Kenya’s vision to move to a middle-income economy driven by industrial transformation is hinged on its ability upscale the manufacturing sector and offer products that are competitive into the market. The Kenyan manufacturing sector has often agitated for solutions to the challenges the industry faces primarily, regulatory inefficiencies, high production costs, logistics, cash flow and liquidity challenges. These have been aptly summarized in the Kenya Association of Manufacturing (KAM) Manufacturing Priority Agenda 2021. (more…)
Mark Twain a renown American writer said, “Wrinkles should merely indicate where the smiles have been.” This quote asserts that age is best seen in wrinkles caused by smiles due to the warmth and joy shared with oneself and others over time.
This maxim is indeed true on a personal level and can also be extended to corporate entities. With every corporate anniversary achieved, the best way to reflect and celebrate on the milestones achieved is seen in the wrinkles etched in the hearts and lips of the people who engage with the company as employees as well as customers. Companies that focus on delivering smiles set a series of activities going in the hearts and minds of their people. Some of these include loyalty, repeat business and advocacy. It is interesting how forgiving people become when their best brand suffers a slip up, the people form a loyal army championing for quick resolution and return to normalcy so that they may continue to enjoy their services as they have known. This level of advocacy from the people is often rare, in a market that is teeming with alternatives, however it is not uncommon. (more…)
African Business Magazine in its May 2020 issue ranked the top 250 African companies. The listing captured various sectors in a ranking that is often dominated by companies in Media, Banking, Metals & Mining. As expected, companies from Africa’s leading economies of South Africa, Nigeria, Egypt and Morocco took a lead in these rankings with Kenya’s Safaricom leading the Kenyan enterprises at position 10. The time is ripe for more and more African enterprises to tap into the opportunities within Africa and contribute to the continents growth and sharing with the rest of the world Africa’s resilience in spite of the challenges that have challenged our economies, threatened our peace and put to question our political choices. (more…)
Players in the essential services sector play a critical role in keeping economies going as the world is engrossed in the COVID-19 battle. Essential services are derived from a broad spectrum of sectors notably, healthcare, transport and logistics, banking, food suppliers, governments, among others. It is therefore safe to say these are the warriors on front-line in the war against the pandemic. These sectors ensure populations have sufficient access to; medical supplies, PPEs, pharmaceuticals, food among others. The logistics sector plays the critical role of ensuring these key supplies are imported and distributed to the destinations in a timely manner and in the requisite state. As such, logistics providers in cargo transportation, warehousing, port, and customs clearance pass the baton to other front-line sectors with much needed supplies through the supply chain. (more…)
Players in the Transport and logistics sector continue to keep economies afloat and play a leading role in the global fight against the COVID-19 pandemic. Since its outbreak in January 2020, the virus continues its spread with infections going into millions across the globe.
Various government restrictions have been implemented to control the spread of the virus through lock downs, containments, and curfews among others. However, certain essential sectors of the economy have been allowed to continue their operations – such as the logistics sector- to ensure delivery of much needed shipments such as; food, medical supplies and Personal Protective Equipment (PPEs) to not only to ensure populations are well resourced with key supplies but also support medical practitioners and governments in the war against the COVID-19 virus. (more…)
The COVID-19 pandemic has dealt a massive blow to the global economy. On the supply side, factories and businesses have been forced to close temporarily due to the shortage of input materials from suppliers and the need to protect workers. Demand is declining, too, as consumers stay home and face the prospect of a large-scale economic downturn.
Against this backdrop, the March 2020 purchasing managers’ index (PMI), which reflects the economic health of the manufacturing sector, slumped to a 92-month low in the Eurozone and also decreased significantly in most Southeast Asian countries.
The world is today grappling with the Corona Virus (COVID-19) that has continued to snuff out the life of thousands across the globe. This newly discovered infectious disease has threatened human existence as its infection rates soar from different corners of the globe. Having initially began in Wuhan, a Port City in China the COVID -19 has rapidly spread to other parts of the world paralyzing economies, trade and human safety of countries affected. As a response to battle the spread of the disease, countries have taken necessary measures such as closing of border points, lock downs, quarantine and curfews to encourage social distancing as well as limit movements to forestall further spread of the disease. With these interventions, trade and businesses have been paralyzed pushing economies to the brink of collapse and crashing of stock markets globally.
