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SAFIC Kenya . Country Background Report February 2013 . SAFIC Kenya Team Members . Prof. Dorothy McCormick - Country Coordinator Dr. Paul Kamau – Team member Prof. Lotte Thomsen – Team member Dr. Jackson Maalu – Team member Dr. Radha Upadhyaya – Team member

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safic kenya

SAFIC Kenya

Country Background Report

February 2013

University of Nairobi ISO 9001:2008 1 Certified http://www.uonbi.ac.ke

safic kenya team members
SAFIC Kenya Team Members

Prof. Dorothy McCormick - Country Coordinator

Dr. Paul Kamau – Team member

Prof. Lotte Thomsen – Team member

Dr. Jackson Maalu – Team member

Dr.RadhaUpadhyaya – Team member

Mr.WamalwaNyukuri H– Team member and Project Assistant/ PhD Candidate

Mr. Nester Peter K’Ochupe – MA student recipient of the 2012 SAFIC project grant

Ms.ZidiOdhiambo – MBA student recipient of the 2012 SAFIC project grant

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kenya
Kenya

Land: East Africa - 582,642 sq km; 30 % suitable for crops.

Population: Est. 2012 pop 41.8M, 43 % below age 15; 36% aged 15-35 years

Population growth: Projected to reach 60M by 2030

GDP: 2011 GDP approx. US$ 34.8; GDP per capita US$ 851 (WEF, 2012).

GDP Growth: Growth rates of 6.4%, 7.0% and 5.8% in 2006, 2007 and 2010 respectively

Industry: Manufacturing sector 14% of GDP.

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gdp growth at market prices
GDP Growth at Market Prices

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political and economic history
Political and Economic History

Recent Events:

  • New constitution in 2010; called most progressive in Africa
    • Critical feature is devolved structure of the government; coming into play from 2013
  • Key policy documents reiterated commitment to expand industry, trade, and tourism:
    • Kenya Vision 2030 (2007); Economic Recovery Strategy for Wealth and Employment Creation (2003)
    • food processing named as the most important single sub-sector in GDP and employment creation.

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international context
International Context

Trade

Global: Founding member of WTO

Regional: Member of:

East African Community (EAC)

Common Market for Eastern and Southern Africa (COMESA).

EAC and COMESA together account for over 40% of exports.

Cross-regional:

Economic Partnership Agreement (EU-EPAs) with the European Union (EU)

US African Growth and Opportunity Act (AGOA) and Generalized System of Preferences (GSP).

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business climate
Business Climate
  • Unfavourable business climate:
    • Kenya ranked 106th out of 144 countries included in WEF survey
    • Global Competitiveness Index of 3.7 (World Economic Forum (WEF) (2012).
  • Main business climate issues: corruption, inflation, tax rates, insecurity, access to financing, inadequate supply of infrastructure, inefficient government bureaucracy, and policy instability.

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study motivation
Study Motivation

Despite the terrible business climate, some local firms have done well.

Study designed to understand how the successful businesses manage to weave through these conditions and remain not only operational, but in some cases, highly successful.

Two sectors – food processing firms and food processing equipment manufacturing firms

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study methodology mapping exercise
Study Methodology - Mapping exercise

Scope: Nairobi Metropolitan Area (NMA)

  • Nairobi and neighbouring counties of Limuru, Kiambu, Thika, Ruiru, Mavoko, Machakos, Kikuyu (see map)

Time frame: Mainly between August and September 2012 but still ongoing.

Sources of information:

  • No single list; used variety of sources
  • Consolidated list from all sources analysed during team meeting held in August 2012.
  • Preliminary firm level data to be updated during survey.

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nma map
NMA Map

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food processing sector
Food Processing Sector

Table 1: Manufacturing Sector - Percentage Contribution to GDP

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food processing sector1
Food Processing Sector

Table 2: Manufacturing Sector - Percentage Growth

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food processing sector2
Food Processing Sector

Vision 2030 stresses the importance of the manufacturing sector and identifies food processing as the most important single sub-sector in terms of its contribution to GDP.

Table 3: Manufacturing Sector - Percentage Contribution to Employment

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food processing sector3
Food Processing Sector

Table 4: Number of Firms in Food Processing Sample by Product Grouping

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food processing equipment manufacturing sector
Food Processing Equipment Manufacturing Sector

Mapping exercise to date:

  • 28 firms directly involved in manufacture of food processing machinery and equipment.

Sources: Five main sources-

  • Kenya National Bureau of Statistics (KNBS), Kenya Bureau of Standards (KEBS), Municipalities of Kiambu, Mavoko, Kikuyu and Ruiru, Ministry of Agriculture and United Business Association (UBA).

Still searching for additional firms in the industry through websites and field visits.

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further investigation policy relevance
Further Investigation – Policy relevance

Vision 2030 – names six priority sectors, including agriculture and manufacturing.

The draft National Industrialisation Policy, 2011-2015, envisions industry as Kenya’s new ‘engine of economic growth’ (Kenya 2011b).

Draft National Trade Policy is dated 2010 (Kenya 2010).

EAC and COMESA membership

Devolved structure of government

Linkages with institutions such as KEBS

Linkages within UoN – DRUSSA

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further investigation methodological issues
Further Investigation – methodological issues

Population size: Difference in the two sub-sectors - 910 food-processing firms but only 28 Machinery and equipment firms .

Limited mapping data: Lack of employment and ownership information in the lists used for the mapping have implications for sampling.

Case studies:

Approach - Qualitative case study approach preferable to problem-oriented study (Yin 2003, Baxter and Jack 2008, GlobaLens 2012).

Number - reduce cases from 20 to 10.

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safic
SAFIC

Thank you!

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