Innovation in the Kenyan Clothing Sector and its Impact on Employment and Poverty Reduction

Draft Final Report By Paul Kamau and Isabel Munandi Institute for Development Studies University of Nairobi

Draft Report Presented During the DelPHE Workshop Held at the Kenya Utalii Hotel Nairobi, Kenya. 31st August 2009

Abstract Learning and innovation are key determinants of competitiveness and growth for garment manufacturing firms operating in a highly competitive environment. Innovations introduced by firms have impact on employment growth in the industry. This exploratory study adopts a case study method to examine the nature and sources of innovation in the Kenyan garment industry particularly in post-MFA period. Results show that mild product, technological and process innovations are taking place across all firms in the industry and seem to have a direct impact on employment. People, market and procurement innovations are generally low and appear to be taking place among locally owned firms rather than in foreign owned firms. Those firms in the export market embrace process and technological innovations largely driven by increasing demands by the buyers. The study concludes that innovation is not taking place in a systematic way, but is ad hoc. To many firms, innovation is not given priority rather firms emphasise survival and any innovation taking place is an outcome of a survival tactic. Assistance from buyers or suppliers to facilitate innovation is minimal in the garment industry. The study underscores the need for quality control, availability of skills and investments in technology as precursor for innovation in the clothing industry. 1. Introduction The strategic significance of the clothing industry in Kenya cannot be underestimated. This industry has been a major source of exports growth and revenue particularly under AGOA. The clothing sector is labour intensive and has been an important source of job growth outside of agriculture. The nature of skills involved - generally unskilled work for women has had important distributional consequences and has helped to mitigate the unequalising consequences of globalisation (Kaplinsky, 2005). Historically, the clothing sector and to some extent the textile has shown the face of industry to countries in early stages of their growth paths, and has provided stepping stone for the development of industrial capabilities (McCormick and Rogerson, 2004, Kaplinsky and Morris, 2006). Competition in the global garment industry has no doubt intensified following the termination of Multifibre Arrangement (MFA) that governed trade in textile and clothing between 1974 and 2004. Firms in Kenya have been exposed to stiff competition in both the domestic and export markets from well established producers in China and India. There is an urgent need for firms to innovate as a way of mitigating the adverse effects of increased competition. Global competitiveness increasingly depends on the ability of firms to assimilate, master and improve technologies in order to produce high-quality products for demanding consumers in the market particularly in the international markets (Goedhuys, et al. 2008; Harrison et al. 2005). The main purpose of this study is to empirically examine the level of innovation in the Kenyan clothing industry. In addition, the study identifies the impact of innovation on employment creation and poverty reduction strategies as outlined in Kenyas commitment to the Millennium Development Goals (MDGs).

The termination of the MFA in 2005 has undoubtedly altered the structure of the textile and clothing industry. 1 As mentioned earlier, competition has generally increased in both the export and domestic market as more efficient producers in China and India surge the markets. The Kenyan garment industry has experienced down turns and the recent gains emanating from participation in the garment global market appears to be gradually getting eroded (McCormick, et al. 2006). According to analysts, the textile and clothing industry in Kenya faces significant crises emanating from shrinking domestic market, cheap imports, and the termination of MFA that exposes firms to stiff competition on third markets from more established manufacturing economies such as China (Kaplinsky and Morris, 2008; Omolo, 2006; Kamau and McCormick, 2009; Kinyanjui et al., 2004). The increased competition has implied that only those firms which embrace innovation have potential to survive the aftermath of MFA termination (OECD, 2004). This study is organised in six sections. Following this introduction, section two examines the role of garment industry in the development agenda and the innovation. Section three, discusses the theoretical approach to innovation while section four outlines the study methodology. Section five presents major findings of the study while section six provides some concluding remarks. 2. Clothing Industry, Employment, and Innovation

The textile and clothing industry has a major role to play in employment creation and poverty reduction in Kenya, in line with the attainment of the millennium development goals (MDG). The sector has the capacity to create both direct and indirect employment opportunities (Omolo, 2006). Though, there is lack of accurate data on the actual level of employment created by all the units within this subsector in Kenya, anecdotal estimates show that the industry has since 2000 created over 60,000 direct jobs and 200,000 indirect jobs. Employment data relating to the Export Processing Zones (EPZs) are fairly documented and reveals that employment of Kenyans increased from 5,565 in 2000 to a peak of 36,348 in 2003 but declined to 25,776 in 2008 (see Figure 1). The number of expatriate workers in the clothing EPZs have been low as compared to local employees.

The global sourcing patterns were formed during decades of trade restrictions have changed and developing countries which thrived on the basis of these restrictions are experiencing formidable threat.

40,000 35,000 30,000

Number

25,000 20,000 15,000 10,000 5,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008

Year
Employment Expatriates

Figure 1: Employment in the Garment EPZ 2000-2008 Source: EPZA 2009 The clothing industry has been conventionally viewed as a major source of employment generation. In addition to this dimension, following the success of the East Asian economies, it is also seen as a lead sector in the industrialisation process of low-income economies. Its low skills requirements and large labour absorption potential have made it an important source of non-agrarian employment for the rural populace. To add, the garment industry offers tremendous prospects for employment of women, unlike other traditional manufacturing sectors (McCormick, et al. 2007; Vijayabaskar, 2002). Majority of women workers in the garment industry would ordinarily not find employment elsewhere in the formal sector, making the clothing sector an important avenue for addressing poverty in Kenya (Kamau, forthcoming). The globalisation process has been paralleled by important changes in the organisation of the clothing commodity chain. While the initial phase of globalisation was dominated by manufacturing capital in the advanced economies, it was, from the early 1970s, replaced by retail capital (Bonacich et al., 1994, Kaplinsky, 2005). This process was once again facilitated by the requirements of low investment and technology in the industry (Vijayabaskar, 2002). As a result manufacturers did not produce the entire output inhouse. They sourced a substantial portion of their output through contract manufacturing, whereby they contracted production to small producers, many of them located overseas. This was mainly driven by the need to keep cost of labour in the production minimum. It is for this reason that the clothing industry is classified as highly globalised.2 The bigger manufacturers focused on supplying designs to producers in the low-waged regions, and ensured control over quality of output sold to wholesalers and retailers in developed economies (Gibbon and Ponte, 2005; Schmitz, 2006).3 Since traders could not undertake the same processes of outsourcing as well, wholesalers and retailers sought to bypass the manufacturers and began to source directly from overseas manufacturers (Vijayabaskar 2002; Kaplinsky 2005). In the process the pricing system
2 3

See McCormick and Rogerson (2004) for details. The sourcing of garments from distant location was found profitable not only because of the low wages but also due to improvements in transport and communication technologies.

for the garment products shifted from being based on cost of production to what customers could afford to pay (Bonacich et al. 1994). Since the retailers could aggressively market the output, they could peg the prices at a much higher level as compared to the cost of production, a process that has ramifications for the modes of organising production in the sector. The industry has since then become an archetype of a buyer driven value chain. 4 Technological innovations have enabled capital to facilitate co-ordination of production in distant locations to take advantage of lower factor costs that prevail in these areas without much increase in transaction costs. The performance of the Kenyan garment industry has been affected by changes in the global and national policies. As shown in Table 1 and Figure 1, the industrial performance within the EPZ garment sector improved following the enactment of AGOA in 2000, a performance that was reversed by the termination of the MFA in 2005. Table 1: Performance of the Kenyan EPZ Clothing Sector 2000 2008
2000 2001 2002 2003 2004 2005 2006 2007 2008 No. of Firms 6 17 30 35 30 25 24 22 19 Exports (US$ Mln) 30 55 104 146 221 195 207 205 201 Investment (US$ Mln) 16 48 88 128 108 132 143 123 118 Source: Compiled from EPZA (2009), Kamau (2007), McCormick, et al. (2006)

Figure 1: Performance of the Kenya EPZ Clothing Sector 200002008

250 200

Value

150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008

Years
Number of Enterprises Exports (US$ Million) Investment (US$ Million)

In todays competitive environment, firms must pay a great deal of attention to the ways in which they initiate, nurture and leverage their innovative efforts. Innovation is widely
4

Given their relatively less knowledge of production, they competed primarily on the basis of design, marketing and fashion creation (Vijayabaskar, 2002).

