Started 22 years ago as a maize milling and packaging facility with 80 employees on a 2.5-acre property in Thika, Capwell Industries has grown into a conglomerate with seven product lines and employing 700. The company recently launched a Sh250 million plant. Its chief executive Rajan Shah spoke to the Business Daily on its investment in new products, the regulatory environment and what Kenya needs to do to make local products more competitive.
YOU RECENTLY INTRODUCED YOLA, KENYA’S FIRST CEREAL MILK DRINK. WHAT INFORMED THIS COMMERCIAL DECISION?
Our research and development (R&D) team invested two years in its formulation and we conducted round-the-country visits. We identified a growing market for ready-to-drink products based on a fast rising urban population with an appetite for a healthy and nutritious ready-to-drink product.
R&D is not about laboratories only but a deliberate endevour within companies to promote new thinking towards product innovation based on customer needs. We worked on various product tastes that we internally tested and that is what informed our Sh250 million plant investment.
WHAT DID YOU DISCOVER ABOUT THE URBAN KENYA TASTES?
Kenyans living in urban areas want on-the-go solutions from mobile phones for payments to snacks. Kenyans are fast becoming a health-conscious community that only spends money on ready-to-drink or read-to eat products. Companies must innovate in line with societal changes and we are currently grappling with new ‘product’ problems that are set to hit the market soon.
HOW HAS YOUR BUSINESS BENEFITED KENYANS?
We source raw materials locally for most of our products, from maize, wheat and porridge flours as well as ready-to-cook pulses, rice, and we trade in imported pasta. All are informed by customer feedback that we closely monitor to inform our new investments.
WHAT CAN KENYA DO TO REINVIGORATE THE INDUSTRIAL SECTOR?
The government’s reduced spending means Kenya lacks liquidity to spur spending and Kenyans are struggling to meet basic needs but the future is bright as populations are growing at a faster rate.
HAVE INDUSTRIES RECEIVED THE REGULATORY SUPPORT TO BOOST THEIR ACTIVITIES?
I am telling you times are very hard.The business environment remains unpredictable and most companies are unsure on what will happen next and how it will adversely affect their operations. There is talk of double inspection and the hefty demurrage costs paid on imported raw materials. The intention of building the standard gauge railway (SGR) was to lower the cost of transporting imported raw materials to factories and finished products to the port for export. But look at the aftermath, it is more expensive to use SGR and until that is fixed, we will not break even.
WHAT CAN BE DONE TO EXPAND THE MANUFACTURING SPACE?
We need to facilitate investments in products that can be manufactured here and discourage imports. Some raw materials are locally available and can be used to make some of these imported products, say pasta.
HAVE OUR TRAINING INSTITUTIONS KEPT PACE WITH EMERGING TECHNOLOGIES?
Not really. We rely on expatriates to train out plant operators as our machines are technologically advanced.We invest in training our own technicians but have also opened our factories for apprenticeship. We source for interns in various fields from technical institutes where some have been absorbed into full employment.
HOW PREPARED ARE YOU TO FACE COMPETITION FROM THE REGIONAL MARKETS?
We are concentrating on formulation of new products and are aware some traders sell our products across East Africa and as far as Dubai. We are ready to make our products available across the region as we have invested in world-class machinery that can be scaled as demand rises.
WHAT CAN MAKE KENYAN-MADE PRODUCTS MORE COMPETITIVE?
Just reduce transport costs as well as ease duty on raw material imports. Kenyan manufacturers need an enabling environment, not favours. This will see them employ more Kenyans as well as process more products for the local as well as the export market.
SGR is suffering teething problems that demand urgent government-led talks to find a lasting solution on last mile transport costs from Nairobi Inland Container Depot. It is faster, secure and extremely reliable.
We also need to promote import substitution. Products that can be locally produced should be protected while foreign products should be subjected to hefty duty.
