priority. Both affect how people get to work, and how goods and services are moved around within the economy. Public transport, in particular, needs to be made smooth, efficient, available and on time at all hours. Transport operators, whether they are government or private enterprise, must ensure that their vehicles are clean, available, on time, and well;
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coordinated with other transport modes. There needs to be a revolution within the metropolis in terms of the modes and means of transport, so that things get to where they are meant to go as quickly and efficiently as possible. That means that fast rail transport, for example, must become a major mode of transport inside and outside of the city. It must coordinate its pick-up and drop-off points and junctions with an integrated bus and shuttle system that responds well to the changing needs of daytime and night time, as well as weekday and weekend, travel. The provision of a regulated and coordinated taxi service for all major urban areas must also be addressed. Roads need to be widened and increased, especially in the major cities and other centres of dense population, including rural areas. Slip roads that allow for exit from one major thoroughfare to another should be constructed to ease the burden of travel in congested city areas. There must be made a duplicate number of roads that one can take to go from point A to point B in any part of the country. The lack of alternative routes for any number of journeys across town makes roads unnecessarily congested, impassable at times, and dangerous, not to mention economically depressive. The 24hour economy will require that aerial roads and overpasses, bicycle lanes, pedestrian paths and bus lanes become a staple ingredient of urban roads planning and construction. In large, congested cities such as Nairobi, it can take several hours in traffic just to travel a few kilometres from one place to another. Much of the daytime traffic jam in Nairobi is as a result of Nairobi being the government, financial, industrial, judicial, and business capital of Kenya. Added to this is the fact that there is a paucity of open businesses at night.
Figure 4.7:Traffic jam in Nairobi [13]
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Much of Nairobi‟s transport mess can be sorted out if one thing is done immediately – move the government out of the central business district (CBD), out of the city and out of the area. Any move to a location within the greater metro area of Nairobi would be counter-productive, as it would not reduce the traffic problem but, rather, shift it around within the same area. There is no important reason for the government to be conducting its legislative, judicial or executive business from Nairobi anymore, especially now with computers, the internet and telecommunications providing for easy connectivity all around the world. The reduction in terms of traffic (motorised, pedestrian and non-motorised) would be a boon for the development of other parts of the city‟s economy, including round the clock freedom of movement, and could stimulate other positive progress. The loss of government business in the city could be offset by the realisation of its greater and untapped tourism potential.
Figure 4.8: Means of transport [14] Some of the measures that could be undertaken to solve the transport problem are: a) Improve security for all aspects of the sector, including, garages, service stations, highways and ports b) Encourage 24-hour operation of service stations and garages c) More car-based police patrols to monitor road and highway security situations around the clock d) Encourage transport operators to provide bus, plane and train transport e) everywhere on a 24-hour basis by creating transit hubs and terminals f) Provide safe and secure taxi transport services (cabs, tuk-tuks, motorcycle and bicycle boda-bodas, etc. in all areas
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g) Improve rail transport h) Install automatic toll collecting and paying points at all toll stations (airports, highways etc.) to help develop a 24-hour operation in all such places i) Start night flights between the various Kenyan airports j) Immediate construction and operation of several large scale and multistorey k) Parking lots in the city and larger towns to cater for all-night and weekend parking. l) Make pedestrianisation of urban areas a major thrust of the 24-hour economy, to promote people-friendly cities and towns m) Construct pedestrian walkways between buildings to create a safe and secure night-time conduit for workers n) Encourage pedestrian traffic by constructing people-friendly sidewalks, o) paths and walkways in all urban areas p) Create pedestrian traffic controls at all major city interchanges q) Provide adequate security in all areas (uniformed security, surveillance cameras, communications equipment, alarms, etc.) to make people feel safe to walk r) Post security cameras on all street corners, on all major buildings and in all alleys in city and town centers as a way of monitoring activities 24 hours a day. Make certain that images on these cameras are monitored by the authorities
4.3.5
Energy
There is currently no way the 24-hour economy will work properly in Nairobi. There is much-too-frequent disruption of power supply and this is not conducive for economic development especially for one that is aiming to go for 24 hours. There needs to be an enabling environment for power security and availability so as to boost investor confidence. The power services are, at best, intermittent throughout the country (including Nairobi), and is seriously lacking in most places most of the time. In order for the concept to become viable and sustainable, this situation must change. Kenya must embrace new and renewable energy technologies in power provision. These include wind, solar and recycled energy technologies, and will involve the handing over of control of this sector by government to private enterprise.