The transport and logistics sector is a major victim of the COVID-19. The industry, which is driven by facilitating cargo movement to or from different geographical locations, supports key economic sectors such as manufacturing, agriculture, aid and relief, construction, education amongst others. However, the interventions to stop the spread of the COVID -19 have made it challenge if not impossible to move goods from point A to B thus affecting trade between regions. (more…)
“The rose is a flower of love. The world has acclaimed it for centuries. Pink roses are for love hopeful and expectant. White roses are for love dead or forsaken, but the red roses, ah the red roses are for love triumphant. “– Unknown
The month of February is here with us, and for the lovers among us, 14th February is the prescribed day to express love to each other as we celebrate Valentine’s Day. In many parts of the world, Valentine’s Day is the celebration of romance and romantic love. The celebration is incomplete without the exchange of gifts usually, chocolates, wine and teddy bears. I dare say, Valentine’s celebrations are incomplete without red roses. The demand for red rose is at its peak at various points of sale across the globe during the Valentines season.
Kenya is a key player in bring to reality those valentines’ moments. As a leading world exporter of flowers, Kenya ensures that global Valentine celebrations are well supplied with red roses to fit the occasion. The demand for cut flower exports peak in January to meet the annual demand that comes with the Valentines season in February. Flower sellers across the globe cash in on sales of red roses especially during Valentines period. Clement Tulezi, the Director of the Kenya Flower Council states, that Kenyan flowers are sold in more than sixty countries, mainly in the European Union, Russia and the United States. He links the popularity of Kenyan flowers to the grower’s compliance to high standards, which has positioned Kenya as a producer of top-quality flowers. He adds, “One of the main reasons of the consistent growth of our industry is the quality of our flowers”. Consequently, Kenya is today the third largest exporter of cut flowers in the world and the horticultural sector plays a major role as a foreign exchange earner for the Kenyan economy.
The Kenyan rose has endeared itself to the global market due to its colours, varieties, size of the head as well as its availability all year. Kenya experiences favourable weather due to its location adjacent to the equator. The Kenyan climate does not suffer extreme high or low temperatures as is common in the markets Kenya serves. In addition, the Kenyan government and private sector players have invested heavily in logistics infrastructure that enable swift movement of flowers from the farm and onwards to the international markets. Today, the road networks to and from the farms have been well maintained and developed allowing for swift movement a factor that contributes to preserving the flower quality at the prescribed temperatures. To maintain the cool-chain, logistics players use refrigerated trucks and cold rooms that ensure the flower temperatures are maintained from the farm, truck, warehouse and onwards to the market. (more…)
The year 2020 marks the beginning of new decade. The logistics industry across the globe has experienced great disruptions from the year 2010 to the close of the decade emanating from various macro and micro economic factors. Notable upheavals include automation of key processes, a tightened regulatory environment and customer inclination for control and real time information on their shipments regardless of time or location, no doubt an indication of the shrinking global village. The year 2019 stretched thin the logistics players in Kenya and the region and to an unfortunate few, the stretch eventually led to shutdowns, job layoffs and sadly an increase on prosecutions arising from failing to meet contractual obligations.
The year 2020 logistics outlook seems to carry over some of that uncertainty particularly for players in the cargo transportation sector. Events in the global arena have shaped costs of doing business and negatively impacted the cost of key inputs. Some of these events include the US-Iran tensions that have directly hiked global fuel prices, a key component for operation. These additional costs will no doubt increase the cost of goods to an already burdened customer suffering from a myriad of taxes.