considered as the primary source creating competitiveness among firms and countries (Harrison et al. 2005; Roy et al, 1999). Innovation goes often with enterprise upgrading which effectively increase competitiveness. A garment manufacturing firm that seeks to compete effectively in a globalised market needs to formulate and implement innovative based strategies. Individual firm innovation may stimulate demand, enable a firm to survive and grow, thereby increase employment. Innovation is widely considered to be a primary source economic growth, and policies to encourage firm-level innovation are high on the agenda of most countries. There is no doubt that learning and innovation are key determinants of competitiveness and growth of nations and firms (Morrison et al, 2008). In addition, the incentives of managers and workers will determine the types of innovation that are introduced and their subsequent effects on prices, output, employment and poverty. Understanding these incentives and welfare effects at the micro level is essential for the effective design of innovation policy and for predicting how other interventions, such as labour market regulations, might affect the rate of innovation (Harrison et al. 2005). There are various definitions of innovation depending either on disciplinary focus (for example, sociological or economical) or perspective (for example, user, producer or seller). Innovation has several characteristics, prominent among which are uncertainty, interactive learning and a degree of innovativeness which leads to characterizations such as minor-major and radical-incremental (McCormick and Oyelaran-Oyeyinka 2007:8). Broadly speaking, an innovation is the implementation of a new or significantly improved product (good or service) or process, a new marketing method, or a new organisational method in business practices, workplace, organisation or external relations. Innovation involves undertaking tasks more efficiently, improved production, and adoption of new technologies. Thus, innovation based strategy requires the simultaneous coupling of three functional components: research and development, manufacturing and marketing. Therefore, innovations consist of the process by which firms master and implement the design and production of goods and services that are new to them irrespective of whether they are new to their competitors, their countries, or the world. Innovation thus involves more than research at frontiers of knowledge (Mytelka, 2007). It includes the many large and small improvements in such areas as product design and quality production, organisation and management routines, and marketing. It includes modification in the production process, and techniques that collectively reduce costs, increase efficiency, provide for human welfare and ensure environmental sustainability. Innovation can increase or decrease employment, depending on the nature of the innovation. Some innovations create new markets that lead to expansion and are labour creating. Others affect efficiency and may actually reduce the amount of labour needed. 3. Methodology The main fieldwork for this study was undertaken between May and August 2008 with some further follow ups in January- February 2009. The study used both primary and

secondary data with the primary data forming the bulk of the analysis. It adopted a qualitative approach to studying the sources of innovation in the Kenyan garment industry. Primary data was based on 10 case study firms purposively selected, identified to represent different structures of the industry. These firms were distributed in such a way that five were drawn from the EPZ and MUB programme, while the other five constituted local firms. From each firm, two workers were randomly selected to give a total of 20 workers. These workers were studied to gather qualitative data relating to their work experience as well as their perceptions on employment opportunities in the industry and their well being. Workers were also asked about their future expectations. The composition of the workers was 10 male and 10 female, drawn mainly from the production cadre of the factories (Appendix 1), in specific, operation section of garment manufacturing. The bulk of workers studied comprised operators, helpers, ironers and packers. In some few cases, supervisors were included in the workers case study. From the latter, we sought to know what skills they had prior to joining the current factory or their current position. In addition to the case-studies, key informant interviews were conducted among staff from government ministries, investment and export promotion agencies, industry representative bodies and trade unions. In total 14 key informant interviews were conducted and provided expert overview opinions on the impact of MFA termination on the clothing industry and the role of innovation as a coping strategy for the industry. The study also utilised observation method whereby enterprises were observed on how they were currently doing. The aim was to find out whether a firm has always been doing the same thing or was changing and, if there were any changes, what was driving it. We were also interested in finding out if a firm was getting any assistance in its innovation process. Finally, the study utilised published materials relating to innovation and the clothing sector. In section 5, we report some of the key findings from the case studies of both the firm and workers. 4. Theoretical and Empirical Literature Review Innovation is defined as the process by which firms master and implement the design and production of goods and services that are new to them, irrespective of whether they are new to their competitors their countries or the world (Mytelka, 2007). In this framework, innovation has its sources in a wide variety of places and in activities such as R&D, design, production on the shop floor, quality control and marketing (Oyelaran-Oyeyinka and McCormick, 2007). Actors engaged in innovation are embedded within a wide network of agents in a system or a system of innovation. Innovation theory of profit suggests that profit is the reward for successful introduction of innovation. Moreover, the value of innovation decreases with more competitors and increases with more users (Baumol 2007). This theory is based on the work of Schumpeter which emphasizes the role of entrepreneurship and the seeking of opportunities for novel value-generating activities which would expand (and transform)

the circular flow of income (Cantwell 2003, Mytelka 2007). According to this theory, innovation capacity and economic performance are much more the result of the smooth interplay between the stakeholders of firms than of high-tech or the intensity of research and development. Combining Schumpeter entrepreneurial theory with the profit strategy approach shows that innovation needs to be embedded in coherent profit strategies in order to be effective. Innovation capacity and economic performance are much more the result of the smooth interplay between the stakeholders of firms than of high-tech or the intensity of research and development. Thus, innovation depends upon the generation of feasible new capabilities, the operation of which adds new value to the existing circular stream of income, and thereby creates new profits and higher income (Cantwell 2003; Goedhuys et al. 2008). Accordingly, there is a reward for developing new ideas, new construction technologies, and for finding new markets. Innovation is neither research nor science and technology, but rather the application of knowledge in production. It consists of the processes by which firms master and implement the design and production of goods and services that are new to them (Mytelka, 2000:18). Thus, innovation includes modifications in the production process and techniques that collectively reduce costs, increase efficiency, provide for human welfare and ensure environmental sustainability (Mytelka, 2007). Firms engage in a variety of activities to reduce costs, improve output quality and develop new products and markets (Goedhuys et al. 2008). These activities are innovative since they might incorporate a strong component of technological learning and may result in products and production processes that are new to the firm. Investment in, and mastery of, new machinery and equipment is still the most important way for technological learning leading to the improvement of production processes. Innovation in the clothing industry is fundamental in enhancing competitiveness of Kenyan firms. Innovation activities can be classified as mechanical, invention, marketing strategies, procurement of inputs, developing new inputs (dye, fabric, threads etc.), introducing new products, and enhancing human resource by employing professionals, and training workers. Therefore, one can talk of four major innovations possible in the clothing industry: product, process, marketing, and procurement, technological and organisational. 5. Characteristics of Innovation in the Garment Industry This section reports findings based on the case studies conducted in 2008 among the garment manufacturing firms in Kenya. 5.1 Characteristics of Firms in the Study The clothing industry in Kenya is diverse in terms of size, ownership, technology, and market orientation. It consists of micro, small, medium, large and very large firms, which

form a pyramidal structure with three tiers. 5 The base of the pyramid is occupied by the micro and small enterprises (MSEs) that produce mainly for the domestic market. These enterprises are spread throughout the country, representing about 15 per cent of all MSEs, and over one-third of the manufacturing MSEs in Kenya (McCormick et al. 2007). The ownership of these MSE firms is dominated by Kenyans of African origin, a vast majority of whom are women. Firms in this tier are classified into three types: custom tailors, contract workshops and mini-manufacturers.6 The next tier consists of medium to fairly large firms that produce mainly for the domestic market, with some producing for the export markets, within the African region and the EU. The number of firms in this category is not known but anecdotal sources indicate that they were approximately 100 firms in 2006 (see Kamau, forthcoming). The third tier consists of large to very large export-oriented firms. These firms mainly established in response to the US - African Growth and Opportunity Act (AGOA) mostly operate as export processing zones or as Manufacturing-under-bond (MUB) factories (Phelps et al. 2008; McCormick et al. 2007; McCormick et al. 2006). In 2003, the number of firms in this tier was estimated to be 45 but by 2008, this had declined to 19 firms in the EPZ (Table 1) and 3 in the MUB programme. Firms in this category largely undertake cut-make- and-trim (CMT) orders, popularly known as the assembly work for US-based buyers. Firms in this study were selected to represent this diversity of the industry. Table 2 presents some of the basic characteristics of the firms in our study. Table 2: Firm Characteristics of the Firms
Firm 1 2 3 4 5 6 7 8 9 Status EPZ Local Local Local Local MUB EPZ EPZ Local Year 2003 1986 2004 1996 1987 2004 2001 2002 1994 Size 2000 110 100 120 159 250 1100 850 150 Products Woven Casual & Knits Woven (Shirts, Trousers, Promotion items & Industrial) Uniforms, Baby wear Knits & Woven (T-shirts, casual kikoys, lamu-lamu, polo) Promotion Items (T-shirts, Polo, track suits) Sports wear Knitwear & Sports wear Woven & Knits Trousers Corporate uniforms, promotion items, industrial clothing Jean Trousers, Casual trousers Markets USA Domestic Domestic Domestic/Europe Domestic EPZ Subcontract USA USA Kenya/ Tanzania/ Uganda/Rwanda USA Source of Fabric Asia China Local/China Local/Region Local/India EPZ Taiwan/ India Hong Kong/ China/ UAE Kenya/Region/ India

10

EPZ

2002

2800

China/India

Source: Authors Fieldwork (2008) Five of the 10 firms in our survey were export oriented and largely foreign owned. They operated either in the EPZ or MUB programme making them purely exporting. All of them relied on the USA market into which they exported through the AGOA trade preferences. Participation in the European market was extremely limited and only one
5

Drawing from McCormick et al. (2007), firms can be classified as micro (1-9 workers), small (1049 workers), medium (50-99 workers) and large (100 or more workers). 6 See McCormick, et al. (1997)

firm in our sample indicated that it exported to this market. Although most of the exporting firms were aware of potential in this market, respondents argued that it was segmented and trade volumes were generally low. Lack of preferential market access similar to the one available in the US market constrained firms penetration. Therefore, as trade statistics show, the US market accounts for more than 90% of all clothing exports in Kenya (see Kamau and McCormick, 2009; Phelps et al. 2009). Markets and products differed depending on the nature of the firm and the export platform in which a firm operated. All the firms in our sample were large-scale with employment size of 100 or more workers. Composition of employees varied significantly across firm sizes and market orientation. Generally, export oriented firms employed more female workers than those producing for the domestic market. Similarly, older firms seem to have a higher proportion of male workers when compared to relatively new firms. Workers in EPZ and MUB firms were generally young and highly educated than those in local firms. However, respondents reported that they were not very keen on education when recruiting but this reflects the general high education level in Kenya. However, given the education level, a firm would prefer to recruit a worker with secondary education rather than one with only primary education. It was reported that it was easier for a worker with secondary education to be trained on how to use machinery and to interpret designs than for a worker with primary education. Most firms in the sample adopted assembly line type of production whereby each worker was involved in production of a small component of the garment. As such, firm managers reported that even though skills training was taken into consideration at the recruitment level, it was not mandatory. Majority of the workers in the production sections were trained on the job, Moreover majority of them were first recruited as helpers and only after showing mastery of skills, were promoted to operation sections. However, most workers had basic tailoring skills. Recruitment was mainly done at the factory gate or through referrals. It was not easy for firms to determine whether a worker originated from rural or urban areas. However, the workers interviews revealed that most workers were migrants from rural areas, who come to Nairobi to search for job opportunities. We asked our respondents to indicate the average age of the workforce for their male and female workers. Results indicate that female workers were generally younger than male workers. Most male workers had long experience in garment manufacturing while women on average did not have long experience. Specialised skills were required for supervisors and technical staff but which was somehow lacking. As such, firms depended on transition of workers from operations to technical positions. Increasingly, workers were recruited on casual or short-term contracts ranging from two months to six year. Only one firm in the EPZ indicated that over 90% of its workers were permanent. The distribution of workers in the local firms showed a higher proportion of them being on permanent terms compared to foreign-owned firms. None of the firms in our sample reported using part-time workers. Increasingly, firms were setting production

targets for workers in operations. The aim of setting targets was to push workers to become more productive and also to ensure that labour costs matched productivity. However, workers complained that these targets were unrealistic at time and would force one to work late into the night without compensation for over time. To workers, production targets amounted to exploitation. A vast majority of firms in our sample indicated that employment levels had declined between 2004 and 2007. Most respondents reported that this was due to increased competition in both domestic and export markets. Most firms indicated that threats from China and to some extent India were pushing them out of the market. 5.2 Product, Process and Marketing Innovations in the Garment Industry A product is defined as an entity made up of a hierarchically ordered set of subsystems and linking mechanisms. Thus, the locus of change in this entity which might involve change in the hierarchy, in the subsystems and or in the linking mechanism may result to product innovation. Product innovation relates to changes in productivity differences of a new product within a firm (Harrison et al. 2005). It entails production of new or improved product within the firm that may imply a change in production methods and input mix, with a view to increasing profitability of the firm. Product innovation, literature suggests, has an impact of creating more demand for the firms product, whose importance depends on the nature of competition and the delays with which rivals reacts to the introduction of new products (Roy et al, 2007). From the literature, an introduction of new product may increase labour requirements in firm commonly known as the compensation effects. Our study sought to find out if firms had changed their product mix between 2004 and 2007 by introducing new products, if so, what new products were introduced and their impact on the sale and labour engagement. Many firms (80%) indicated that they had introduced new products. Three firms had had a complete overhaul of the product mix whereby they shifted completely to new products while others continued producing the initial goods in addition to new ones. An EPZ (Case study 10), for instance, initially established to produce knit garments such as t-shirts, had shifted to production of jeans. This process was gradual, starting with an introduction of one line and subsequently increasing this production and phasing out knit garments. In the locally owned firms, respondents reported their operations were shifting from standard garment production to corporate uniforms where competition was low and returns were higher. Firms that had introduced new products in their product mix indicated the new products fetched more in their respective markets and had made them more competitive. However, there were firms in our sample which had not introduced any new products between 2004 and 2007. Process innovation: Activities that are likely to reduce the quantities of factors required to obtain a unit of output, including the required labour input. Any increase in productivity resulting from a process innovation implies a reduction in unit costs. Depending on the competitive conditions facing the firm, this is likely to result in a lower price, which will

10

stimulate demand and hence increase output and employment, with the size of the effect determined by the elasticity of demand for the firms products (Harrison et al. 2005). This will also depend on the behaviour of the agents inside the firm and the nature of the market competition. Marketing innovation involves searching for new markets for the products. The impact of market innovation performance of the firm depends on whether it results in businessstealing or market expansion. In our study, market innovation entailed finding new markets either within Kenya, within the region, or in the global markets. Results indicate that export oriented firms in EPZ and MUB were exporting only to the US market and gave no evidence of market diversification. Local firms were exporting, some aggressively while others were doing it passively. Two of the firms reported they were exporting to the European market while the rest were exporting to the African markets. There was a consensus among respondents that export markets were very demanding in terms of quality and timely delivery which most of the time were not worth the price the buyers offered. Most large-scale enterprises produced entirely for the US retail market. All firms in this sample indicated they we producing for Wal-Mart Stores, the largest retailer in the US. Other customers included Russell, Levis, Gloria Vanderbilt, Target, JC Penny and Calvin Klein. This is in keeping with Phelps et al. (2009) who found from a survey that over 50% of the firms in the survey produced for one large US retailer. The reliance on the US market to the exclusion of other destinations indicates a high level of failure to diversify. The concentration on buyers is very high in the export market and for most firms; they were dealing with just one or two buyers. Analysts argue that the high dependence on a very limited number of buyers constrains innovation and growth of a firm (Phelps, 2008; Roy et al. 2003). Turning to the local firms, the trend is somewhat different. Firms aggressively market their products in the domestic or regional market. However, their success is limited by financial capabilities. In this category of firms market diversification is limited to the African region particularly Tanzania and Uganda where firms are exporting. The innovation in these new markets is witnessed through entry of tourism and corporate uniforms sector as opposed to the standard garment markets (Kamau, forthcoming). Local firms were also working closely with buyers in the European market, who were helping them to penetrate this high quality demanding market. 5.3 Technological, Organisational and People Innovations Technological innovation occurs when firms are able to assimilate, imitate and master modern techniques of production (Knight, 1967). Investment in new machinery and equipment is the most important way for technological learning leading to the improvement of production process. The process of achieving technology transfer could be further strengthened among garment manufacturing firms by exploiting more

11

efficiently the opportunities offered by the ICT for the dissemination of advanced technological knowledge (OECD, 2004). Human resource training is also a prerequisite for technology transfer, such that firms that pay attention to upgrading skills of their workers tend to achieve higher levels of technological capabilities than those which do not train their workers. Another way of acquiring technology is being involved in the design. Design is a highly technical process but also high value added activity in the garment value chain. In GVCs for garment, design is normally done by the buyer located in developed countries (Gibbon and Ponte 2005; Schmitz, 2006). In our case, we found that most firms in the export segment of garment trade do not undertake the design work which would facilitate technological innovation. Instead, the end customer, the agent or buyers, specify the designs for the factory to produce a prototype. This is sent to the customer for approval, after which an order is placed for the factory to produce certain quantity, size or colour. Among local firms, case studies found that innovation by way of copying and modifying known designs is being practiced at varied levels. The level of sophistication in the design increased with the firm sizes. Large firms have employed designers from China, India and Sri Lanka to assist with interpretation of designs and also train local workers. Although respondents were aware of the relevance of technology transfer in the innovation process, activities that would promote this transfer were not adequately addressed. Use of ICT, involvement in the design and also training facilities in the garment industry remain rudimentary. In one case study a respondent reported that: The firm stopped training its production workers because it realised that after the training, workers left the factory within three months to work with neighbouring factories. The firm realised it was doing the training for the industry, work that should be undertaken by the government instead (Case Study One). Being in charge of procuring raw materials used in the production process puts a firm in contact with suppliers who may play an important role in facilitating technological transfer and capabilities. According to OECD (2004:31) technological transfer should be encouraged between suppliers of machinery, raw materials and users. The nature of the garment global value chain is that procurement of inputs is done by buyers or their agents (see Kamau, forthcoming). Suppliers of key fabrics, threads and other accessories are prequalified by the buyer or agent even before an order has been confirmed. Once a firm to undertake production is selected, it is directed on where to get the raw materials. Therefore, large exporting firms are not involved in the procurement of key inputs in the garment production process. Thus, technological transfer that would arise from interaction between supplier and users of raw materials is very low. Locally owned firms are somewhat involved in the procurement of inputs and therefore stand better chances of technological upgrading. Organisational innovation is the use of capabilities associated with systems to coordinate activities from design through production and distribution of garments (Knight 1967, Roy et al. 2003). It relates to the capability of a firm to coordinate all activities related with the production and distribution of garment products. Although it is closely linked to

12

process innovation, organizational innovation involves establishment of clear work assignment, authority, relations, communication systems or formal reward system within a firm (Knight 1967:482). It examines the capability of firms to have elaborate structures, use professionals and acquire skills to effectively negotiate with buyers and suppliers. An important ingredient of organisational innovation is the ability to plan and control production activities, costs and management controls, quality control and assurance, as well as to manage human resources within the firm (Harrison et al. 2005). Human resource is at the centre of any organisation and human beings play an important role in facilitating change in any organisation. Analysts argue that changing people is the most important, yet the most challenging part of organisational change and so is the innovation (Knight 1967, Harrison et al. 2005). People innovation relates to activities undertaken by firms with a view to changing workers' behaviour and attitudes towards work. It highlights the human capital management practices that foster an innovative environment and better understand the roles that senior executives can play in enabling innovation from a people perspective. Employees in the clothing sector in Kenya have recently witnessed relentless cost cutting, a deep focus on productivity and efficiency, continual merger and acquisition activity, and the closure of firms. This has led to many of them being rendered jobless. As a result workers are wary about their future in the clothing industry. Firms are increasingly changing people within the organisation as a way of cost cutting. In some cases, new ones are hired but on lower terms than those of the previous employees. Labour casualisation has also become common in the industry with workers being engaged on one to three month contracts. With uncertainty about their jobs, workers are always on look out for alternative jobs elsewhere. Their commitments to the firms where they are working are therefore quickly waning off. With low commitment to the firms, we found that people innovation in the industry is generally low. Firms generally recruit young people mostly female job seekers and give them intensive on-job training. In the industry, training programmes are limited to induction training which is given to new employees for a period of at most one month. One exporting firm reported it had started a training programme for its workers but after one year it was suspended for fear that workers were being poached by other firms in the industry which did not have their own training programme. Most respondents felt the government should to take up the responsibility of training garment manufacturing workers for the industry. There appear to be a huge disconnect between what training institutions are currently offering and what the industry needs in terms of human resources. This cuts across all cadres of employment. Respondents felt there was need for collaboration between the industry and training institutions to ensure that relevant skills were available. Foreign owned firms justified use of expatriates because of such shortage of trained and technical manpower. The aim was to assign local staff on work study under an expatriate so that after the expatriate leaves, local staff could take up those assignments. In spite of this expectation, workers reported that transfer of skills from expatriate workers to local workers was minimal if not completely absent.