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Kenya has vast potential for solar and wind energy technology, seeing as it straddles the equator and gets plenty of sunshine throughout the year, and has large areas of uninhabited land suitable for the construction of large-scale wind farms and solar energy gathering panels. This is a completely unexploited area of development. Smaller-scale energy projects can be set up in all urban areas, too. These will reduce the over-reliance on hydro-electric power generation and provide for a more environmentally-friendly system of energy production. Measures that can be taken to mitigate this problem include: a) Decentralize emergency power stations to districts to encourage uptake of 24-hour activities b) Encourage development of solar, wind and other „green‟ renewable energy sources all over the country, to help speed up 24-hour economy growth. This can be done by developing „farms‟ in appropriate areas such as the outskirts in Nairobi as sources of public energy and power supply. c) Reduce energy tariffs to encourage 24-hour investments d) Provide tariff concessions for new investors in the 24-hour economy. e) Reduce the frequent power disruptions to minimal levels or even completely to gain investor confidence.
4.3.6
Water services and Waste Management
Water is an essential commodity in the implementation of the 24-hour economy. In Nairobi, water lacks in most of the places most of the time. Many industries and buildings resort to buying water which is supplied in trucks and this leads to wasted labour hours and resources and also inconveniences from delayed deliveries. There needs to be a new thinking in the provision of water so as to embrace the 24-hour economy as fast as possible and effectively. Water services must be rendered on a 24hour basis. Legislation can be set up that requires any building constructed to have up-to-date water-harvesting technology, including gutters and storage tanks of a specified size per specified unit area of building space. This is not difficult to do. This would help offset the over-reliance on water provision companies. Also, conservation and storage must be improved. Waste management can become an even bigger issue with a full-time night economy operating alongside the daytime one. In particular an increase in nighttime fast food and shopping outlets can result in greater amounts of paper and plastic waste that must be effectively disposed of. This issue needs to be carefully addressed. ;
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a) The environment should be made an integral part of any development programme and project. Environmental impact assessment must become a normal procedure through the bodies involved such as NEMA. b) Garbage collection should be done on an around the clock basis to prevent choking the environment. This is also a win since many jobs could be created this way. c) Sorting, collecting, recycling, disposal and re-use of waste materials must be encouraged and made a normal procedure. d) There should be a public awareness campaign on the importance of proper waste disposal and management.
4.3.7 Financial and investment services Finances are an important part of every sector of the economy. Money, whether liquid cash or whatever forms it is in, is needed to carry out transactions and also in the dayto-day running of the economy. Most financial institutions operate on the traditional eight to four schedule giving their customers only eight hours access. Some banks such as Barclays bank have tried extending their operating hours by a few hours in some of their branches which is a bold step forward in the attainment of the objectives of the 24-hour economy. Some of the ways this sector could support the manufacturing industry is by: a) Extend banking hours beyond 4 pm in the CBD and other towns b) Provision of low-interest loans to help the development of startup businesses and industries, and for educational development (bursaries and loans, development loans, etc.) c) Install ATMs across the metropolis
Figure 4.9: ATM outlets
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d) Expand mobile and online money transfer systems across the country (such as Zap, M-Pesa) and operate these on a 24-hour basis. e) Banks to expand online and mobile banking systems in all major world currencies f) Operate 24-hour money and funds transfer systems in all major towns, for both domestic and international transfers (such as Western Union and Moneygram) to assist in business transaction g) Offer fiscal and other incentives to local, domestic and foreign investors who start up business on a 24-hour basis h) Make a concerted effort to promote Nairobi as Africa‟s financial centre, open for business on a 24-hour basis i) Promote foreign investment in Kenya j) Improve policies to promote 24-hour banks all over the metropolis k) Assist clearing and forwarding operations to work 24 hours a day l) Operate the Nairobi Stock Exchange and any other future capital market exchanges on a 24-hour basis 4.3.8 Health and Social welfare 4.3.8.1
Medicare
