James Mworia's Perspective on Digital Transformation and Innovative Solutions

What is the current investment climate??

With the Covid-19 pandemic subsiding, the recovery in the global supply chain in 2022 was interrupted by the Russian-Ukraine war and the sanctions that followed.

While there is a wide expectation of an improved business environment going forward, the global supply chain is still struggling but has become more fluid than in previous years.

In the meantime, individual players continue to implement solutions to reduce their dependency on affected countries and are looking closer to home for their sourcing needs.??

The Covid-19 pandemic and the recent global conflicts initially affected investments by disrupting the global supply chain and then temporarily reducing the aggregate demand in Kenya, like in the rest of the world. This in turn, meant that there was no justification for local businesses to invest in expansion.

Now, we are experiencing a new problem, where the demand in several sectors has rebound to almost pre-Covid-19 levels, but industry players are still struggling to get production back to their previous capacity.

We have seen this with several companies in our portfolio who are dealing with sales backlogs due to global supply-chain disruptions.

Can technology help companies weather supply-chains challenges?

The simple fact is that there are two ways to improve the return on investment (ROI) of a company: increase sales or decrease costs.?Stagnant real wages in the country create a ceiling on the consumer purchasing power.

Combining this with the fact that most companies already have a strong focus on the revenue side of their business means that for many industry players, there may not be a lot of potential to drive ROI through increasing sales.?

Logically, executives must look at the cost-reduction side, and investments in technologies that enhance supply chain efficiency become inevitable.?

As Centum, we are involved in several sectors: agriculture, manufacturing, education, real estate, power, and fast-moving consumer goods.?If we take the real estate sector as an example, most of the local supply chain consists of traders who thrive on information asymmetry.?

These middlemen may bring upwards of 20% in cost increases, which can make projects unnecessarily expensive hence decreasing profitability, ROI, and at times viability, i.e., the project may not happen at all.?

Technology can?reduce inefficiencies and disrupt how information is accessed. We recognize this at Centum, and therefore digital transformation is an important focus within our own projects.

How important are innovative solutions to you?

Just five years prior to our investment in the reverse-osmosis water treatment plants, the technology was too expensive to consider; but in 2017 we found ourselves with a commercial need for clean water, and a number of technologies to choose from.

Following a year of supplier visits, research, and due diligence, we settled on the reverse osmosis technology through a Dubai-based company with proven experience and know-how in building such facilities.?

Uninterrupted supply of clean potable water is a key selling point for our mixed-use developments at Two Rivers as well as Vipingo where we have installed a desalination plant with capacity to churn 3 million litres a day.

In a developing-world context, innovation and?sustainability are mostly the result of what I call “the Law of Unintended Consequences.”

Which of your sectors of operations are most aggressively digitizing??

Our subsidiary company, Longhorn Publishers is a key player in the education and publishing sector within Kenya and several markets across Africa.?

We have fully appreciated the digital transformation in this space, which has been among the fastest compared to other sectors. The business focus has had to shift away from the traditional bulk distribution of books and other publications via middlemen and government agencies.?

The business has now leveraged technology and developed a robust e-commerce platform that enables them to reach a wider pool of the end consumers.?

The roll out has also been done via a mobile platform through a partnership that allows Longhorn Publishers to embed its e-commerce application within the M-Pesa app, Safaricom’s e-wallet and mobile money transfer application.

To summarize, commercial viability directly drives investment in sustainable solutions, and I see this trend deepening as sustainable technology continues to become more efficient and affordable.

What is your advice for introducing innovative solutions in Kenya??

Don’t reinvent the wheel. In most cases, a solution exists out there that can address your problem, so research?comes in handy.

The biggest challenge in the adoption of new or disruptive innovation, in my view, is change management, which can be costly, time consuming and result in opportunity losses. Resistance to change fuels inertia internally.

A small silver lining of the recent global shocks like the Covid-19 Pandemic is that companies had to weather many challenges in a short period of time, making them more accepting of change.

We therefore see a lot of investment potential in Kenya and are on track to launch multiple new projects and capitalize on digital transformation opportunities to grow markets and products.?

**This article was first published on the Xetova website.?Read it here. **