How local supply chains might take off in Kenya

September 15, 2020 Newsroom

Set out in an open field in Nairobi’s plush Karen estate ‘The Waterfront’ was the next frontier for shopping malls in Kenya, they had evolved.

Just a few years ago, a mall’s biggest attraction was probably an escalator, ridding through rising floors of shops of every kind selling all manner of things.

They were squeezed within the city and Nakumatt was the anchor tenant in almost all of them.

A real estate boom and the rise of an aspiring middle class stroked the fire and malls popped up across the country to teach the ordinary Kenyan how to be a discerning buyer.

Then the rise of the shopping malls took on a life of its own fighting over 3D to 7D cinemas, children play areas fixed with roller coaster rides, dashing display of fountains, holding concerts and comedy shows, the malls were a lifestyle.

The Waterfront; the second-largest mall in Nairobi, with more than 200,000 square feet of letting space was the idyll of this new culture for the first time offering a manmade lake and brought all the exotic brands one could name, Shoprtite, Game, Panarottis, Al Falak Perfumes and Classic Polo.

Then Coronavirus hit and Shoprite was the first one out of the door, or maybe they had a foot in a foot out and the virus precipitated the run.

Shoprite announced the closure of its Karen branch in April citing reduced flow of shoppers, leading to loss of jobs for about 104 staff who worked at the outlet.

This exposed the underbelly of the malls, the reliance on foreign business, the disconnect of the market from the people.

The idea of a market is the aggregation of producers who offer consumers value in terms of goods and services.

Ideally, a market should first serve local communities and small producers who grow to become regional and global brands.

Read also

It is expected that this evolution would see a single tailor in a small kiosk start small and upscale gaining loyalty and developing unique offering and graduating all the way into the shopping malls, and finally into global shipping.

Markets in Kenya both formal and informal have traditionally relied heavily on local supply chains.

However these supply chains have stunted or regressed and have not had the opportunity to grow into malls which instead have concentrated on imported brands and products.

One advantage of local supply chains is that they have nowhere to run to since this is their country, they often stay put and sustain the market through thick and thin.

For instance, Uchumi supermarket which has collapsed more times than one can count but is still operational may just express how local supply chains will literally go with a market to hell and back.

Uchumi was born out of government owned parastatals; ICDC, KWAL and KNTC, which entered into a management contract with Standa SPA, a European supermarket chain from Italy. Standa were commissioned to transfer their wide experience to Kenyan personnel who would eventually take over and launch the hyper market concept in the country in the 1990s.

The model was to provide a market for locally produced goods, a close linkage from farm to fork.

However, this model, while it has been largely abandoned, the advent of modern malls is still very much alive in the many markets that dot the city.

County and national governments are giving some of the local markets a face lift, turning wooden stalls into the concrete and glass, perhaps learning from malls that markets of the future will have to be attractive to customers and offer more than just utility products.

What these markets are however able to do is to serve as the outlets of local entrepreneurs who have a stake in the market and who will not blot at the slightest whiff of trouble.

Take Uhuru market for instance a 44 year old market that off Jogoo Rd, near Light House Chapel that houses more than 1000 traders operating in 567 stalls.

Dominated by female traders (62 per cent) of an average of about 29 years old who produce textile, this market has weathered economic swings, ups and downs and has held on raggedly to existence.

There is an attempt by the national government for a rehabilitation project to enable micro, small and medium-size fashion and apparel producers and retailers within Nairobi’s Uhuru Market to address the particular constraints of the garment and textile value chains within the market ecosystem.

What they envision is a modern market that offers competitively priced high quality clothing and apparel.

The traders will be supported on the role of supplying affordable clothing to Kenyans of all walks of life, and providing gainful, decent and sustainable employment for the citizens of this community.

These are the businesses that should grow and transition into formal space, into super brands that would then scale up and graduate into important brands that are globally competitive.

While they are currently focused on wholesale production of uniforms for various sectors – education, security, hospitality, domestic use, with a little ambition they could, make the fashionable brands and add value that could triple or quadruple their returns.

For now however they need access to credit facilities through SME Funds, credit guarantees, LPO financing from banks as well as a market that will lure Kenyans back to their roots.

In particular, a shift to digital commerce means traders would also require a deep dive into how to leverage online platforms to acquire new customers.

Kenya needs to find a way of transforming local brands from ordinary markets into the shopping malls of the future, growing local talent while saving malls from contraction by global supply chains.