Kenyan Firms Urged to Embrace Technology in Global Value Chain

Kenyan firms and multinationals have been challenged to embrace technological advancements inorder to competitively participate in the global value chain. This was the message by Prof. Pinelopi Goldberg, Senior Vice President and Chief Economist, World Bank Group.

Kenyan Firms Urged to Embrace Technology in Global Value Chain

Speaking during a public lecture at the University of Nairobi Towers on January 20, 2019, Prof. Pinelopi spoke on the effects of technological advancements like 3D printing and robotics. “Companies and multinationals that have embraced technology have been able to grow much faster and have been able to create jobs. Countries that have been able to embraced Global Chain have registered significant growth in the last 50 years,” she said. She singled out China, South Korea and Vietnam as examples of countries that have been able to see meteoric rise by taking advantage of global value chain.

According to Prof. Pinelopi, Global Value Chains are all the activities involved in the production of a good or service and its supply, distribution, and post-sales activities when activities must be coordinated across geographies. She pointed out that African countries which are primarily involved in export of raw agricultural material and simple manufacturing are lagging behind compared to developed countries which are engaged in complex manufacturing processes. She explained that with increased technological advancements, African countries could compete with developed countries in global value chains.

“All growth comes from manufacturing,” she said. Prof. Pinelopi observed that most companies on the African continent are not into manufacturing, but in export of agricultural produce. She challenged governments to encourage companies to venture into manufacturing to grow their economies, as manufacturing is key in creating jobs and grows the middle class and grows the economy. “Kenya and Ethiopia have underperformed in the global value chains because they have limited manufacturing. They are mostly concentrated in textiles and agribusiness,” she said.

In the past, there has been rumours of robotics wiping out thousands of jobs. This was refuted by World Bank Group Chief Economist, who is also Senior Vice President of World Bank. She pointed out that companies that use robots, tend to be use lots of raw materials and hence more imports from developed countries, hence more trade. “Automation is good for developing countries,” she pointed out.

On gender issues, Prof. Pinelopi argued that developing countries increasing participation in global value chains favour women empowerment as more women get employed and participate in trade.

Earlier on, the University of Nairobi Management team and the World Bank Group discussed closed collaboration between the two institutions. It was agreed that going forward, more research collaboration especially on data science and big data should be embraced to enable decision makers and policy makers make better informed decisions based on data.