The effects of evening, night, extended and rotating shift work on emotional, mental, psychological, physical and social health are enormous, and have serious ramifications for personal, family and community health. Personal health can become a major issue as people pull away from the natural benefits of a good eight-hour sleep at night to sleeping less and more intermittently and at varying hours of the day and night. The body requires a proper sleep schedule in order to function effectively and efficiently, and the brain can only work well when it receives the same signals at the same time every day on a continuous basis. The very efficiency on which the best minds depend for their creative and innovative edge is least well catered for by the rigours imposed by a 24-hour lifestyle. Health and medical services, including psychological, counselling and physical therapists, must play a central role in the deliberate planning and implementation of the 24-hour economy. Government hospitals and clinics need to operate on a fulltime 24-hour basis for all services, and not just the emergency and casualty sections. Inorder to support the industry, this could be done: a) Provide incentives for better management of health services b) Encourage and improve service delivery over extended hours c) Create more ambulance services in all parts of the country, as a PPP project
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d) Provide medical care at all public and private hospitals, clinics, health centres and dispensaries e) Promote telemedicine and e-medicine as normal procedure in hospitals, clinics, health centres and dispensaries f) Work towards universal healthcare and make this available all day,every day, everywhere g) Use hospitals as health education centres on a broader basis across the country
Figure 4.10: Health care services
h) Make sure diagnostic and supportive services (such as laboratory services, x-ray services, etc.) at all public and private healthcare facilities is available on a 24-hour basis i) Open hospital-based and free-standing pharmacies for 24-hours every day j) Reduce or waive duty on certain pieces of hospital equipment, as an inducement for medical services development k) Encourage doctors and dentists to operate private 24-hour clinics l) Provide ambulances around-the-clock. Good Medicare will contribute to increased productivity since healthy workers are more productive. 4.3.8.2
Social Welfare
Social welfare refers to the various aspects of human life including religion, family welfare, societal well-being, social amenities and activities. Included here also could be the social manifestations of mental, psychological and physical health. In addition, work effectiveness, work efficiency, and work efficacy must be properly thought-out. Otherwise there is a risk of running employees ragged and lead to employee „burnout‟ and subsequent serious health problems. Some of the negative effects of the ;
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staggered working hours brought by a 24-hour economy are absentee parenting, broken homes, divorce, inadequate moral and spiritual development, and a general degeneration in the quality of family life. As more and more people shift towards a working life that embraces the 24-hour economy, including working late in the evening, at night, and on weekends, there will be a concomitant increase in the numbers of people with young children requiring child care at all odd hours of the day and night. Good planning demands that facilities for child care be made available for those who need it. These situations require the availability of child care that is specialized and can be provided either in the workplace, at special centres or on special request. It is an important offshoot of the round-the-clock economy, and must be addressed. The government has a major role to play in this, as it must provide the legislative and administrative framework and guidelines, via labour and childcare laws. 4.3.9 Information and Communication A fast and reliable communication network is essential inorder to carry out business round the clock because information has to be passed around and between the various players in the manufacturing industry e.g. Customers have to place orders, suppliers have to be paid, employees need to be contacted, e.t.c. The current ICT structure is ridden with recurrent breakdowns which cripple communication within the industry making them resort to „ancient‟ communication methods which are not so efficient. Recently, the fibre cuts in the Indian Ocean have seen the internet connection for the whole country and Nairobi in particular be at snail‟s speed which is not good for an economy which is trying to move from being a third-world economy. Also, the cost need to be affordable so that connection will be easily affordable even to the small scale manufacturing investors who are key to the growth of the manufacturing industry. In recognition of the need for creation of a platform for a comprehensive one-stop communication centre, there is a proposal on the creation of a platform known as “the Kenya Industrial Development Platform” though the Ministry of Industrialization. This would create effective networks and become a contact window for all manufacturers. Once it is in operation, information can be shared among all stakeholders in the sector; traders and manufacturers regardless of their sizes. A reliable, accessible and affordable ICT structure could come in handy in the implementation of a twenty-four hour economy since movement of information in the shortest time possible is key to economic growth. Ways in which this could be implemented so as to help the manufacturing industry adopt the 24-hour economy are:
