Manufacturers call for affordable capital financing, tax incentives for tech purchases
SYSPRO, a global provider of industry-built enterprise resource planning (ERP) software for manufacturers and distributors, together with Strathmore University, has today released research findings from a study that saw close to 100 companies drawn from 12 sectors of the production and manufacturing industry in Kenya interviewed.
The study explored productivity and competitiveness of the manufacturing sector in Kenya, the role of new technologies in improving the sector, and the state of adoption and use of these new technologies.
The findings, presented at a launch event attended by the Cabinet Secretary of ICT, Joseph Mucheru, demonstrated that the most important initiatives that can increase competitiveness both for local and export markets (according to the manufacturers interviewed) are favourable taxes and favourable regional preferential treaties. Other factors included reduction in cost of production, upgrading the current technologies deployed and increasing production efficiency.
Speaking at the launch of the research findings, Professor Ismail Ateya, Principal Investigator and Dean of Research and Innovation at Strathmore University, noted that over 85% of companies interviewed were either semi-automated or fully-automated, with a majority still holding on to outdated production units because of high cost of spare parts, unavailability of locally manufactured spare parts and inability to differentiate quality from fake until used. Counterfeits, he noted, were a large hindrance to local purchasing. High software and hardware costs as well as the lack of skilled labour were cited as major hindrances to technology adoption. Manufacturers interviewed proposed to have tax incentives for technology purchases, better training for local technology partners, improved availability of new technologies locally, availability of affordable automation and robotics technology as well availability of skilled technical workers.
In addressing the issue of affordability for manufacturing software solutions, SYSPRO’s Head of Channel, Pravir Rai, said the SYSPRO ERP solution is modularised to ensure it is not only affordable but also allows systematic scaling to meet the operational needs of a business as it grows. “We have found this to work very well for our SME customers. A company doesn’t need to buy a whole stack of applications if all it needs is just one or two modules to begin automating its business.”
Upgrading ICT infrastructure such as Internet, intranet and security, company financial or accounting software and warehouse management systems were considered the top three areas earmarked as future ICT improvement by companies involved in the research. Besides technology, the study revealed that more than half of the manufacturers interviewed felt the government could still do more to make the sector competitive and attractive to potential investors.
Development of infrastructure, provision of exemptions, grants and subsidies as well as purchasing guarantee from government were highly rated. Support for apprenticeship, graduate internships and technical courses in universities was identified as a major initiative that would make local manufacturing an attractive business venture. It was noted that over 50% of the respondents felt that Kenya’s manufacturing sector would have difficulty competing with counterparts in other developed countries that have advanced education and training systems.
Other notable factors that need to be urgently addressed include high cost of capital financing, which remains a major hurdle in the manufacturing sector, and energy, which was reported as the main external factor that adversely affected business operations in the last two to three years. Political climate, taxes, cheap imports and exchange rates were rated as negatively impacting business operations, while technical skills, labour wages, climate conditions and visa requirements were rated as having the lowest adverse effect on the business operations comparatively.
Regarding future projections and strategic planning, companies interviewed prioritised product development, advertisement and marketing, computer systems, hardware and software as potential investment areas to improve business operations in the next financial year.
SYSPRO is a global, independent provider of industry-built ERP software designed to simplify business complexity for manufacturers and distributors. Focused on delivering optimized performance and complete business visibility, the SYSPRO solution is highly scalable, and can be deployed on premise, in the cloud, or accessed via a mobile device. SYSPRO’s strengths lie in a simplified approach to technology, expertise in a range of industries, and a commitment to future-proofing customer and partner success. SYSPRO has more than 15,000 licensed companies in over 60 countries across six continents. For more information, visit www.syspro.com.
Strathmore University seeks to become a leading outcome-driven entrepreneurial research university by translating our excellence into a major contribution to culture, economic well-being and quality of life. Strathmore aims at providing all-round quality education in an atmosphere of freedom and responsibility excellence in teaching, research and scholarship, ethical and social development and service to the society. www.strathmore.edu