Driving sustainable industrialisation in Kenya through investment
Sustainable industrialisation in Kenya has the potential to increase economic growth, provide jobs and strengthen sector productivity as shown by the construction of Kenya’s Silicon city, Konza Technology City.
Wellers Impact aims to promote sustainable industrialisation in Kenya through their Joint Venture (JV) with MachineANI and Parable Trust, as well as through the Water Unite Impact fund, thus contributing to sustainable development goal (SDG) 9 – Industries, Innovation and Infrastructure.
Economic growth and climate action depend on universal innovation throughout sectors that operate with a goal of sustainability. Kenya has shown itself to be a significant innovator and is currently 86th out of 131 ranked countries in the Global Innovation Index, a score which is high for a Sub-Saharan country (WIPO 2020).
In comparison, South Africa is the only other Sub-Saharan country which surpasses Kenya for innovation and is ranked 60th. Two of Kenya’s neighbouring countries, Uganda and Ethiopia rank 114th and 127th respectively.
The JV aims to increase innovation and is establishing a production line for Printed Circuit Boards (PCBs) that can be used in industries across multiple sectors. For example, the production line will help to produce medical technology and equipment, including COVID response technology, agricultural technology and domestic utility monitoring devices, for example, devices that monitor energy and water usage.
In order to establish an efficient production line, the UK’s Blakell Europlacer Surface Mount Technology (SMT) machinery has been transported to a Kenyan facility, combined with a programme of intensive training to support quality accreditation and deep knowledge transfer.
With the end to end design and production process residing within Kenya, it aims to build extensive new supply chains upon a solid infrastructure, encouraging domestic economic growth and decreasing reliance on imported goods and the associated risks including currency fluctuations, global logistics and Intellectual Property theft.
Electronic and technological imports constitute one of Kenya’s largest sectors of imported goods. This includes electrical parts and machinery and mechanical appliances which accounts for 17.75% of all imported goods (OEC 2018), valued at approximately 3.41 billion USD (2018).
Decreasing the reliance on imports will encourage economic growth as well as strengthening the capabilities of the domestic electronics sector. Furthermore, retaining the entire chain of manufacturing in Kenya may provide opportunities for exporting goods to other Sub-Saharan countries.
Although South Africa is the largest Sub-Saharan exporter of electronic goods to other Sub-Saharan countries, China is the largest exporter of such goods and is Kenya’s largest importer of electronic devices (OEC 2018).
Creating a new stream of exports will create independence from China’s economy, generate new supply chains throughout Sub-Saharan African countries and strengthen infrastructure throughout the Kenyan electronics sector.
The construction of the Silicon Savannah, Konza Technology City, in Kenya reinforces the need for domestically available electronic appliances and circuit boards. Konza was commissioned to be built in 2008, construction of this city started in 2013 and it will be a part of Kenya’s Vision 2030 project (Konza Technopolis 2020).
The Vision 2030 project entails sustainable construction, industrialisation and a better quality of living for all. This city is further proof of Kenya’s advances in innovation, industry and infrastructure.
It is vital that the industrialisation required for the construction of this city is sustainable and efficient and it is also key that this city can continue to run sustainably after completion, particularly in terms of its electronics sector amongst other sectors.
In providing the first fully domestic production line of electronics, the JV aims to be a part of this innovative future.
Other examples of SMEs which aim to enhance Kenya’s ability to innovate and scale include circular economy businesses such as Sanivation, who presented with our partner, Water Unite at a UN Environmental Conference.
Although Sanivation primarily contributes to SDG 6 - Clean Water and Sanitation, they also provide a means for renewable energy for developing countries in Africa, particularly African secondary cities (Sanivation 2020).
SDG 9 highlights the importance of clean and environmentally safe technologies and industrial processes alongside resource-use efficiency. This is achieved by Sanivation and their partnerships with local government through the design and construction of faecal treatment plants which ensure that human waste is properly treated to be converted into a biomass fuel.
This is far more productive and sustainable than charcoal as it burns for twice as long and produces one-third of the emissions of charcoal, therefore each treatment plant reduces environmental pollution.
Sanivation also offers city-wide innovative sanitation services that include city planning for the safe storage, collection and transport of human waste, which creates new supply chains for the entire fuel transport and conversion services.
This provides a solid infrastructure upon which new supply chains requiring innovative PCB designs can be built, and skilled and unskilled jobs can be created.
Finally, it should be acknowledged that Kenya was placed in the ‘break out’ zone of the Digital Competitiveness Index (IDM Business School 2020). In its current state of digitization, Kenya is low-scoring and held back by weak infrastructure and poor institutional quality. Despite this, Kenya is evolving rapidly and has the potential to become a ‘stand out’ country for investments that can sustain innovation, as indicated by the Global Innovation Index. The JV aims to be a pivotal component of these exciting advances as Kenya continues to increase its competitiveness and innovation.
Wellers Impact is a UK-based, FCA-Regulated Impact Investment Manager which works to unlock community-focused impact through SDG-focused impact investing. Through innovative investment models that utilise fair economics, Wellers Impact originates investment opportunities across three core business activities; real estate developments in partnership with local land-owning not-for-profits in East Africa, financial support for agriculture firms and supply chains globally through sustainable development finance and direct investment into private water, sanitation and plastics recycling firms globally. Investment involves risk. Suitable for Sophisticated, Professional and High Net Worth Investors only.
IMD Business School. 2020. IMD World Digital Competitiveness Ranking 2020. [online] Available at: <https://www.imd.org/wcc/world-competitiveness-center-rankings/world-digital-competitiveness-rankings-2020/>.
Konza Technopolis., 2020. Konza Technology City Approved As Kenya's Vision 2030 Flagship Project | KONZA TECHNOPOLIS. [online] KONZA TECHNOPOLIS. Available at: <https://www.konza.go.ke/timeline/konza-technology-city-approved-as-kenyas-vision-2030-flagship-project/>.
Oec.world. 2020. OEC - The Observatory Of Economic Complexity. [online] Available at: <https://oec.world/>
Sanivation. 2020. Sanivation. [online] Available at: <https://sanivation.com/>.
World Intellectual Property Organisation (WIPO), 2020. Global Innovation Index. [online] Cornell SC Johnson College of Business. Available at: <https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020.pdf>.