Clusters to improve firms’ competitiveness

November 22, 2010

, NAIROBI, Kenya, November 22 – The government has adopted a key strategy seeking to actualise Vision 2030 and increase the country\’ global competitive edge.

The initiative dubbed \’The Cluster Strategy\’ seeks to bring together related companies according to their geographical location, service providers and specialised suppliers in a bid to increase their productivity.

National Economic and Social Council Secretary Julius Muia said on Monday that other than reduce the cost of doing business, this will improve efficiency.

"In terms of the cost of doing business, when firms are engaging in the process of production and offering services, one of the key concerns is first of all the efficiency with which they can do those activities and secondly the cost of offering those services or producing the goods," he stated.

"Where there are high incidents of corruption, then that gets to affect the cost of doing business," he told Capital News in an interview.

He emphasised the government\’s commitment to boost productivity in various industries.

"Value addition is one of the things that the government is pushing to make sure that there is increased productivity," he pointed out.

"One would then look at this cluster strategy and this is really important as it would get firms which are in geographical concentrations and related institutions to work together so that they can benefit from research and logistics," he said.

A consultancy firm K-Group also stated the importance of companies using the cluster strategy of doing business as this would improve yield.

According to K-Group, this means of doing business will result to improved economic growth within the country.

The firm\’s managing partner Kavore Kariuki said the strategy looks to sharpen and improve innovativeness in various companies.

"Clusters basically have got several benefits. Whenever companies congregate together, certain things like productivity goes up," he said.

"If you are a manufacturer and you open up a shop on Moi Avenue and you produce about 100 jikos but the guy next door has got half your capacity and is producing 200 jikos, you are going to figure out what he is doing differently that is enabling him produce more jikos," he explained.

He stated that this will further enable the country realise the Millennium Development Goal number one, whose aim is poverty alleviation.

"Another benefit of clusters is that it stimulates the formation of new businesses within a cluster which automatically leads to the creation of employment," he said.

He said the use of clusters as representing a new way of thinking about national economies and necessitates new roles for companies, government and academic and research institutions in enhancing competitiveness.

He pointed out the way clusters affect competition saying that they increases the productivity of companies based in the area and drives the direction and pace of innovation.

He stated that it further stimulates the formation of new businesses within the cluster.


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