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Kenya Country Economic Profile

Contents1 Background on Kenya..........................................................................................................................2

1.1 Overview of Economic Drivers and Key Sectors...........................................................................3

2 Extractives...........................................................................................................................................5

2.1 Mining..........................................................................................................................................5

2.1.1 Mining company descriptions/CSR Efforts...........................................................................8

2.2 Oil & Gas....................................................................................................................................10

2.2.1 Oil & Gas company descriptions/CSR Efforts.....................................................................12

3 Tourism..............................................................................................................................................13

3.1 Overview....................................................................................................................................13

3.1.1 Tourism company descriptions/CSR Efforts.......................................................................14

4 Agribusiness.......................................................................................................................................15

4.1 Tea Overview.............................................................................................................................16

4.1.1 Tea company descriptions/CSR Efforts..............................................................................17

4.2 Coffee Overview........................................................................................................................17

4.2.1 Coffee company descriptions/CSR Efforts..........................................................................20

4.3 Horticulture Overview...............................................................................................................22

4.3.1 Horticulture Company Descriptions/ CSR Efforts...............................................................24

4.4 Sugar Overview..........................................................................................................................25

4.4.1 Specific Company Descriptions including CSR Efforts...............................................................25

4.5 Livestock and Dairy Overview....................................................................................................26

5 Key Business Entities and their Activities/Program............................................................................29

6 Recommendations for approaching private sector/extractives industry...........................................30

7 Works Cited.......................................................................................................................................31

USAID | Preparedness and Response |Kenya Extractives/Private Sector

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1 Background on Kenya

Kenya is located in Eastern Africa between Somalia and Tanzania, bordered by the Indian Ocean. It boasts a varied climate and diverse geography, divided into four regions: the arid deserts of the north; the savannah lands of the south; the fertile lowlands along the coast; and highlands in the west. Kenya’s unique physiography supports an abundance of natural resources of significant economic value.1

Kenya has one of the largest, most industrialized, and diverse economies in East and Central Africa. It is also a regional hub for trade and finance in East Africa with a natural entry point to the region. Kenya has a market-based economy with a liberalized foreign trade policy, as is evident by its participation in regional trade blocs such as the COMESA (Common Market for Eastern and Southern Africa) and the EAC (East African Community), a partnership of Kenya, Uganda, and Tanzania.2 In 2013, Kenya’s GDP was $55.3 billion, making it a low-middle income country with a per capita income of $1,300. As the economic and transport hub of East Africa, its real GDP growth has averaged around 5% annually. In 2013, the country recorded $5.803 billion in exports, comprised of key commodities such as tea, horticultural products, coffee, petroleum products, fish, and cement.

While Kenya shows great promise due to its young, robust population, dynamic private sector, new constitution, and role within the region, it faces a range of challenges. These include corruption, security concerns, high levels of extreme poverty and inequality, inadequate infrastructure, low investment and firm productivity, and reliance upon several primary goods whose prices remain low. Other issues such

1 CIA Online Factbook, 2015.2 Export Promotion Council, http://www.epckenya.org/index.php?option=com_content&task=view&id=50&Itemid=70.


http://www.epckenya.org/index.php?option=com_content&task=view&id=50&Itemid=70


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as water degradation and pollution from industrial and urban waste, desertification, soil erosion, deforestation, and poaching pose threats to Kenya’s environmental health. 3

1.1 Overview of Economic Drivers and Key Sectors

Agriculture30.27%

Industry 19.38%

Services 50.35%

2013 GDP Contributions in KenyaCIA World Factbook, 2015

3 Kenya Overview, World Bank. http://www.worldbank.org/en/country/kenya/overview.


http://www.worldbank.org/en/country/kenya/overview

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Image Credit4

Agriculture is the backbone of Kenya’s economy and central to the government’s Kenya Vision 2030 development strategy. More than 80% of the almost 46 million people that live in Kenya work in agriculture in some capacity. Over 75% of agricultural output is from small-scale, rain-fed farming, or livestock production. Approximately 48.1% of the country’s land is used for agriculture (arable land 9.8%; permanent crops 0.9%; permanent pasture 37.4%), while 6.1% is forest and 45.8% is dedicated to other purposes. 5 Key agricultural exports include tea, coffee, fruits, vegetables, fish, and fresh flowers. Low levels of access to agricultural inputs, technology, financial support, and extension services has resulted in less than optimal yields in many areas. This stagnating agricultural productivity, combined with a growing population, poses critical challenges to the country’s food security.6

The service sector, composed primarily of financial services, hospitality, and tourism, accounts for a significant portion of Kenya’s GDP (over 50%). Retail activities tend to revolve around small scale street vendors, most of whom are part of the informal sector.