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a) Extending the optic fibre network throughout Nairobi Metropolis to encourage a broader consumer base. b) KDN, which is a government-owned ISP should offer subsidized internet connection to industries and the services sector. c) Provide reliable mobile telephony network throughout d) Increase the availability and accessibility of e-government and eadministration among other systems essential to the manufacturing sector e) Increase tax incentives on ICT equipment and software beyond the current hardware tax relief f) Improve the availability and accessibility of reliable telephone, postal and courier services on a 24-hour basis 4.3.10 Emergency and Safety Services Nairobi has a lot to learn in responding to emergencies for it to be a 24-hour economy. Looking at previous cases of of fire tragedies such as the Kimathi House which is in the CBD, disaster preparedness is a myth. There are cases of firefighters arriving at the scene without water, incompetent firefighters, empty or broken water hydrants, e.t.c. One is left wondering how the people incharge of dealing with disasters such as those will handle a raging fire fueled by petroleum products in a factory located in the heart of Industrial Area in the middle of the night. There is need to implement an emergency policy, guidelines and infrastructure for the smooth running of a 24-hour economy in the manufacturing sector. This means there is should be a proper setup by the authorities involved for such services as: a) Fire brigades and fire safety services b) Free telephone calling for emergency services c) Proper training and equipment for the personnel d) Regular drills and refresher courses for employees What this means is that Authorities such as the Nairobi City Council needs to be upgraded in terms of personnel and equipment in order to function as 24-hour service providers. The current set-up of the City Council does not lend itself to any meaningful activity, leave alone off-hour activities.
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CHAPTER FIVE SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 5.1
SUMMARY OF FINDINGS.
The research established that most of the respondents entertained slightly different perceptions regarding the implementation of a twenty-four hour economy in the manufacturing sector. i) 78.125% of the respondents were from manufacturing industries, 9.375% of the respondents were from the Ministries and other players and the rest were suppliers of manufactured goods. ii) Most of the respondents (61.66%) believed that the government had not done enough to promote the twenty-four economy in the manufacturing sector. iii) It was also found that the government had a major role to play in protecting the local manufacturing industries through:a) Restriction of cheap imports. b) Lower tax rates for local companies‟ raw materials imports c) Better policies in investments e.g. low interest rates, subsidies, tax breaks e.t.c d) Encouraging adoption of technology e) Providing patent for local inventions. f) Participation in regional trade blocs to expand the market. g) Encouraging PPPs. h) Encouraging Research and Development i) Encouraging direct and foreign investment in the local industries. j) Promotion of local industries by awarding tenders to local industries which meet standards. iv) The Government also promoted the implementation of a twenty-four hour economy by:a) Incentives to 24-hour manufacturers e.g. tax breaks, energy subsidies, wage subsidies, e.t.c. b) Involvement in regional trade blocs. c) Providing a good environment to operate in.
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d) Encouraging Research and Development e) Establishing policies and institutional frameworks for industrialization in the 24-hour economy. f) Introducing 24-hour cargo port operation g) Introducing online processing of documents e.g. tax returns, licences, e.t.c. v) From the companies were visited most of their goods were mainly for the local market. There was found to be a great potential in the untapped export market. vi) The causes in demand for locally manufactured products were found to be:a) Low production quality b) Lack of enough marketing c) Competition from cheaper imported products d) Attitude towards local goods e) Lack of appeal in design f) High prices of products vii) The adoption of a 24-hour economy would most likely affect other sectors of the economy. viii) Technology has had a big effect in the adoption of the 24-hour economy e.g. on the use of CNCs and CAM leading to higher and more efficient production. ix) Other sectors affecting the adoption of a twenty-four economy in manufacturing were:a) Security b) Transport c) Energy d) Health and social welfare e) Water and Waste Management f) Financial and investment services g) ICT
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5.2
CONCLUSIONS
In conclusion, there are many factors that could undermine the implementation of the twenty-four hour economy in manufacturing. The government itself and other sectors of the economy are key if the manufacturing industry is to realize the 24-hour economy adoption in line with Vision 2030. For the manufacturing industries to enhance the 24-hour economy they need to expand their markets to increase the demand for their products. They also need to invest in technology so as to improve on research and development and also their manufacturing practices so as to produce effectively and efficiently.
