Many of the future posts will focus on businesses operating in the Kariobangi Light Industries. This is a very interesting cluster that specializes on metalwork, woodwork and on building machinery of different kinds.
You can see from the photo that Kariobangi does not look like an usual industrial area. There are numerous (concrete) buildings with small industries on the ground floors and apartments in the floors above. Safety in the area is a problem. A few months ago a business dealing with chemicals got on fire at night time and 10 people living in the floors above were killed.
Several studies were conducted in the past in Kariobangi. The most recent one is by Sonobe, Akoten and Otsuka “The growth process of informal enterprises in Sub-Saharan Africa: a case study of a metalworking cluster in Nairobi” (ungated version). This is how they introduce the areas:
Our study site is called Kariobangi Light Industries since the local government designated it to be an area for artisans in 1989. Its development dates from the early 1980s, when the workers of formal-sector factories lost jobs as a consequence of the implementation of the Structural Adjustment Program (SAP) and began to establish garages and workshops along the main road. They cleared the bushes to construct roads inside the area. The current population of enterprises is about 300, of which half are related to metalworking. They call themselves Jua Kali in Swahili, meaning informal sector artisans. This cluster is informal and may be categorized as what Altenburg and Meyer-Stamer (1999) call a ‘‘survival cluster of micro and small-scale enterprises,’’ which produce generally low-quality products and sell them primarily to domestic markets.
The article provides lots of details about growth processes and constraints in the cluster and it is definitely the main empirical study done in this area. Though, after spending several weeks in the field, I do not agree entirely with their description, especially the last part. First, because although there is no official census, the population of enterprises in the Light Industries seems larger than the 300 estimated in their article. But this is probably just a matter of delimitations of the cluster and fact that many businesses are quite hidden.
Second, the definition of Kariobangi as a ‘‘survival cluster of micro and small-scale enterprises’’ does not reflect the local perception of Kariobangi. Although most businesses operate at a micro and small level, Kariobangi is technologically more advanced than most informal clusters in Kenya and produces goods that require a higher level of skills.
Third, many products coming from Kariobangi are not of low-quality. There are tons of restaurants and small dining places that buy their machinery in Kariobangi. Many agricultural enterprises come to Kariobangi to buy their technology as well. Although the quality of this machinery is low for western standards, it seems to satisfy the needs of local markets and it is difficult to produce with the scarce means available.
If we fail to identify the differences between clusters in local markets, from informal to semiformal and from survival to those with a growth potential, then we have little chances to design appropriate policies for private sector development. Kariobangi Light industries is not a survival cluster. On the contrary, many of the firms operating here are at the higher end of the local MSE sector.