I know it’s day three of Eid but I still want to wish you all a very happy one! “Eid means ‘a recurring festivity’ and this being the Eid Al Adha, the second Eid of the year (first one is Eid Al-Fitr which follows the Holy month of Ramadhan) it is evident that the year is almost coming to an end.
But before that happens, let’s talk logistics. That’s why you’re on this page!
Majority of news reports that seek opinions, there is one constant: the individual who will invariably invoke the phrase “Naomba serikali…”, (I’d like to request the government) followed by a request that can range from profound and useful, to downright unreasonable.
This individual, while mildly entertaining, is usually an indicator of a much deeper Kenyan problem of expecting government intervention in the minutiae of daily life. Does the government owe us a debt to hear us and work towards our benefit? Yes. Have they been doing so in subtle ways whose impact is not immediately clear? A resounding “yes” as well.
One important development comes from the government’s management of the power industry, where the current monopoly of KenGen is being challenged in a move to include private players in national supply. The Energy Ministry, through
announced independent power suppliers were to be given top priority in plans to expand the capacity of the national grid over the next few months.
By introducing new participants in power generation, along with alternative power sources such as wind energy or coal, power consumers will gain much-needed bargaining leverage, meaning power prices are likely to come down.
With electricity being a major overhead cost for logistics firms with warehousing capabilities, this can only be termed as good news, since profit margins will see an increase, and supply chain managers will have the choice to lower service prices in hopes of attracting new customers.
Similarly, fuel prices in Kenya have seen a marked decrease, with the Energy Regulatory Commission announcing this welcome reprieve due to reduced landing costs and an encouraging improvement of the Kenya Shilling’s exchange rate. The reduced prices, set to last for a month after the announcement, affect super petrol, diesel and kerosene.
The logistics industry, like most others nationwide, is dependent on petroleum products: from powering freighting vehicles to in-house machinery, the price cut on these precious commodities spells nothing but good news.
Other industries that rely on the work of logistics players, such as industrial complexes that need to transport finished goods to consumers, also benefit from the economic upturn, meaning even more business is available for logistics players.
Aside from the obvious implications of reduced costs, the new pricing is a happy “symptom” of a greater success currently being enjoyed by the Kenyan economy: where the Shilling grows stronger, supply chain managers working in export and import grow more secure as foreign traders are encouraged to do business with a country in an economic boom.
Foreign investors also play a part in the most recent initiative by localized government to raise funds for self-sustainable development. An excellent example of this would be where the Embu county government accomplished the feat of getting KES 441 billion in development pledges from investors around the globe during its first Investment Conference held in early October.
With these commitments going in to agriculture, industry and development of infrastructure, Embu County is set to be a force to reckon with starting 2014, when most projects kick off. Embu County will also become a haven for supply chain management players, eager to do their part in developing the area, but also making a decent profit. From careful transportation of agricultural products, to providing a logistical backbone for the industries set to come up, the business opportunities for logistics are vast and easy to tap, even as we do our part in helping the community move forward.
The government has also done its share in sourcing for local investors in hopes of reducing reliance on foreign investors, and therefore, debt. The announcement from National Treasury Cabinet Secretary, Henry Rotich stated that private public investment partnerships were set to raise up $3 billion per year, finances that would go a long way towards Kenyan development. These funds to be raised via the capital markets have been earmarked for development of infrastructure, a subject near and dear to logistics industry hearts.
With better infrastructure, not only will previously inaccessible areas be open for trade, new routes that cut delivery time can also be mapped out via new roads. This will also eliminate the need for more expensive forms of transportation, such as freighting by air. Existing roads can also be better managed, ensuring less damage to supply management fleets traveling over rough terrains, a major cost consideration that involves paying for spare parts, mechanics and space to store out of action cars.
The Kenyan government has also been true to an encouraging wealth creation endeavor, setting aside tenders worth KES. 200 billion for access specifically by youth, women and persons living with disabilities. This noble cause, aimed at giving marginalized and disadvantaged groups in society equal footing in the race to make profits by supplying goods and services to public sector entities.
While the logistics industry can share in the spoils by supplying transportation or freighting services at a fee, it is also possible, and commendable, to offer supply chain management consultation pro bono to enable first time tender applicants to succeed. Seminars and training courses can be held, educating these marginalized groups about warehousing, organizing transportation schedules, maintenance, new technology and the likes to have done our part in helping the country move forward.
By participating in such initiatives, we can say we asked, not “what can our country do for us”, but “what can we do for our country”. Can you say the same?