Industry accounts for less than 18% of Kenya’s GDP. It consists of processing/packaging agricultural and horticultural products; manufacturing food and beverages; producing small consumer goods (such as plastic, furniture, batteries, textiles, clothing, soap, cigarettes, flour); some extractive activities (mostly non-metallic minerals); refining crude oil shipped into the country; and commercial ship repair.7

4 Primer to Extractives Industry in Kenya (pg 82)5 CIA Online Factbook, 2015.6 Feed the Future Website. https://www.feedthefuture.gov/country/kenya. 7 CIA Online Factbook, 2015.


Natural Resources (CIA, 2015)

LimestoneSoda ash

SaltGemstonesFluorspar

ZincDiatomiteGypsumWildlife

Hydropower

Agricultural Products

TeaCoffeeCorn

WheatSugarcane

FruitVegetables

FlowersDairy products

BeefFishPork

PoultryEggs

Legumes

Industry

Small-scale consumer goods

Agricultural productsHorticultureOil refiningAluminum

SteelLead

CementCommercial ship repair

Tourism

Exports

TeaCoffee

FlowersLegumes

Petroleum productsFish

Cement

https://www.feedthefuture.gov/country/kenya

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2 Extractives Kenya’s extractives sector, valued at $400 million per year, contributes roughly 1% to the GDP8 and constitutes 3% of total export earnings.9 Extractives-related exports include commodities such as limestone, salt, fluorite/fluorspar, soda ash, and cement. 10

The extractives industry holds great potential for Kenya and may be instrumental in addressing infrastructural deficits, increasing trade and investment, accelerating industrial growth and development, improving the agricultural sector, stimulating job growth, and garnering additional funding for education and health initiatives. However, experts are concerned that expansion of extractives activities, if poorly executed and managed, could also lead to economic instability, social conflicts, political unrest, and environmental damage, all while posing risks to human health and safety.11

The government has made extractives activities a priority in recent years, including it within Kenya’s 2030 Vision as the 7th priority sector with the potential to stimulate economic growth and development. The Kenya Vision 2030 Medium Term Plan (2013-2017) addresses the need for review of the many fragmented legal and regulatory frameworks which govern the sector and the restructuring of institutions therein.12

2.1 Mining

Kenya’s mining activities revolve around several non-metallic minerals, including soda ash, raw crushed soda, fluorspar, crude and refined salt, gypsum, vermiculite, and gemstones. Other important extractives include limestone, barite, carbon dioxide, manganese, soapstone, graphite, copper, gold, chromite, and nickel. There have also been recent discoveries in niobium and rare earths, mineral sand deposits (including titanium ores such as retile, ilementine, and zircon), and coal.13

8 A Primer to the Emerging Extractive Sector in Kenya: Resource Bliss, Dilemma or Curse. Institute of Economic Affairs (83)9 A Primer to the Emerging Extractive Sector in Kenya: Resource Bliss, Dilemma or Curse. Institute of Economic Affairs (12)10 OurAfrica.Org Website. http://www.our-africa.org/kenya/economy-industry . 11 A Primer to the Emerging Extractive Sector in Kenya: Resource Bliss, Dilemma or Curse. Institute of Economic Affairs (12-13)12 A Primer to the Emerging Extractive Sector in Kenya: Resource Bliss, Dilemma or Curse. Institute of Economic Affairs (148)13 A Primer to the Emerging Extractive Sector in Kenya: Resource Bliss, Dilemma or Curse. Institute of Economic Affairs (12)


http://www.our-africa.org/kenya/economy-industry

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There are currently a variety of mining companies operating in Kenya, some having commenced activity as early as the 1940s. While both large and small companies exist, a good portion are small in size.14

Mining Companies and Minerals in Kenya15

Mineral Companies Notes

Soda Ash Tata Chemicals Magadi TCM is Africa’s largest soda ash manufacturer and one of Kenya’s leading

exportersFluorspar Kenya Fluorspar Company Ltd Fluorspar is the second largest income earner

About 360,000 tons of ore mined annually for export Locations in Kerio Valley, east of the town of Eldoret

Diatomite African Diatomite Industries Limited Has access to viable quality diatomite deposits of over 6M tons in Gilgil region

Mainly mined for export ADIL is currently modernizing its plant to enhance production capacity

Limestone and Lime Products

National Cement CompanyBamburi CementAthi River MiningEast Africa Portland CementSavannah Cement

Produced for manufacture of cement and other industrial products Cement and construction industry take bulk of limestone mined and

quarried Estimated annual capacity for cement production:

Bamburi Cement: 2.3M tons East Africa Portland Cement Company (EAPCC): 1.4M tons Athi River Mining: ~1M tons Mombasa Cement: ~ 1.6M tons Savannah Cement: 1.5M tons

Iron Ore Skylight LimitedWanjala Mining Company Ltd/ R.K. Sanghani

Mainly for use in domestic manufacture of cement New steel plants project sourcing about 40% of required iron ore from

domestic producersGold Artisanal Miners

Karebe Gold Mining Ltd Several small greenstone belts and operations in West and Southern

parts of KenyaTitanium and Mineral Sands

Base Titanium One of Kenya’s world class advanced development project Constitutes about 2/3 of mineral sector in Kenya with:

Titanium: 140M tons Rutile: 80K tons annually Zirconthe: 40K tons annually Ilmenite: 330K tons annually

Estimated project capital cost of USD 300M Estimated USD 100M to be designated as direct spend in Kenya

(contractors, machinery and equipment, goods and services and employment during construction)

Estimated USD 260M – 300M tax revenue through mine life Estimated contribution of 1% to GDP Other project prospects in Mambrui, Kilifi, and Vipingo

Base Metal Prospecting

Acacia Mining Project constitutes about 2,800km2 of Ndori Greenstone Belt as well as Lake Zone gold camp

Potential for gold, copper, lead and zinc Project constitutes advanced knowledge of belt geology and structure Will also include drill testing of up to 50,000 meters of air core, reverse

circulation and diamond drill core, and to collect more than 15,000 auger and soil samples throughout the properties

Carbon Dioxide Carbacid Co2 Ltd.BOC Kenya Limited

About 16,000 metric tons produced annually though Carbacid has capacity to produce 35,000 MT annually

Gypsum Yamata Gypsum LimitedAthi Stores Ltd

Primarily used in production of cement with about 7,000 MT produced annually

14 Extractives Industry Local Content Early Gap Analysis- Summary Report, Adam Smith International (pg 5)15 Extractives Industry Local Content Early Gap Analysis- Summary Report, Adam Smith International (pg 3-4)


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Gemstones Kutima Investment LimitedBridges Exploration LtdFirst Green Garnet (Co) Kenya LtdKilimapesa Gold Pty Limited

Various precious and semi-precious stones Cumulative production annually of about 17,550 kilograms

Magnesite Mineral Mining (1965) Corporation Ltd -

Silica Sand Eastern Chemical Industries Limited -Coal Fenxi Mining and Great Lakes Corporation Estimated 400M tons of coal

Estimate value of USD 40B Investment required of close to USD 500M in exploration and production

Mining Companies in Kenya and Phase of Operations16

2.1.1 Mining company descriptions/CSR Efforts

Kenya Fluorspar (http://www.kenyafluorspar.com/) o Mission: To produce fluorspar and create sustainable prosperity with a wide

commitment for responsible mining in Kenya.o Located near Eldoret in Elgeyo-Marakwet County of western Kenya, in the Kerio Valley o Started in 1971 under auspices of Govt of Kenya. Privatized in 1996 under governmental

reform policy and entered into a 20-year lease with the government (3,664 hectares).o Average annual sales of Ksh 2.35bn ($24.53m) were recorded between 2011 and 2014o 360,000 tons of ore are mined annually from 7 active mining siteso CSR:

Operates Field-Marsham Medical Clinic at Kenya Fluorspar

16 Extractives Industry Local Content Early Gap Analysis- Summary Report, Adam Smith International (pg 7).


http://www.kenyafluorspar.com/

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Invested in school infrastructure (primary, secondary, nursery), scholarships and libraries.

Created KenSAP Project, which helps students from an underserved region of Kenya gain admission to elite colleges in the United States and Canada.

Offers free Taekwondo lessons offered to 600 students who attend Kenya Fluorspar Primary School, several other surrounding schools, and village members more generally.

Tata Chemicals Magadi {part of Tata Chemicals Limited (TCL)} (http://www.tatachemicals.com/magadi/index.html)

o Mission: Serving Society through Science. Aims to be a sustainable company with deep customer insights and engaging relationships with all stakeholders in industrial chemicals, branded agri & consumer products aiming to triple market capitalization by 2020.

o Formerly known as Magadi Soda Company, TCM has been a part of Tata Chemicals since 2005.

o Africa's largest soda ash manufacturer and one of Kenya's leading exporters.o Located in Lake Magadi region in Kenyao Approximately 450 employees in Magadi (4,752 worldwide in 2011)o Company’s worldwide revenue: $2.1 billion USD, Profit: $120 million USD (2012)o CSR:

Robust programs, including- provision of health services, Magadi Hospital, water for domestic use, supports education and funded school construction, community information centers, IT/skills training, business and employment opportunities, support for micro-businesses and women's groups, etc.