13

6. Employment Creation and Poverty Reduction In order to demystify issues the role of the sector in employment creation and poverty reduction beyond the macro data which are highly aggregated, in this study we carried out 20 workers interviews. We found about 40% of workers in the operation stage had some training in tailoring. Otherwise, majority of them had no formal training and relied on the on-job training to gain skills for garment manufacturing. Almost 80% of the workers interviewed were below 40 years old implying that the industry relied heavily on young labour force. Women tend to be younger than men. Regarding their perceptions on the work they were doing, a vast majority of workers believed that it was better to work in the garment industry than to remain unemployed. Female workers on average were more contented with the work in the industry than the male workers. This was because male workers had more alternative opportunities for employment than was the case of women. Others felt the expectations of employers were too high and production targets unattainable. They complained that working hours were too long and employers were not willing to pay for the overtime. Besides salaries, benefits for working in the industry were minimal. Workers were particularly concerned about statutory deductions which some reported were never remitted to relevant authorities. In one case, a respondent reported that although his firm was deducting National Hospital Insurance Fund (NHIF), he went to Kenyatta National Hospital for admission, only to be told that he had not made any contribution to NHIF. Most workers said they were supporting their extended family from the salaries they earned in the industry. We found that among the 20 workers in our survey more than half were supporting their relatives. Remittances and family support accounted for a large share of monthly expenditures. Challenges of working in the industry included lack of appreciation by employers, uncertainty about the jobs, casualisation of employment contracts, and low wage. Some respondents felt that labour union was not representing their interest well. They opined that trade union officials in some cases were colluding with management to deny them their rights. Wages paid by the industry on average puts a worker above the poverty line. However, the real value of income earned was low. Therefore, almost half the workers believed they were among the poor people in the society. They argued the salary earned was not even enough to meet their monthly expenditures. To make ends meet, one had to look for extra part-time work. On the other hand, some felt they were better off than most people working in other industries. One main use of income generated from the industry was education. When we asked workers what their main achievements were, they reported that being able to educate their children or siblings was important. Others had been able to train themselves or upgrade their skills.

14

A major aspiration of many of the workers is to buy sewing machines and start their own business. Others reported that their ambition was to start a business not related to garment because of the fierce competition. 7. Conclusions Innovation is the result of successful product, people, process and technological changes that enable a new level of productivity and performance within a firm. In the garment industry, improved performance and cost reduction strategies yield significant benefits such as enhanced competitiveness, lower lead time, lower capital and operating expenses, and improved product margins. Moreover, innovation enables a firm to improve welfare of its employees. Innovation is the use of new ideas or current thinking applied in fundamentally different ways that result in significant change in performance of the firm. This covers a broad view of issues including the development of new products, services and markets, improvements to existing operations and the creation of new business models all of which aim at generating breakthrough results. Case-studies in Kenya show that managers recognise the need for innovation in the industry. Innovation in this sector is determined to a large extent by developing the clothing commodity chain backwards to stimulate the moribund cotton ginning and textile sector. This, respondents overwhelmingly argued, would be instrumental in creating competitiveness of the garment industry. Moreover, it was reported that lack of innovation may have been stemming from the lack of a well developed garment value chain. In spite of the clearly stated requirements under AGOA for African countries to develop textile and cotton growing in the region, the progress has been slow at best. To many, the end of derogation of the third country fabric under AGOA would mean an end to the garment industry. In Kenya the process of reviving the textile industry has been uncoordinated. Given the high capital requirements for this kind of venture, not many investors are keen to pull their investments in textile manufacturing. Innovation is taking place in an ad-hoc manner and it is also precarious. No firm seems to have a systematic approach to innovation. Whenever this was happening, it was mainly driven by survival strategy than an expansion strategy. Assistance from both the buyers and the suppliers to promote innovation was low. Buyers expected firms to upgrade and innovate but were not willing to support them in any way. The ability of the firms to turn around an order was low, making lead times high. Most firms focus on a single market and in most cases, one or two buyers. For large firms, the US market is the sole market the firms sold their products. Investment in modern production technology is low, so is the skills availability. Product innovation seems to be taking place but largely driven by the demands a buyer places on the firm.

15

Limitations to innovation in the garment industry include lack of access to information on new technologies and innovations, inadequate institutional infrastructure, management and marketing, human kills. Others include limited access to finances, regulatory. Overall environment is problematic: poor transport infrastructure, governance and corruption issues, mediocre banking, high business costs and lack of technological infrastructure.

16

References
Audet, Denis. 2007. Smooth as Silk? A First Look at the Post MFA Textiles and Clothing Landscape. Journal of International Economic Law, 10:2, p. 267-284 Bonacich, Edna; Lucie Chenge, Norma Chinchilla, Nora Hamilton; and, Paul Ong. (eds.). 1994. Global Production: The Apparel Industry in the Pacific Rim. Philadelphia: Temple University Press. EPZA. 2009. EPZA Annual Report for the Year 2009. Nairobi: Export Processing Zones Authority Gibbon, P. and S. Ponte. 2005. Trading Down: Africa Value Chains and the Global Economy. Philadelphia, Temple University Press. Goeddhuys Micheline, Nobert Janz and Pierre Mohnen. 2008. Knowledge Based Productivity in Low-tech Industries: Evidence from Firms in Developing Countries. UNU-Merit Working Paper No. 2008-007. Maastricht: UNU-MERIT Harrison, Rupert, Jordi Jaumandreu, Jacques Mairesse, Bettina Peters. 2005. Does Innovation Stimulate Employment? A Firm-Level Analysis Using Comparable Micro Data from Four European Countries, Research Report for EU, Innovation and Employment in European Firms- Micro-econometric Evidence. Kamau, Paul. 2009. Upgrading and Technical Efficiency in Kenyan Garment Firms: Does Insertion in Global Value Chains Matter? Forthcoming A thesis Submitted in Fulfilment of the Requirements for the Award of a Degree of Doctor of Philosophy in Development Studies. Institute for Development Studies, University of Nairobi Kamau, Paul; and, Dorothy McCormick. 2009. The Impact of Asian Drivers on the Kenyan Garment Industry: An Analysis of Coping Strategies. Institute for Development Studies, University of Nairobi Kamau, Paul. 2007. The Developmental Impact of Asian Drivers on Kenya, with Particular Emphasis on Clothing and Textile Manufacturing. Research Paper prepared for OECD Development Centre. Kaplinsky, R. 2005. Globalisation, Poverty and Inequality: Between a Rock and a Hard Place. Cambridge, Polity. Kaplinsky, Raphael and Mike Morris. 2006. Dangling by a Thread: How Sharp is the Chinese Scissors? Final Report Submitted to DFID Trade Division, London Kaplinsky, Raphael. 2008. What Does the Rise of China Do for Industrialisation in Sub-Saharan Africa? Review of African Political Economy 35:115. p. 7-22 Kenya, Republic of. 2008. Kenya Vision 2030, Government Printer, Nairobi Kiggundu, Rose. 2007. Learning to Change: Why the Fish Processing Clusters in Uganda Learn to Upgrade, in Oyelaran-Oyeyinka, Banji and Dorothy McCormick (eds.), Industrial Clusters and Innovation Systems in Africa: Institutions, Markets and Policy, Tokyo: United Nations University Press Kinyanjui, Mary Njeri, Dorothy McCormick and Peter Ligulu 2004. Clothing and Footwear in Kenya: Policy and Research Concerns, in McCormick, Dorothy and Christian Rogerson, (eds.) Clothing and Footwear in African Industrialization. Pretoria: Africa Institute of South Africa Knight, E. K. 1967. A Descriptive Model of Innovation of Intra-Firm Innovation Process. The Journal of Business. 40:1 p. 478-496

