Importance of Manufacturing in the Economy?
Manufacturing is the process of converting a raw material into a finished, tangible product. Manufacturing entails making a process efficient as it converts specific resources into a different resource, often for the purpose of being sold to a customer.
It’s a key sector in Kenya's economic, in both its contribution to national output and exports, Family businesses in manufacturing show higher profitability and generate significant revenue for the government in terms of corporate and employees’ taxes, also it has played a role in creating jobs, boost export earnings, and provide a pathway for industrialization and economic development that has steered industrial growth
Its contribution to the economy of Kenya and to the Africa region?
Manufacturing has contributed immensely in the Kenyan economy growth it accounts for 14% of the GDP, output for 2022 was $8.88B, a 9.89% increase from 2021 with industrial activity concentrated around the three largest urban centers of Nairobi, Mombasa, and Kisumu, and is dominated by food-processing industries such as grain milling, beer production, sugarcane crushing, and the fabrication of consumer goods. In addition, a substantial and expanding informal sector commonly referred to as jua kali engages in small-scale manufacturing of household goods, auto parts, and farm implement. (Wikipedia)
Family businesses have the potential to grow. A good example is Mabati Rolling Mill which started in 1961 in Nairobi industrial Area by Chandaria Family and is today a global player. This family has propelled upwards due to the growth strategies they have continued to adopt. Mabati Rolling Mills has over the years adopted various growth strategies, these growth strategies have led to the growth and expansion of the company and contributed to the growth of the country.
Role of Manufacturing in the Sector: Population/Economy/Family
Sustaining growth of the manufacturing sector is vital for providing incomes and employment for Kenya's rapidly growing population, increasing exports this allows people to create and build things that are useful to the economy in the society. Without manufacturing, many people would be unable to get the products and services they need. and stimulating other sectors.
Manufacturing Challenges: are the corporate governance, strategy, succession challenges faced by these companies
One of the main reasons for the high failure rate among first and second generation family businesses is their inability to manage the complex and highly emotive process of ownership and strategic management succession from one generation to the next. The generally accepted figure for succession is 3 out of 10 family business surviving to second generation and only 16% persist to the third (Kuratko, 1995). Kenya is no different for statistics show that three out of five of these businesses fail within the first three years of operation (GoK, 2007), half of all family businesses fail to make it to the next generation because of inefficient succession.
Failure and breakups of Manufacturing family businesses occur due to power struggles and internal feuds amongst siblings that are not settled through mediation and negotiation, family members refusing to give up their central roles in the management of the businesses and to relinquish control and power in the businesses
Research shows successfully survive three or four generations have a complex governance structures, agreements, strategic plans, execution in place and forms of accountability to manage their wealth (Jaffe & Lane, 2004).
Manufacturing sector should embrace strategic management and good corporate governance practices of family businesses, this knowledge will improve the quality of the management and leadership of family businesses making succession planning successful.
IFFB offers different types of growth strategies to family businesses and every business has to develop its own growth strategy according to its own characteristics and environment.
Industry Association:
Some of the sectors that IFFB has partnered with is Kenya Association of Manufacturers. We work closely to ensure proper governance and strategic management and execution is implemented.
Some Sector Clients we have Partners to support.:
