In Summary
  • In the past three months, I have been mentoring youths developing new enterprises in manufacturing.
  • Unfortunately, some middlemen are short sighted and in the long-run, they fail to succeed.
  • The number of start-ups manufacturing lotions, soaps and other sanitary products is rising, addressing a huge underserved population in disadvantaged neighbourhoods. 

Jon Meade Huntsman Sr., the founder and executive chairman of Huntsman Corporation, a global manufacturer and marketer of specialty chemicals and author of Winners Never Cheat, made an interesting observation in his book:

“There are no moral shortcuts in the game of business or life. There are, basically, three kinds of people, the unsuccessful, the temporarily successful, and those who become and remain successful. The difference is character.”

Huntsman attributes his success in building a $12 billion enterprise to integrity. Many other organisations have become successful and remain successful based on their values of integrity and honesty.  

As we begin to gear up towards the promise of industrialisation in Kenya, these virtues are becoming rare.

In the past three months, I have been mentoring youths developing new enterprises in manufacturing.  This week’s blog is comprised of my observations and views.

I hope policymakers will take notice and take necessary action to correct some of the problems that may be hindering industrialisation.  

POST-PORT CHECKS

The youths have spent a great deal acquiring the necessary equipment but they have not moved past producing the right sample of their products.  Reason: there are no good suppliers of their inputs. 

Most suppliers cheat by adulterating the chemicals these young entrepreneurs need, and they are not alone in making these claims. The Daily Nation carried a story on November 9, 2017 with the title, “Agency raises red flag over dangerous milk.” 

In the story, the Kenya Dairy Board raised the “alarm over heavy presence of drug residues, including antibiotics, pesticides and preservatives in milk.”  Greedy suppliers use unorthodox chemicals to delay fermentation of milk or add wheat and water to increase quantity.  The people doing this are devoid of any values. 

Small start-ups that often have a significant market do not have the resources to invest in quality control tools, or to import the large quantities of materials they require for production. 

Instead, they rely on the integrity of suppliers or middlemen, who import large quantities of some of these chemicals then break them down to smaller, more affordable quantities.

Ordinarily, the Kenya Bureau of Standards (KEBS) protects customers by ensuring the right quality but it is not clear whether there are post-port checks of oil and other chemical imports.

SIX DIFFERENT SUPPLIERS

When start-ups approach suppliers, they do so expecting to build a lasting relationship.  Unfortunately, some middlemen are short sighted and in the long-run, they fail to succeed. 

Huntsman refers to these types of entrepreneurs as those who succeed only temporarily.  Even new customers do not stay too long before seeking another supplier. 

In our case, it took six different suppliers before we fully understood the supply chain, and the weak areas where unscrupulous middlemen exploit new entrants into the chemical manufacturing industry. 

Many small enterprises do not bother pursuing these criminals to courts to recover their losses; they simply don't have time and money to do so.

Yet it does not take a genius to reveal these criminals and punish them. Preaching integrity and honesty alone won’t stop the criminal activity that hinders industrial development but must be accompanied by investigative agencies posing as customers.

Indeed, on pharmaceutical products, there exists a unit called pharmacovigilance within the Pharmacy and Poisons Board, which randomly samples products in the market and tests them against the declared standards. 

IMPORT MAZE

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