17

McCormick, D. (2007) Introduction: Clusters and Innovation Systems in Africa, in Oyelaran-Oyeyinka, B. and D. McCormick (eds.), Industrial Clusters and Innovation Systems in Africa: Institutions, Markets and Policy, United Nations University, Tokyo McCormick, D. and C. Rogerson. 2004. Introduction: Researching Clothing and Footwear in African Industrialisation. Clothing and Footwear in African Industrialisation. D. McCormick and C. Rogerson. Johannesburg, Africa Institute of South Africa: 1-15. McCormick, Dorothy, Paul Kamau and Peter Ligulu. 2006. Post-Multifibre Arrangement Analysis of the Textile and Garment Sectors in Kenya, IDS Bulletin, 37:1, p. 81-89. McCormick, Dorothy, Peter Kimuyu and Mary Njeri Kinyanjui. 2007. Textiles and Clothing: Global Players and Local Struggles, in McCormick, Dorothy, Patrick Alila and Mary Omosa (eds.) Business in Kenya: Institutions and Interactions, Nairobi: University of Nairobi Press McCormick, Dorothy. 2007. Industrialization through Cluster Upgrading: Theoretical Perspectives, in Oyelaran-Oyeyinka, Banji and Dorothy McCormick (eds.) Industrial Clusters and Innovation Systems in Africa: Institutions, Markets and Policy. Tokyo: United Nations University Press Morrison, Andrea, Carlo Pietrobelli & Roberta Rabellotti, 2008. Global Value Chains and Technological Capabilities: A Framework to Study Learning and Innovation in Developing Countries. Oxford Development Studies, 36:1. p. 39 58 Mytelka, Lynn K. 2007. From Clusters to Innovation Systems in Traditional Industries. in OyelaranOyeyinka, Banji and Dorothy McCormick (eds.) Industrial Clusters and Innovation Systems in Africa: Institutions, Markets and Policy, Tokyo: United Nations University Press OECD, 2004, A New World Map in Textiles and Clothing: Adjusting to Change, Geneva: Organisation for Economic and Cooperation and Development (OECD) Omolo, Jacob O. 2006. The Textiles and Clothing Industry in Kenya, in Hebert Jauch and Rudolf TraubMerz (eds). The Future of the Textile and Clothing Industry in Sub-Saharan Africa, Bonn: Friedrich-EbertStiftung Oyelaran-Oyeyinka, B. and D. McCormick, Eds. 2007. Industrial Clusters and Innovation Systems in Africa: Institutions, Markets and Policy. Tokyo, United Nations University Press. Phelps, Nicholas A. John C. H. Stilwell and Roseline Wanjiru. 2008. Missing the GO in AGOA? Growth and Constraints of Foreign Direct Investment in the Kenyan Clothing Industry. Transnational Corporations. 17: 2, p. 66 106 Phelps, Nicholas A., John C. H Stilwell and Roseline Wanjiru 2009. Broken Chain? AGOA and Foreign Direct Investment in the Kenyan Clothing Industry. World Development. 37:2, p. 314 -325. Roy, Santanu, Suresh Kumar and Sunil K. Dhawan. 1999. Promoting Industrial Innovation in a Developing Country: Indicators of Design Engineering Practices in the National Capital Region of India, Unpublished Report, National Institute of Science, Technology and Development Studies. New Delhi. Schmitz, Hubert. 2006. "Learning and Earning in Global Garment and Footwear Chains." The European Journal of Development Research . 18(4): 546-571. Vijayabaskar, M. 2002. Garment Industry in India. In Joshi, Gopal (ed). Garment Industry in South Asia: Rags or Riches? Competitiveness, Productivity and Job Quality in the Post-MFA Environment. International Labour Organisation, New Delhi

18

Wamae, Watu. 2006. A Technological Acquisition Model: The Role of Learning and Innovation. UNUMERIT Working Paper. 2006:022. Maastricht

Appendix 1: Workers Interviews

Case 1 Indicator Demographic Local Firm: Julius Date: 5/06/08 Male; 30 years old; married with 2 children; wife and children in rural area; wife is farming, looking after livestock & repairing clothes Training Never attended any formal tailoring training learned on the job. learned all his skills on the job. He said he knows how to cut and sew trousers. Skills Machine Operator; cut and sew trousers Employment History 1995-1996, helper at Spinner in Ruiru blanket factory; 1997-2000, casual laborer in the construction industry; 2000 (four months), Falcon 2000-2003 Sameer JR Falcon 3 months, machine operator, Binti Apparels 2 month, machine operator, Freba. 2005 (for six months), Machine Operator, Mash Apparel From August 2006 to present, machine operator, Brother Shirt Factory Earnings Wages: Ksh. 282 per day since 2006; (wages, housing, Deducted NHIF only no other medical cover. Hasnt been given card travel, medical) though; Deducted NSSF no other pension scheme. Perception of the Better paying compared to other firms worked for, though aware of current employment firms that pay better than current employer Has not received this years NHIF card despite deductions. Attempt to inquire on this issue may lead to dismissal. Achievements Purchased two straight needle machines, goats, and a cow. Possible mainly when worked for Sameer JAR; Learned stitching and has trained wife how to repair clothes Able to make remittances to parents who live in rural area Poverty situation He feels he is better than the unemployed colleagues even though the based on the current working conditions could be improved. employment Case 2 Indicator Demographic Local Firm Agnes Date 5/ 6 / 2008

Training

Female; born in 1976; married with 3 children; husband is a mechanic working in industrial area; children living with their grandparents in rural area Tailoring through apprenticeship from a rural micro-enterprise

19

Skills Helper Employment History May 2001-2005, tailor at Specialised Hardware. Since 2005 to present, helper at Brother Shirts Earnings Wages: Ksh. 249 per day (wages, housing, Deducted NHIF, but employer has not given a card of the same. No travel, medical) other medical scheme Deducted NSSF, but on personal follow-up with institution, found no remissions. No contribution to other pension scheme Perception of the Perceives employer is exploitative current employment Considers self fortunate as she has never been subjected to frequent temporary lay offs Achievements Purchased a sewing machine Purchases clothes for a physically handicapped child belonging to a cousin; Makes monthly remittances of Ksh. 1000 to parents in rural area. The money is used in buying farm inputs and food; Occasionally assists husband to pay childrens school requirements uniform & examination fees Poverty situation The workers are overworked and the pay is small. It is very challenging based on the current to work in the garment industry. employment Case 3 Indicator Demographic EPZ Firm: Richard Date: 7/05/08

Male; 26 years old; married with one child; wife and child are in rural home; incomplete secondary level of education reached form 2 Training Dressmaking Grade III from a private dressmaking training school Skills Machine operator, mainly double needle; helper Employment History 2003 2005, Machine Operator, Global Apparel From 2006 to present, helper, Global Apparel Earnings Wages: Ksh.184 per day (Ksh. 4784 per month) (wages, housing, House allowance: Ksh. 750 per month; travel, medical) From the Ksh. 4784, makes monthly contributions to NSSF, NHIF and TTU (Take home at the end of month is therefore Ksh. 4500) Perception of the Fortunate to have a job current employment Achievements Making monthly remittances of Ksh. 1500 to rural home share between wife and mother for education of brother Poverty situation based on the current employment Case 4 Indicator Demographic Local Firm: Evelyn Date: 08/05/2008 Female; 32 years old; married with two children; husband is a driver with one of the high commissions in Kenya; lives in Upper Hill, Nairobi middle class residential area; has dependents mother and siblings who live in rural home; first born in her family. Certificate in garment making from Kirinyaga Technical Institute. Trained for three years.

Training

20

Skills Machine operator Employment History Started at Wool Track Play Back International for one year October 2005 to present machine operator at Kiboko Leisure Wear Earnings Paid bonus at the end of the year (wages, housing, Wages: Ksh. 6500 per month travel, medical) House allowance: 1500 Other allowance: No commuter allowance Contributes to NSSF and NHIF Perception of the Present job is better and has no difficulties in comparison to farming current employment (which is difficult and demanding)

Achievements Poverty situation based on the current employment Case 5 Indicator Demographic

College mates are doing better than her financially, but those people from her village are worse off. The firm has been helpful to her in getting new machines to start her own business. Local Firm: Job Date: 8/05/08

Male; 23 years old; married with no children; third born in the family; has one dependant a younger brother in secondary school; wife is not engaged in any economic activity; incomplete secondary level of education reached form 3 Training Driving Skills Machine operator (trained on the job) Employment History Before joining firm, was assisting parents to sell eggs; thereafter, joined Kiboko. Initially with Kiboko, was assigned general duties specifically cleaning. On completing the task, then would join other colleagues in the garment section. Current has held position of machine operator for 2 years. Not engaged in side jobs Earnings Wages: Ksh. 250 per day (inclusive of NHIF and NSSF) (wages, housing, Bonus: Ksh. 1000 per year and rejected garments. All these take place travel, medical) at the end of the year. Allowance: Transport allowance when going on leave; no lunch allowance; no other medical cover or pension scheme Perception of the Fortunate to be working for current employer current employment Achievements Poverty situation Considers self poor, but better today than before he joined firm based on the current employment Case 6 Indicator Demographic Local Firm: Daniel Date:19/05/08 Male; 40 years old; married with six children; stays with family in Nairobi; primary level of education; wife is working with a firm in Nairobi

Training

21

Skills Machine operator one needle, straight stitching Employment History 1989 1995, handling a lath machine (welding work) with SP Company 1995 1999, machine operator at Lestud 2005 to present, machine operator at Lestud Engaged in a side job does some sewing for persons from his neighbourhood Earnings Wages: Ksh. 7750 per month. This includes house allowance of Ksh. (wages, housing, 1500 per month travel, medical) Allowance: Ksh. 2000 as transport when going for annual leave at the end of the year Medical: Statutory deductions made to NHIF; Pension: Statutory deductions made to NSSF Perception of the Comparison between current and previous jobs: Previous job was current employment better. The salary was Ksh. 6000 per month and, in addition, received at the end of the year a travelling allowance of Ksh. 5000 and wife was given a voucher. Employer also paid for overtime. Does not mistreat employees Achievements Been able to education children Been able to construct a semi-permanent home upcountry. Inherited the land from his father Purchased a Singer sewing machine in the year 2004 Poverty situation Considers self not to be doing well based on the current employment Indicator Case 7 Indicator Demographic Local Firm: Laban. Date: 19/05/08 Male; born in 1969; married with four children; wife and children stay upcountry; secondary level of education; wife is a teacher

