- The survey reveals that 36 per cent of the manufacturing companies said their businesses will stabilize in 2023 and beyond.
- It also notes that only 7 per cent of the businesses expressed an “already recovered” trading environment.
Most manufactures and distributors expect their businesses to recover from the effects of Covid-19 in 2023, a new survey has revealed.
The inaugural Manufacturing CFO 2021 Survey reveals that 36 per cent of the companies surveyed said their businesses will stabilize in 2023 and beyond.
The survey notes that only 7 per cent of the businesses expressed an “already recovered” trading environment.
Doug Hunter, Head of Customer and Ecosystem Enablement at SYSPRO Africa noted that the pandemic prompted the need for diversification and innovation in changing global market policies to help businesses adapt to the ‘new normal.
“While we have seen an expedited global move towards diversification particularly in digital transformation in the manufacturing and distribution sector, Kenya’s uptake has been much slower,” said Hunter.
He however notes that the mentality however remains the same: Innovation is essential.
Further,41 per cent of the CFOs surveyed have yet to record their digital return on investments – with 7 per cent not being sure if any were received and 31 per cent still planning on investigating.
“The return on digital investment comes down to how companies deploy the technology they acquire. It is not how much you spend that matters; it is how you spend it,” said Hunter.
Also speaking at the launch event, Edwin Makori, CEO,ICPAK said they saw businesses eager to diversify largely favor uptake of enterprise technologies and the re-engineering of supply chains to improve business-to-business (B2B) trading.
Makori noted that while supply chain hurdles are nothing new in the global market, Kenya’s unique position as a primary goods manufacturer means it was hit harder.
Innovation was seen as a likely solution to these hurdles, however, a look at the spending structures of Kenya’s manufacturing companies put the sector on an uneven playing field from a global perspective.
Internationally, most companies were able to expand through the help of stimulus, but the survey findings showed 60 per cent of Kenyan businesses are aiming to support new initiatives through direct purchase.
Others include dwarfing other means such as third party financiers (38 per cent) and paying for user subscriptions (20 per cent).
The survey findings also showed while global financial leaders have pushed for expansion through continued expenditure, Kenya has elected to place its faith in older stock.
Kenyan Manufacturing companies have continued utilizing traditional cost-cutting as their main contingency measure, with the curbing of discretionary expenditure being most prominent at 70.93 per cent, followed by debt collection at 40.70 per cent.
Interestingly, the expansion of revenue models only ranks a low third on the cost cutting strategies list at 32.56 per cent.
51 per cent of the CFOs surveyed expressed that managing cashflow remains the biggest business priority for 2022 while 40 per cent felt investing in research and development (R&D) and new products and services are not far behind.
The survey findings also revealed that while globally CFOs in the manufacturing sector showed insistence on rapid diversification as a Covid-19 countermeasure, Kenya’s ability to weather the storm through more traditional means proves that there is no one-size-fits-all solution.
“With the momentum displayed by Kenya’s international peers, the onus is fast becoming one of digital renovation. The world is moving into a digital space so companies must ready themselves for this new era of online agility through the encouragement of digital innovation and literacy,” said George Mokua, ICPAK Chairman.
The survey was conducted by SYSPRO, a global enterprise resource planning software provider and the Institute of Certified Public Accountants of Kenya (ICPAK).