Kenya’s next industrial revolution will be built on scale

The ongoing acquisition of East African Portland Cement Company (EAPCC) by Amsons Group, coming just months after Amsons’ takeover of Bamburi Cement, perfectly illustrates this shift. The cement industry is capital-intensive, energy-hungry, and logistics-heavy.

This combination punishes inefficiency and rewards size. Larger players produce cement at lower unit costs, spread their overheads across output, negotiate better supplier contracts, and invest in cleaner, more modern technology. Ultimately, consumers are the ones who benefit the most from this.

By contrast, smaller players often struggle to stay afloat. EAPCC, once an industry leader, has in recent years grappled with dead stock, weak cash flow, and years without dividend payouts.

Without the financial strength or production scale to compete effectively, such firms – like EAPCC - become vulnerable to acquisition or decline. Shareholders of EAPCC went 13 years without a dividend payout and finally received one this year, but that was only because of the sale of some land.

With heightened fiscal pressures, rising energy costs, and shifting regulatory policies reshaping Kenya’s business environment, smaller firms are being forced to scale down production or temporarily halt operations due to high electricity tariffs and the rising cost of imported inputs.

In such an environment, only firms able to invest in energy-efficient technology, negotiate bulk power arrangements, or diversify their sourcing strategies can remain competitive. Larger companies can absorb these new costs more easily, whether it means meeting tougher emissions rules or adjusting to new tax measures.

For smaller or struggling manufacturers, these added pressures pile on top of rising energy costs and unpredictable market conditions.

This challenge goes far beyond the cement sector; it affects the entire manufacturing industry, where size increasingly determines who survives and who struggles.

Consolidation, therefore, becomes not just a strategic option but a practical response to economic headwinds that hit smaller and struggling firms hardest.

When done responsibly, it can help protect jobs, stabilise supply chains, and keep Kenya competitive.

In the beverage sector, large players like EABL continue to dominate through integrated production, strong distribution networks, and economies of scale.

In banking, the consolidation trend has seen big players like KCB, Equity, and NCBA leverage digital transformation and regional expansion to spread operational costs to millions of customers, causing smaller banks to either merge, be acquired, or fade out.

Even in logistics, port handling, and energy, scale is everything. A company like Kenya Pipeline Corporation moves oil more efficiently through centralized infrastructure than smaller distributors could ever manage individually.

In telecommunications, Safaricom’s scale advantage enables it to invest billions in 5G infrastructure and digital services that smaller players cannot match.

At its core, economies of scale describe the cost advantage that arises when production becomes efficient. As output grows, the cost per unit falls.

This creates a virtuous cycle; larger firms can reinvest profits into innovation, expand market share, and drive prices lower, which again benefits the public, especially during times of economic hardship.

Of course, consolidation must be handled carefully. Without proper regulation, it can lead to market dominance and reduced consumer choice. But when managed within a competitive framework, mergers can rejuvenate industries that have long struggled to grow or stay organised.

They bring new capital, modern management, and operational efficiency, the very ingredients that Kenya’s industrial sector needs to thrive in a regional and global marketplace.

For Kenya, where infrastructure expansion and housing demand continue to rise, the creation of large, efficient industrial players is not just good for business; it’s an economic necessity.

Therefore, the acquisition of struggling firms like EAPCC, if well executed, could unlock new capacity, stabilize prices, and ensure that industrial assets are fully utilised.

In the long run, Kenya’s growth story will depend less on the number of players in the market and more on their ability to operate at scale, compete regionally, innovate consistently, and deliver quality at affordable rates.

The age of small, isolated operators is fading; the era of scale, integration, and strategic consolidation has arrived, and we should welcome it.

The writer is an accomplished academician and strategist passionate about East African Economy