Training Skills Works at the finishing sector of firm packing as described by client Employment History On completing school, first got employed at Kikomi and, when Kikomi collapsed, joined Kenya Bus Service, then Lestud 1991 to 1993, casual at Lestud 1993 to 2006, permanent contract at Lestud Currently, three month renewable contract at Lestud Engaged in side job purchases from the firm rejected T-Shirts, prints on them and gets wife to assist in selling them. Earnings Wages: Ksh. 6750 per month (wages, housing, House allowance: Ksh. 1500 per month travel, medical) Travelling allowance: None this year From side job: profit of Ksh. 4000. Purchases rejected T-shirts at Ksh. 70 a piece, adds value on them, and resells at approximately Ksh. 200 a piece. Perception of the Work is a lot but the salary is low current employment Exploitation of workers in the industry is real. The employees are told to either take what is being offered or walk out Salary is low, while the cost of living has increased

22

Achievements Poverty situation based on the current employment Case 8 Indicator Demographic

The side business mentioned above. Average - Considers self not poor but also not doing well

Local Firm: Philemon Date: 19/05/06

Male; 30 years; married with one child; family lives in Nairobi; secondary level of education; second born of eight siblings and is the first son; six dependents siblings; resides in Dandora Phase IV; wife holds a job in an industry based in Nairobi Training None Skills Draughts man Employment History 1996, tourist guide 1998, draughts man in the design section of Lestud 2007, was promoted to Assistant Supervisor at Lestud 2008, was stripped of the promotion Not engaged in side jobs Earnings Wages: Ksh. 7700 per month (wages, housing, House allowance: Ksh. 1500 per month travel, medical) Medical cover: Employer makes statutory deductions toward NHIF. No other medical cover Pension scheme: Employer makes statutory deduction toward NSSF Benefits: No transport or lunch allowance Salary increases: After end of last year, he started on a lower salary. In the year 2007, he was earning a salary of Ksh. 9461 per month and, a house allowance of Ksh. 2255 per month Perception of the Not well paying current employment Working environment is poor there is a lot of dust, no first aid services and no medical allowance Achievements Educating his siblings Poverty situation Compared to peers, considers self not to be doing well based on the current employment Case 9 Indicator Demographic EPZ Firm: John Date: 12/05/08

Male; 50 years old; married with five children; wife is a farmer and lives in Nyeri with the children; Training Trained at KITI as a cutter and mark maker (all garment industry related) Skills Cutter Employment History First employer: Kentex Apparels Second employer: Sakum Apparels. Kentex split to enable production of both local and export markets. Sakum was responsible for the export market Current employer: Mash Apparels on permanent contract Earnings Wages: Ksh. 27,000 per month, inclusive of house allowance, NSSF (wages, housing, and NHIF travel, medical) Benefits: No medical insurance, lunch or tea

23

Perception of the current employment Achievements Poverty situation based on the current employment Case 10 Indicator Demographic

Benefits Employment with current employer came with a higher salary and a

more secure position Likes where he is working there is no harassment Able to educate children and live better Considers his economic status to be good.

EPZ Firm: Norah Ndinda. Date: 12/05/08

Female; 30 years old; married with one child; husband works in Magadi Soda; contributes to support of two brothers secondary education Training Basic computer skills Skills Production coordinator, whereby responsibilities include: checking production how employees are working; balancing lines; record production and enter the information into a computer on a daily basis. Employment History First garment firm: Millenium where started as a trimmer, followed by issuing needles, then checker and lastly attendance clerk. Second garment firm: Sakum Third garment firm from year 2005: started as production clerk, then promoted after 3 months to Personnel Assistant and currently hold the position of Production Coordinator Earnings Wages: Ksh. 8500 (wages, housing, House allowance: Ksh. 1500 travel, medical) Other allowances/benefits: None no medical cover, transport allowance nor lunch allowance Statutory deductions made: NSSF and NHIF Not engaged in side jobs Perception of the Likes her present job current employment Achievements Able to educate her child Poverty situation Considers self to be doing better than her peers. Lives in a better place based on the current (in Pipeline) and is able to take care of child who is staying with her employment Case 11 Indicator Demographic EPZ Firm: John Date: 7/05/08 Male; 29 years old; secondary level of education; married with one child; family stays with him;

Training Skills Specialised in hemming Employment History 2002: ironing duties at MRC. While at MRC, learnt on the job how to operate a machine; From 2003 to present: machine operator on permanent contract Earnings Wages: Ksh. 5400 per month (wages, housing, House allowance: Ksh. 822 per month travel, medical) Transport allowance: Ksh. 1000 during Christmas holiday to enable workers to travel up country Statutory deductions: NHIF and NSSF

24

Perception of the current employment Achievements

Other benefits/allowances: none Better paying Working conditions are not bad Supporting the education of younger brother who currently is in

Poverty situation based on the current employment Case 12 Indicator Demographic

college Built a house upcountry Considers self to be slightly above the poor

Local Firm: Mendreuin Date: 14/ 6/08

Female; 21 years old; single; shares house with a female workmate; primary level of education; Training Tailoring making males, females and children clothing. Trained at a Catholic sponsored vocational institution in Kibera for a period of 2 years at a fee of Ksh. 500 per month Skills Cutting, stitching, trimming, ironing, and packing. She uses a straight machine. Employment History From September 2006 to present: at Stitch Master, stitching only (does not do trimming, ironing, cutting, inserting of buttons and buttonholes) Earnings About Ksh. 3750 per month. Payment is done on piece rate, whereby a (wages, housing, skirt, dustcoat and shirt are paid at Ksh. 25 each, while a trouser is Ksh. travel, medical) 30 each Perception of the The job is important as it enables her stay in Nairobi as she looks for current employment better paying work. Getting work with a garment industry is not easy for her as she does not have the experience gained in working for other companies Achievements Able to make remittance of Ksh. 500 per month to parents upcountry Not able to save Poverty situation Considers her economic standard as slightly better when working as based on the current opposed to when she is not working. employment Case 10 Indicator Demographic EPZ Firm: Ann Date: 10 /05/08

Female; 29 years old; married with one child; husband works in the hotel industry Training Beauty manicure, pedicure and facial. Trained for one year in a beauty school. Skills Beauty as described above and, some computer skills Employment History Before joining the garment industry, was working in a salon For about five years, United Aryan. Started as a store keeper for one week on the basis of her form four certificate. Thereafter, held the position of human resource clerk which entailed issuing employees with swapping cards. Currently, as from March this year, not employed with United Aryan. Terminated contract because as from January this year, employer reduced wage.

25

Earnings (wages, housing, travel, medical) Perception of the current employment

Achievements

Wage by the time of terminating contract: Ksh. 8500 House allowance by time of terminating contract: Ksh. 1275 Statutory contributions made: NSSF and NHIF Other benefits/allowance: none Exploitative. Examples give in support include: Company resisted workers demand to join a union to advocate for rights in terms of overtime and service dues in the event of termination of service. Target kept going up such that it was not possible to complete within 8 hours company pays based on targets Employees doing sand blasting do not get milk as required, but employer would lie to auditors from buyers. Employer would also threaten workers against informing the auditors on the same Employees also threatened against informing auditors about working on Sundays and night shifts Been able to: Purchase some utensils Save some money in a bank account Make remittance of Ksh. 1000 per month to parents. Has other brothers and sisters who also support parents

Poverty situation based on the current employment Case 13 Indicator Demographic EPZ Firm: Catherine Date: 10/05/08

Female; born in 1970; married with one child; child resides with grandparents upcountry; incomplete primary level of education; Training None Skills Helper at the finishing section, which entails: cutting off loose ends, trimming, checking, ironing and finally packing Hair plaiting Employment History Plaiting ladies hair From 2006, helper at United Aryan Earnings Wages: Ksh. 5,000 per month as basic salary; (wages, housing, House allowance: Ksh. 770 per month travel, medical) Bonus: given Ksh. 3000 at the end of the year Statutory deductions: NSSF and NHIF Salary increment: none since joined firm Other: no annual leave Perception of the Employer is exploitative. Examples supporting this include: current employment Discourages employees from joining a workers union goes to the extend of even bribing the union people to desist from recruiting employees May increase working hours without corresponding compensation (for overtime) Employer not kind Working station has too much dust. Employer provides only a face mask which is inadequate. Required to provide sufficient quantities of milk as well, but done sparingly

26

Employer informs employees to go on leave, but on resuming,

Achievements Poverty situation based on the current employment Case 14 Indicator Demographic

employees are informed to reapply for their jobs (sign a new contract). This is done without payment of terminal dues In addition, employer discourages employees from disclosing their concerns with respect to their employment with the firm. If it is know that an employee has done so, s/he is immediately given the sack. None Considers self poor lives from hand to mouth

EPZ Firm: Jared Date: 10/05/08

Male; 34 years old; married with two children; second born in family; secondary level of education and, thereafter vocational training; wife is self-employed, selling paraffin upcountry Training Machine operator. Trained at Catholic vocational training institute for a period of six months on tailoring and dressmaking, quality control, supervision and, use and maintenance of industrial machines. Basic computer skill Customer care through seminars Skills Machine operator Employment History 1998 2003: Security guard with BM Security. Thereafter, got employed as a casual in Nairobi Hospital. Following, started employment involvement with garment industry first Rising Sun, followed by Rolex. Currently: contract worker with an EPZ firm. Contract signed for a period of one year Not engaged in side jobs Earnings Wages: Ksh. 6700 per month as basic salary (wages, housing, House allowance: Ksh. 850 per month travel, medical) Bonus: none Statutory deductions: NSSF and NHIF Medical cover: Other than NHIF, none. However, firm has a first aid facility within compound. Salary increment: none for the last two years Perception of the Payment is pegged on the targets set per day and not hours worked. current employment Subsequently, there is no overtime payment. In the event that one works more than required in a day, s/he is asked to report late the following day so that overtime is not paid. Discourages employees from joining a workers union. Currently, employer has taken union officials to court on allegations of inciting employees Employer always looking for mistakes so as to sack employees Not well paying. Earned more as a security guard and the economy was better then. Today, the cost of living in high, forcing respondent to consider relocating family to upcountry Achievements Poverty situation Considers self to be poor. Resides in a place with neither electricity nor based on the current water supply and pays rent of Ksh. 800 per month. Owns a small radio.

