China and Sub Saharan Africa: impacts and challenges of a growing relationship

The existing literature is clear that China is impacting on Sub Saharan Africa (SSA). What is not clear is the precise nature of that impact. Does it come mainly from trade in cheap manufactured goods? Does it come from China's seemingly insatiable hunger for oil and minerals? What countries benefit and in what sectors? What role do Chinese companies operating in Africa play? How beneficial is Chinese aid and/or international cooperation? Who is losing out, and why

Garmentmaking in Nairobi: a research proposal

The paper outlines proposed research on Nairobi's garment industry. Using a political-economy framework, the research will investigate whether two patterns of success identified in an earlier study of small-scale manufacturing stand up to more rigorous testing. In particular, the research will examine whether the smallest garment manufacturers follow the small and flexible model, and whether capital accumulation is related to the social class and rural linkages of the business owner. The research will also investigate differences between men's and women's businesses, the impact of ethnicity on business performance, and the industry's export potential

Value Chains and the Business System

Summaries Garment firms are typical of the poor state of Kenyan industry. Production has declined and, with it, employment. New investment is minimal, so firms are producing inefficiently using outdated equipment. Many larger firms have closed, while small and micro enterprises have proliferated. Only the tiny minority of enterprises that is capable of producing for export seems to be doing well. Why should this be so? And what can be done about it? To answer these questions, this article develops and applies a simple model that incorporates two theoretical perspectives: value?chain analysis and the business systems approach. The value?chain approach first enabled us to describe several distinct garment chains with production facilities in Kenya. It also highlighted the differences between these chains and enabled us to distinguish issues affecting each of the stages within a given chain. We found, for example, that production issues dominate the main export chain because their other functions – design, supply, and distribution – take place outside of Kenya. The business?system perspective supplemented and complemented the value?chain analysis by pinpointing the institutional causes of many of the problems facing the industry. Not surprisingly, given its continued dominance of the economy, the state is held responsible for many of the industry's difficulties. Also important are the technology system, the labour system, and firm?level institutions in the textile industry. Since the study is ongoing and, therefore, incomplete, the analysis was able to identify only a few areas that are ready for immediate policy intervention; others will require further investigation

Why small firms stay small: risk and growth in Nairobi's small - scale manufacturing

Despite abundant literature on the social and economic benefits of encouraging tiny "informal" firms, scholars generally agree that somewhat larger enterprises create more unskilled jobs, use resources more efficiently, and are better at building technological capacity. Yet the vast majority of firms will never grow beyond six workers. This paper argues that one very significant reason why small firms stay small is risk. In Nairobi — and probably elsewhere — the economic and social consequences of business failure are extremely high. Not surprisingly, entrepreneurs try to protect themselves from failure and, in the process, ensure that their firms will remain small. Our research identified four risk-management strategies that work separately and together to discourage firm growth. First, many entrepreneurs manage risk through flexibility. By working in rent-free quarters, using family labour and little capital, they minimise fixed costs and maximise opportunities for additional income. Second, many small manufacturers also avoid risk by manufacturing standard products for a known market. Third, successful entrepreneurs frequently diversify their income and assets rather than expand a single enterprise. Finally, moot prefer to preserve their land and other assets unencumbered by debt. These rational responses to risky business environment ensure that most firms will stay very small and, in the process, work against formation of a dynamic manufacturing sector. Policymakers are challenged to improve the enabling environment by creating broad policies conducive to firm growth and by targeting specific policies and programmes to small-scale industry. Kenya needs macroeconomic and social policies that indirectly encourage firm growth by removing or reducing business and background risks. The country also needs an industrial policy that provides positive incentives for enterprising business owners ready and willing to expand employment, improve efficiency, and upgrade their technology and their workers' skills

Risk and firm growth: the dilemma of Nairobi's small - scale manufacturers

In Nairobi, where the economic and social consequences of business failure are high, entrepreneurs' risk-management strategies work separately and together to discourage firm growth. Many manage risk through flexibility. By working in rent-free quarters, using family labour and little capital, they minimise fixed costs and increase opportunities for additional income. Business owners also avoid risk by manufacturing standard products for a known market. Successful entrepreneurs diversify their income and assets rather than expanding one enterprise. Finally, most prefer to preserve land and other assets unencumbered by debt. These rational responses to a risky business environment inhibit formation of a dynamic manufacturing sector. Policymakers, NGOs, and the private sector can help by creating broad policies and targeting specific programmes to remove or reduce risk

Enterprise clusters in Africa: on the way to industrialisation?

Recent literature on industrial districts and enterprise clusters suggests that the grouping of enterprises into sectoral and geographic clusters gives rise to a certain collective efficiency that can enhance competitiveness and foster industrialisation. This paper reports the results of an analysis of eight African enterprise clusters: three in Kenya that were the subject of original research, and five others for which substantial secondary literature was available. The study addresses three questions: Do the clusters have the characteristics associated with successful industrial districts elsewhere? To what extent have they been able to respond to opportunities and shocks in their environment? How closely are these clusters linked to the wider industrialisation process in their countries? The research found that only two of the eight clusters have the internal structure and wider market access that generally go with successful industrial districts, but that even these two are at very different levels of development. The rest of the clusters consist almost entirely of microenterprises selling in localised markets. Nearly all of the clusters could be said to be in some way involved with their country's industrialisation process, but the nature of that involvement varies with the level of development of the cluster. The first group consists of small-enterprise clusters that lay the groundwork for industrialisation by developing basic skills and fostering the transition from craft to factory production. The next group of clusters, which has clearer signs of collective efficiency, is characterised by greater specialisation and differentiation of firms, bilateral production linkages, and somewhat higher technologies. The final group consists of clusters with large as well as small firms that aim at wider markets and are generally able to produce competitively. The paper draws implications from the findings about the appropriate support for clusters at each stage, and makes suggestions for further research

Manual for Value Chain Research on Homeworkers in the Garment Industry

In developed and developing countries, grassroots organisations are trying to improve thelivelihoods of informal producers. Such organisations have been concerned in particular with thehome-based workers who carry out production tasks or provide services for the garmentindustry. Organisations such as the Self Employed Women’s Association (SEWA) of India,and HomeNet International, both founding members of Women in the Informal Economy:Globalizing and Organizing (WIEGO), have tried to provide homeworkers with informationand organisational strength. Women represent a majority of those working in the garmentsindustry, particularly in home based operations, where they are excluded from formal labourmarket protection and organisation

Growth and the organization of production: case studies from Nairobi's garment industry

Most enterprises in Nairobi's garment industry begin small and stay that way. Owners of businesses selected for intensive study consider weak demand to be the major barrier to growth. Current theories of industrial organisation identify two clearly different production models: Mass production, rooted in the advantages of scale economies; and flexible specialisation, a paradigm focusing on flexibility and innovation. Analysis of market relations in Nairobi's garment industry reveals not two, but five different types of firms: custom tailors, contract workshops, specialised small producers, minimanufacturers, and mass producers. Preliminary research indicates that some types can cope with weak and fluctuating demand better than others. Contract workshops, specialised small producers, mass producers capable of tapping external markets, and high quality custom tailors have the greatest potential for success, while low-to-medium quality custom tailors, mini-manufacturers, and mass producers tied to the domestic market have the least, The analysis has important implications for the shape of Kenyan industry, employment creation, and entrepreneurship. It also suggests that interventions by government and/or NGOs need to be targeted, not at small and medium-size, firms in general, but at the most promising types of producers