The Standard Gauge Railway (SGR), which was launched in 2018, will put to task the business model for transporters who previously relied on business from cargo off loaded from the Port of Mombasa and recently from the Inland Container Depot in Embakasi (ICDE). The SGR is now in full operation with increased pressure from the government to ensure that all goods imported into Kenya are loaded onto the SGR and ferried inland into Nairobi cutting off the gravy train for transporters. The expansion of the network further inland into Naivasha and future plans of linking it to the metre gauge rail (MGR) onwards to Kisumu and Kampala will tremendously reduce cargo volumes and cripple transporters who have been ferrying transit cargo from the ICD in Nairobi/Mombasa for cargo destined to Uganda, Rwanda, South Sudan and beyond.
Major infrastructure projects in the region are set to catalyze logistics in the region threatening Kenya’s position as East Africa’s capital. Notable projects include Ethiopia’s construction of the USD 5 billion airport while Rwanda is set to build a mega airport in partnership with Qatar Airways. The completion of these projects will steal the shine off Kenya’s Jomo Kenyatta International Airport (JKIA) and entice major freighters and forwarders away from Kenya to terminate at either of these airports.
The Kenya Customs Agents and Freight Forwarders Bill 2020 will play a great role in regulating the mode of operations by Clearing Agents. The Bill seeks to enhance service delivery in customs clearance by eliminating cargo delays, improve cargo flow, improve revenue collection by the revenue authority and lower the cost of doing business. The bill will boost the credibility of clearing and forwarding sector by registering licensed agents as well as detailing consequences for those operating outside the confines of the act. This will no doubt clean up the clearing agent’s fraternity. The new International Maritime Organisation (IMO) global sulphur cap 2020 rule came into force starting January 1 this year. The Kenya Ports Authority (KPA), which is a signatory, has licensed 2 companies to supply low Sulphur fuel for ships making call at the Port of Mombasa. The global Sulphur cap 2020 applies to all seagoing vessels, both cargo and fishing vessels and is aimed at reducing air pollution by cutting sulphur oxide emissions. The move to cleaner fuels could add substantially to logistics costs, from an estimated $400 a tonne for fuel oil today to as much as $600 a tonne, according to the International Chamber of Shipping. It is likely that the higher shipping costs may be absorbed throughout the manufacturing and transport supply chains
2020 also comes with great opportunities for trade in markets like the United Kingdom (UK) who have reaffirmed their interest to trade with Africa following Brexit. The resultant relationship will likely see an increase of exports of key UK exports such as; motor vehicles, chemicals and finished products as well as a number of imports from Africa into UK such as flowers, perishables and raw materials. Trade between neighboring East African countries such as Kenya and Uganda are likely to grow with the Kenya government’s provision of ICD’s in Naivasha for transit shipments. Demand for warehousing space adjacent to the ICD’s in Nairobi and Naivasha is set to spike. The spike will present a huge opportunity for free and bonded warehouses to serve customers using the SGR as well as align with the lucrative E-commerce sector.
We remain optimistic that despite the potential challenges seen in the sector, the logistics sector comes with great opportunities that remain to be tapped for prosperity now and in future.
The 2018 United Nations Conference on the Trade and Development (UNCTAD) Business-to-Consumer E-commerce Index ranked Kenya in 7th position in ecommerce uptake in Africa and position 85th globally. Leading the Africa pack is Mauritius, Nigeria, South Africa, Tunisia, Morocco and Ghana respectively. Globally, Netherlands took the lead having improved from a being placed 4th on the same in 2017. While Africa needs to boost Internet penetration to grow e-commerce, it also needs to get more of her existing Internet users to trust the online market for making purchases, secure servers, bank accounts, a clearly marked and mapped address system.
The UNCTAD report further estimates that that the B2C e-commerce market in Africa is worth about $ 5.7 billion in 2017, which corresponds to less than 0.5% of GDP, far below the global average of over 4%. However, the uptake of eCommerce in Africa has seen online shoppers surge at an annual rate of 18% which is way above the global rate of 12%. There is no doubt that e commerce is fast emerging as a new frontier in Africa and in the global market. As eCommerce continues to grow, retailers need to expand their distribution networks, build more fulfillment centers, and leverage more on 3PL partners. At the same time, online retailers must place greater focus on conveniently locating their fulfillment centers close to their markets to facilitate faster deliveries. (more…)