27

employment Case 15 Indicator Demographic EPZ Firm: Angela Date: 10/05 /08

Female; 24 years old; secondary level of education; single; has no children; Training In house training for two days on quality control toward employment as a checker at the finishing section Skills Checker at the finishing section specifically, quality control. Has learnt how a garment is sown as well as various parts of a cloth. Employment History Before involvement with garment industry, worked at Frigoken for two years. Frigoken deals with export of French beans and other food products Current: checker with United Aryan. First garment industry to work with. Been with firm for a period of nine months. Earnings Wages: Ksh. 5000 per month as basic salary (wages, housing, House allowance: Ksh. 775 travel, medical) Statutory deductions: NHIF and NSSF Separate medical cover: none Other benefits: none Bonuses: given a gift pack at the end of the year Perception of the Former employer was better. Work was easier with no set target. current employment Current employer gives targets which one cannot complete within normal working hour, thus forcing one to put in extra hours at no extra pay As a checker, chances of getting promoted are very slim and, makes training as a machine operator difficult because, as a checker one is fully occupied Achievements Been able to: Purchase a meko; and, Host a sister who is attending school provides food Poverty situation Considers self to be poor. With current salary, only able to feed, cloth based on the current and house self employment Case 16 Indicator Demographic Training Skills EPZ Firm: Felistace Date: 10/05/08

Female; married with two children; In-house training on checking Quality control, measuring a garment and stitching using a straight machine Employment History Past six years: Assistant Quality Controller at Upan Wasana Before joining firm, was selling garments and tapes through a stall based at the city centre. Earnings Wage: Ksh. 7100 per month (wages, housing, Statutory deductions made: NSSF and NHIF travel, medical) Perception of the In the last eleven months, has been holding a position in the firm as an current employment Assistant Quality Controller from a checker. This is normally considered a promotion, but it is not reflected in her salary no salary

28

adjustment. Subsequently not sure whether she has been promoted or not. Current employment has enabled her assist husband with household expenses such as educating child, purchasing food stuff and, paying house help. Employer does not pay for overtime. Forced to work late into the night, exposing her to criminals. Some colleagues have been raped. As line quality controller, she has to depart on the last person completing his/her target. Achievements Poverty situation based on the current employment Case 17 Indicator Demographic Considers her standard of living as has improved though marginally

EPZ Firm: Phyllis Date 12/ 6 / 2008

Female; 28 years old; single; leaves alone, close to the firm; secondary level of education; Training Beauty manicure, pedicure and facial. Trained for one year at a beauty college based in the city Machine operator for a period of six months by MRC Skills Laying the garment on the cutting table, separating or sorting of clothes, embroidery, stitching and, beauty Employment History Before current employer: For one year worked at MRC as a machine operator From December 2005: Upan Wasana. Started as machine operator, then got promoted to current position embroidery machine operator Earnings Wage: Ksh. 7000 per month inclusive of house allowance (wages, housing, Statutory deductions made: NSSF and NHIF travel, medical) Separate medical cover and insurance scheme: none Perception of the The job is important to her because it is her only source of income. current employment Achievements Operates a savings account with a bank in which she saves Ksh. 500 per month. Able to remit some money to parents upkeep Poverty situation Compared to her age mates from upcountry, her economic status is based on the current better employment Case 18 Indicator Demographic Training EPZ Firm: Priscilla Date: 10/05/08 Female; 29 years old; single; living alone; secondary level of education; fifth born; no children; contributes to supporting parents Machine operator. Trained by Global Apparel Basic computer (done in the year 2004)

Skills Employment History First garment industry employer: Global Apparel. Started as a helper, thereafter got trained to be a machine operator. Employed for one year Second garment industry employer: MRC for a period of three years as a machine operator.

29

Current employer: Upan Wasana, machine operator. Has been with

Earnings (wages, housing, travel, medical)

Perception of the current employment

firm for a period of two years. Wages: Ksh. 6000 per month inclusive of a house allowance of Ksh. 900 Statutory deductions: NSSF and NHIF Benefits: no separate medical cover, no lunch, tea or transport allowance Annual leave: In December, gets two weeks off. Annual leave is not taken all at once. It is spread along the year Salary increment: none since joining Upan Wasana No job security can be given the sack anytime even for very small mistakes Not comfortable Target set is very high and therefore not able to complete the work within the nine hours allocated in a day. The extra hours put in are not compensated for and, result in departing from work at night (which is dangerous) Employer discourages employees getting unionised Employer currently has a lot of orders, hence work is continuous Has had no promotion since started working with employer and, there are no prospects of promotion. The supervisors she found there are the ones still there. These have always been supervisors recruited as such Considers self better off than many of her friend that she schooled with

Achievements Poverty situation based on the current employment Case 19 Indicator Demographic

EPZ Firm: Hellen Date: 13/11/08

Female; 24 years of age; single; no children; leaves in Kariobangi in her parents house; first born; form four level of education Training On the job training Skills Embroidery operator. Trained by Wild Elegance. Also learnt from employer is trimming. Hair plaiting acquired on the job at a hair salon Employment History Year 2007 joined Wild Elegance as a trimmer & after four months was trained to operate an embroidery machine. Her job description in the firm reads general worker. Employed on a one year renewable contract. Before joining Wild Elegance, was working on commission at a salon plaiting hair. Learnt skill on the job. This was her first job. Worked for a year. Earnings Statutory deductions: NSSF and NHIF. None other scheme involved (wages, housing, in. travel, medical) No lunch and transport allowance Earns Ksh. 270 per day Overtime is paid at the rate of Ksh. 70 for each one and half hours worked. Normal working timing is from 8:00 a.m. to 4:30 p.m., with 30 minutes lunch break. Perception of the Unreliable. Twice, the firm has sent respondent home due to lack of

30

current employment

Achievements

Poverty situation based on the current employment Case 20 Indicator Demographic

work. Combined number of months been out of work within the period been employer with is four. Joined firm as a general worker, and is still considered a general worker despite having the new skills thus remuneration is still that of a general worker. Aware that in some firms, those with embroidery skills earn between Ksh. 300 and 340 per five hour shift. Better than previous employment as is assured of an income at the end of the day. Earnings in the previous employment were dependent on getting a customer. Been unable to save, despite leaving with parents Contributes to family budget every month. Ksh. 600 is given toward food purchase; total of Ksh. 600 given to sibling as pocket money; and, Ksh. 500 is given to grandmother toward support. Considers self to be poor. Earnings are low, taking into consideration the high cost of living. EPZ Firm: Gideon Date: 12/11/08

Male; 22 years of age; single; no children; leaves alone in a rented premise in Embakasi; completed primary level of education; last born Training On the job training Skills Machine operator - straight, over lock, flat lock, buttonhole and button stitching Trimmer. Capable of stitching whole garments Painting. Employment History Current employer: Wild Elegance. Been with employer for a period of two years as a machine operator. Previous employer: Brother Knit Wear. Joined as a trimmer, and later acquired skills as a machine operator. Before joining Brother Knit Wear, was a painter on demand; and before that, attempted to grow cabbages, but was unsuccessful due to unreliable rainfall was dependent on rain-fed agriculture Earnings Casual labour with a three month renewable contract (wages, housing, Earns Ksh. 320 per day. A working day commences from 8:00 a.m. travel, medical) and ends at 4:30 p.m. with a 30 minute lunch break. Incentive offered is Ksh. 50 on completing targets before 4:30 p.m. Statutory deductions made: NSSF and NHIF. Not engaged with any other scheme. No lunch and transport allowance Perception of the Unreliable sometimes employer has not got work. Agreement with current employment employer is that he is employed only when there is work. Months on the break, he falls back on his painting skills. Better in pay than previous employer who offered Ksh. 280 per day and, there were no incentives. No chance of being promoted. Achievements Been able to purchase four goats and household goods Saving Ksh. 1000 per month with a group through a rotating savings and credit scheme. Has not got a personal bank account

31

Offers support to cousins and parents. Support to cousins is toward

Poverty situation based on the current employment

payment of school fees and clothing; while to parents is upkeep food and clothing. Perceives self as poor.

32

Appendix 2: Survey Questionnaire Firms Innovation in the Kenyan Garment Industry - 2008
Introduction The garment industry plays an important role in the Kenyan industrialization process and employment creation. In this regard, Institute for Development Studies, University of Nairobi is conducting a survey to better understand the current situation of this industry and how innovation can be enhanced. Your firm has been randomly selected for this research and we hope the industry will benefit from the findings of this study. Neither you nor your companys name will be disclosed in any document prepared based on this survey.
Date _________________________

A. Basic information about the company

A1. Name of the Company ________________________________ A2. Contact Person: Name _________________________ Designation: ____________________ A3. Physical Address (Location) ______________________________________________ A4. Town ________________________________________ A5. Telephone: ________________________________ A6. E-mail: _________________________________________ A7. Year of establishment in Kenya ____________ A8. Number of employees when operation started (production) ____ (administration) ____ A9. What is the nationality of the Owner(s) of this firm? ________________________________ ______________________________________________________________________________ A10. How do you describe your company?
i. ii. iii. iv. Independent Holding Company Subsidiary of a domestic firm Subsidiary of Foreign firm Other (specify): _________________________________

v.