5.3
RECOMMENDATIONS
The manufacturing industry players and other stakeholders should co-operate in seeking to fully implement the twenty-four hour manufacturing to aid in achieving the objectives of Vision 2030. This will have a symbiotic relationship amongst the sectors since each of them stands to gain from this. Industry bodies should unite in a common initiative to provide guidelines and advise to manufacturers on implementing the 24-hour economy and how to deal with the challenges that face them. Manufacturers should embrace technology, innovation and R&D which was seen to be generally low in the sector. This will lead to increased productivity and value addition for their products, hence growth. Through the Ministry of Industrialization, the government should focus on encouraging manufacturing industries on adopting the twenty four hour economy. This sector is one of the key productive sectors identified for economic growth in the Vision 2030. This could be done by making policies and implementing them by help of the Ministry of Planning. The manufacturing industry should focus on market diversification rather than produce limited range of standardized products which offer limited scope for value addition and diversification. Similarly, the promotion of market expansion often leads to product diversification and need for adjustment of industrial activities to meet the demand, hence the need for working twenty hours. ;
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5.4
Areas of further research i. ii.
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Ways of implementing the twenty-four hour economy in other sectors. The data collected in the survey should be analysed further using predictive analytical methods such as the SPSS.
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References [1]
Ministry of planning, (2009), Kenya Vision 2030: 1st Annual Progress Report, Government Press. Pg. 40
[2], [3]
Ministry of Planning, (2011), Kenya Vision 2030, sector plan for manufacturing (2008 – 2012), Government Press pg. 1
[4]
Ghauri, P. and Gronhaug,K. (2002). Research methods in business studies, 2nd Edition. Europe: prentice hall
[5]
Mugenda and Mugenda, (1999). Research methods. Quantitative and qualitative approaches, Nairobi act press, Jomo Kenyatta memorial library, University of Nairobi.
[6]
Kombo D. K. and Kombo DLA, 2006, Proposal writing and thesis proposal; An introduction. Paulines publications, Africa: Nairobi.
[7]
Hornby, A.S (2002). Oxford advanced learners dictionary. Oxford University Press. London
[8]
Ministry of planning,(2011), Kenya Vision 2030 strategic plan (2008 2012), Government press pg.16
[10]
www.vision2030.go.ke
[11]
www.knbs.or.ke
[12], [17], [18] A 24 hour economy- the next frontier in Kenya‟s economic development. By Iraki B Lavussa, C.Misiko, J,Nyaggah and E Mukabana
;
[13]
www.architecturekenya.com
[14]
www.visualgeoraphy.com
[15]
Ministry of Planning, (2010), 2nd Annual progress report. Government press
[16]
www.planning.go.ke
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Appendix: Questionnaire
UNIVERSITY OF NAIROBI DEPARTMENT OF MECHANICAL ENGINEERING FINAL YEAR PROJECT TITLE: DEVELOPING A FOCAL POINT ON ENHANCING THE 24 HOUR ECONOMY FOR THE MANUFACTURING SECTOR IN NAIROBI. QUESTIONNAIRE KABIRU DENNIS
F18/2714/2007
MAHMOUD IBRAHIM HABIB
F18/1725/2007
We, the above mentioned students are in fifth and final year in the department of mechanical and manufacturing. As part of final year requirement we are undertaking the above mentioned project. We will appreciate if you could kindly answer the attached questions to help us understand the underlying factors. Thank you in advance for your kind and helpful comments. Kabiru Dennis
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Mahmoud I Habib
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Name of company: ………………………………. Questionnaire. 1. What role does the government play in protecting the local manufacturing industry? ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… What are the government policies in promoting the 24 hour economy of the manufacturing industry? ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… 2. Products in this company are produced for the local industry
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3. What causes the drop in demand for locally manufactured products? ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… 4. How many manufacturing companies do you know that operate in a 24 hour schedule? ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………
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5. How has technology affected the adoption of the 24 hour economy in the manufacturing industry? ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… 6. (a) What other sectors affect the adoption of the 24 hour economy in the manufacturing industry? ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… (b) How does each sector affect manufacturing? ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… 7. Any other comment ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………
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