Third Eye

Standards agency holds key to growth of small firms

Friday, September 10th, 2021 00:00 |
President Uhuru Kenyatta inspects firearms during the commissioning of a small arms factory at the National Security Industries in Ruiru, Kiambu county. Photo/File

The old saying that necessity is the mother of invention has been proven right by small businesses which have used the myriad challenges posed by Covid-19 to come up with new and innovative products for local consumption as well as export. 

For instance, there has been a significant increase in the number of textile manufacturers and there are indications that Kenya’s leather industry is priming itself for exponential growth in the short term.

This shows that small businesses are plugging in to fill market gaps created by global supply chain disruptions.

They are also taking advantage of incentives offered under the Big Four agenda, particularly with regard to manufacturing.

Ultimately, these small pieces will contribute to the bigger economic jigsaw as envisioned in the Vision 2030 development goals.

What is more encouraging is that these small businesses have woken up to the need to have their products certified by agencies like Kenya Bureau of Standards (Kebs). 

In my view, this demonstrates that they have started making their way from informal to formal ways of doing business.

With such certification, there is nothing to stop them from growing their businesses beyond Kenya’s borders, thus transforming themselves into regional and international companies.

Indeed, this is a trend that has been witnessed in other countries, particularly in Asia, where cottage industries have become important contributors in exports market of countries like China and Japan.

For the benefits of this emerging trend to be fully realised, it will be important for the government to give young Small and Medium Enterprises (SMEs) time and space to grow so that with time, they can contribute more to the tax kitty as well as Gross Domestic Product.

For them, the value chain disruptions that have affected cross-border trade over the last 18 months is a mixed bag of blessings and challenges.

First, they have had to innovate to remain open. This was a demonstration of their resilience.

Now they have an opportunity to pivot if given the right investment environment, and what better way to start this journey than for them to seek certification for their products?

This way, they can meet local and international quality standards, putting them in a position to compete favourably with products from other countries.

To begin with, however, SMEs – such as those supplying hospitals with medical equipment – ought to be commended for using the lemons handed to them by Covid to make lemonade.

Indeed, their transformation journey is something that policy makers ought to watch closely because it offers important lessons on future growth of enterprise with or without Covid.

An important observation is that in the process of transformation, not only have the SMEs created new jobs, they have also demonstrated that with the right conditions, it is possible to birth and sustain a culture of manufacturing quality products locally.

The momentum so far created ought to be sustained to ensure that more and diverse SMEs emerge for holistic economic growth.

Despite the dark cloud that Covid has cast on humanity – including its negative effects on many businesses – the fact that the pandemic has adversely affected both imports and exports has made it possible for local manufacturing to grow.

In turn, this has opened a window for SMEs to seize opportunities created by the slowdown in imports of key products like Personal Protective Equipment (PPEs).

With time, they should be able to manufacture more specialised and sophisticated products, including machinery.

And since there is high demand for such products, not just in Kenya but in neighbouring countries as well, there is nothing to stop these companies from extending their businesses to the rest of the East African Community where they will enjoy favourable trade terms compared to imports.

This is why certification by agencies like Kebs is important. First, it will inspire confidence that Kenyan exports meet international quality standards.

Since there are mutual agreements between Kenya and neighbouring countries on certification, Kenyan goods can make their way straight to regional markets without having to be retested.

Thus, they will have a head-start compared to imports. The other advantage of certification is that it will incentive consumers to have greater faith in local products.

In so doing, Kenya will reduce its already high import bill, which has skewed our balance of trade.

It will also stanch the export of jobs while increasing local circulation of money. — The writer is a Partner and Head of Content at House of Romford –[email protected] com

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