A11. What are the main items produced in your firm? ______________________________________________________________________________ ______________________________________________________________________________ A12. How are the decisions about the following issues made in this firm?

i. ii. iii.

Design of the products: ______________________________________________ Supply of fabric: ___________________________________________________ Supply of other raw materials (threads, zips buttons etc): ____________________

33

iv. v. vi.

Markets: __________________________________________________________ Labels: ___________________________________________________________ Packaging: ________________________________________________________

A13. How are the samples developed? _______________________________________________ ______________________________________________________________________________

A14. How are the Labels produced for your products? __________________________________ ______________________________________________________________________________ B. Employment Structure 2004 -2007 B1. How many employees did your firm have in the following years? 2004 2005 2006 2007 Male Female Male Female Male Female Male Female Helpers Operators Sample Makers Pattern Makers Supervisors Officers Managers - Locals Managers - Foreigners B2: If the firm has foreign workers, which countries are they from? ______________________________________________________________________________ B3: On average what proportion of the employees are permanent? __________ % B4. What percentage of total production workers has completed secondary education? _______% B5. What is the mean age of the employees in the firm? (i) All _______ (ii) Males ______ (iii) Females__________ B6. Does Marital Status matter when recruiting production workers? Explain: _______________ ______________________________________________________________________________ ______________________________________________________________________________ B7. When recruiting is there preference for rural or urban workers? Explain ______________________________________________________________________________ ______________________________________________________________________________ B8. On average what is the rate of Absenteeism in a month? ______________________________________________________________________________ B9. On average what is the Turnover rate in a year? ______________________________________________________________________________

34

B10. What do you consider when recruiting production workers? i. Gender: _______________________________________________________________ ii. Experience ______________________________________________________________ iii. Age: ___________________________________________________________________ iv. Other factors: ____________________________________________________________ B11. How would you rate the performance of Male and Female production workers? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ B12. How many days in a week does your company operate?
(1) 7 Days (2) 6 Days (3) 5 Days (4) Other [specify ___________________________]

B13. How many hours does your firm operate in an ordinary day? __________ Shifts? ________ B14. What proportion of production workers was trained in 2007? i. Formal training ---------------------------------------------------------------------------------------ii. On-job-training ---------------------------------------------------------------------------------------B15. How is the promotion structure for production workers in the firm? ___________________ ______________________________________________________________________________ B16. How many expatriates are currently working in the production section (supervisor and below)? ______________________________________________________________________________ ______________________________________________________________________________ B17. What is the HOURLY wage rate for a machine operator in this firm? Kshs. _____________ B18. How has this wage rate changed between 2004 and 2007? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ B19. What proportion of the wage/salaries in total monthly sales? ________________________ B20. Is there a pension scheme for the production workers?: _____________________________ ______________________________________________________________________________

________________________________________________________________________ B21. Medical insurance for production employees: ______________________________ B22. Are there wage differentials between male and female production workers? ________________________________________________________________________ ________________________________________________________________________

35

C. Market and Sales C1. Since the end of MFA in 2005, have you been selling to any other country except the US? Explain ________________________________________________________________________ ________________________________________________________________________
C2. Has your firm been faced with price changes since the end of MFA? Explain

________________________________________________________________________ ________________________________________________________________________
C3. What challenges does your firm face in exporting? a) ____________________________________________________________________________ b) ____________________________________________________________________________ C4. How do you find buyer(s) for your garment products? ______________________________________________________________________________ ______________________________________________________________________________ C7. Who are the major buyers of your products? _______________________________________ ______________________________________________________________________________ ______________________________________________________________________________ C8. Have your major buyers changed between 2004 and 2007? ___________________________ ______________________________________________________________________________ ______________________________________________________________________________ D. Innovation in the Enterprise D1. How is the Quality Control conducted in the firm? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ D2. How is Quality Control data collected in this firm? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ D3. How are the Designs developed? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ D4. How is the procurement of raw materials (fabric, threads, dye, WIP, etc) ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

36

D5. What is the lead time in the following activities in days? i. Confirmation of orders ____________________________________________________ ii. Development of samples___________________________________________________ iii. Sourcing of raw materials __________________________________________________ iv. Clearance at the Port of Mombasa ___________________________________________ v. Transport to the Factory ___________________________________________________ D6. Marketing strategies since 2004 ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ D7. Relationship with buyers ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ D8. Research and development in the firm ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ D9. Introduction of new products since 2004 ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ D10. Investment in new machineries between 2004 and 2007 ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ D11.Embracing the ICT in the firm ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ D12. Changes in ICT between 2004 and 2007 ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ D13. What is the role of Local Universities in the garment industrial development (technology, ideas, machinery, designs, etc)? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

37

What is the role of Local research institutes such as KIRDI, Science Council, in the garment industrial development (technology, ideas, machinery, designs, etc)? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ E. Corporate Social Responsibility (CSR) and Business Associations E1. Does the firm participate in CSR (Schools, Health, Bursary, Community Activities, etc)? E2. Details of any community development programme by the firm (CSR) ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ E3. Budget allocation to CSR in Kshs 2004 _______ 2005 _______ 2006 _______ 2007 _______ E4. Is your enterprise a member to Business Associations (Details) ________________________ ______________________________________________________________________________ ______________________________________________________________________________ E5. What are the benefits of being a member to these associations? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ What is the role of business associations in export and product development? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ F. Termination of MFA F1. Have your fears prior to the end of MFA been confirmed or not? Discuss in what ways? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ F3. How has your company coped with the effects of MFA termination? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

38

F4. How do you perceive the competition from Asian countries in the export market? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ F5. What demands are the buyers putting on manufacturers since the year 2005? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ F6. How are the buyers helping you to meet their demands? ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ G. Business Constraints and Policy Issues G1. What problems facing does your firm face? ______________________________________ ______________________________________________________________________________ G2. What solution(s) would you recommend in addressing these challenges? ______________________________________________________________________________ ______________________________________________________________________________ G4. How would you rate condition of the road network that your firm mainly use?
(1) Excellent (2) Good (3) Average (4) Poor (5) Extremely poor

G5. How would you rate the services of Customs Clearance in Kenya?
(1) Excellent (2) Good (3) Average (4) Poor (5) Extremely poor

G6. How are the services of railway network that serves your firm?
(1) Excellent (2) Good (3) Average (4) Poor (5) Extremely poor

G7. How would you rate security situation in the area where your firm is located?
(1) Excellent (2) Good (3) Average (4) Poor (5) Extremely poor

G8. If poor or extremely poor, how does insecurity affect your firm? ______________________________________________________________________________ ______________________________________________________________________________ G9. Approximately, what share of the total revenue does a firm like yours spend on security? _ % G11. How many times have you experienced delay in fabric delivery in the last three months? __ G12. How long was the delay in fabric delivery on average? ______________ Days G13. How many times have you experienced problems with quality of fabric in the last three months? ________ times G14. How many days did your company experience an electric power failure during working hours in the last three months? ________ days

39

G15. What plans does your firm have for this business in the next 3 years?
(1) Expand export market (4) New export markets (2) Upgrade to high value products (5) Relocate (6) Close down (3) Expand beyond garment production (7) Other [specify____________________]

Once again, thank you very much for your time and useful information.

40

Appendix 3: Survey Questionnaire Workers

Innovation in the Kenyan Garment Industry - 2008 Interview Guide for Case Studies Preamble Please note that this is not a questionnaire. You are therefore urged to probe each question in details and make adjustments where necessary in order to be able to come up with a detailed case history of the respondent. A. Background Information 1. Age 2. Gender 3. Marital Status 4. Levels of Education 5. Place in family (H/H, wife, son, daughter, etc) 6. Number of children 7. Number of dependants and nature of support B. Work History 1. How long have you been in this job? 2. What was you previous job and how long was it? 3. What other jobs did you have previously? 4. What skills do you have for the current job? 5. How did you get your present job? 6. Is this job permanent or contractual or casual? 7. Look for breaks in employment i. Do you do other work besides this job? ii. Are there any other members of your household who are working or self employed? iii. How many days do you or your other family members work in a month? C. Wages and Benefits (Now and before the current job) 1. Do you have bonuses? If yes how much and how often? 2. How about your previous job? Is there any change? 3. Are there provisions for the following? i.Pension ii.NHIF/Other medical cover iii.Insurance iv.Transport v.Lunch 4. Were there similar provisions in your previous jobs? If yes, is there any change with respect to the present job? 5. Are there increases in your wages or salaries? 6. If yes, when was the last increase and by how much?

41

7. Are there promotions in your current job? If yes, when was the last time you were promoted? How long did it take to be promoted or to work under probation? 8. What skills do you have for the present job? How did you acquire them? D. Poverty 1. How do your rate yourself (i.e. poor or not poor)? 2. Is there any change that your have realised due to your present job? 3. Is the change better or worse? How better or how worse? 4. In case of a change, what has caused it? 5. Is there anything significant that you can say about this job? E. Family Support 1. Who do you support with your wages or salaries? 2. Is there any other person who contributes to this person? 3. Are there other contributions which you make to family budget or other family members more or less regularly? F. Future Plans 1. Do you intend to keep or give up your job? 2. Are there prospects for promotion in your present job? 3. Do you consider it a good job? Please explain your answer.

42