African Diatomite Industries Limited (ADIL) (http://africandiatomite.com) o Mission: To produce the best High quality Diatomite earth Filter Aid powder, to meet

our Customers' Quality Demands as per the International Standards.o Privately owned mining company which manufactures branded Diatomite fillers and

filter aid end products.o Since 1942, ADIL has been one of the leading processor and suppliers of fresh water

Diatomaceous Earth products in Sub Saharan Africao ADIL is situated about 120 km northwest of Nairobi within the Great Rift Valley regiono Production capacity is currently 10,800 tons annuallyo Revenue or Profit?o Can’t determine CSR Efforts.


http://africandiatomite.com/

http://www.tatachemicals.com/magadi/index.html

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2.2 Oil & GasThere has been a significant amount of oil and gas exploration in East Africa in the past decade. While recent declines in oil prices have slowed the process in some areas, Kenya’s low exploration costs have translated to less financial risk for companies compared to elsewhere. Many international oil companies have been prospecting in Kenya’s 46 exploration blocks, where onshore oil discoveries have been made. Of the 46 blocks, 39 are licensed to 22 operators, including one block for the National Oil Company of Kenya (NOCK). While most companies are in early stages of operations, Tullow Oil and partner Africa Oil are currently in the appraisal stage. Nevertheless, there have yet to be any scoping or feasibility studies and project plans have not been fully developed.17

There are 33 international oil and gas companies operating in Kenya, 21 of which have operation rights to the licenses under the existing Production Sharing Contracts (PSC). The remaining 12 are their Joint Venture (JV) Partners. Tullow Oil and its partner Africa Oil have made and declared discoveries with commercial viability, mainly in the Lokichar Basin.18

17 Extractives Industry Local Content Early Gap Analysis- Summary Report, Adam Smith International (pg 7).18 Extractives Industry Local Content Early Gap Analysis- Summary Report, Adam Smith International (pgs 8-9)


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Analysis of Services Types in Oil and Gas 19

20

19 Adam Smith International, pg 9.20 Adam Smith International, pg 8.


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Oil and Gas Operators in Kenya and Phase of Operations 21

2.2.1 Oil & Gas company descriptions/CSR Efforts

Tullow Oil (http://www.tullowoil.com) o Mission: focus is on finding and monetizing oil in Africa and the Atlantic Marginso Established in 1985 and headquartered in London, it is the leading independent oil and

gas exploration and production company o Portfolio of over 120 licenses spans 22 countries.o Revenue: $1.6 billion in 2015 (total portfolio)o Employees: 1,403 in 2015 (total portfolio)o CSR:

Community engagement/education sessions, road shows/theatre, recruitment of Community Liaison Officers (CLOs) from the local area

Africa Oil (http://www.africaoilcorp.com) o Mission: increase shareholder value through the acquisition, exploration and

development of oil and gas assets, located in under-explored geographic areas, in the early phase of the upstream oil and gas life-cycle.

o Canadian oil and gas company with assets in Kenya and Ethiopia, and an equity interest in Africa Energy Corp.

o Revenue/Profit?o CSR:

Community Health

21 Adam Smith International, pg 10.


http://www.africaoilcorp.com/

http://www.tullowoil.com/

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Construction of Laisamis District Hospital Construction of water pipe to Laisamis Hospital Provision of clinical and medical supplies to Logologo Dispensary Community water points and WASHE programs across ( Laisamis,

Marsabit County) Education and Skills

Construction of classrooms (Isiolo County) Provision of school supplies including math and science materials,

various districts ( Turkana, Laisamis) Scholarships and bursaries (Laisamis, Turkana) Scoping study of educational and skills required for emerging up stream

oil and gas sector (Lundin Foundation) Scholarships to Ministry of Energy and Petroleum and National Oil

Corporation to attend training at PETRAD (from Foundation) Access to Energy

Provision of cookstoves One Child One Lamp M-Kopa Kenya (Lundin Foundation)

Sustainable Livelihoods and Economic development Facilitate solar company to set up local sales agent One day Veterinary clinic in Kaisut to in support of pastoralist

communities Local Sourcing Turkana Basin Institute

3 Tourism

3.1 OverviewAccording to Kenya’s 2030 Vision, tourism represents a key driver of economic growth and stability.22 It dominates Kenya’s service sector and stands as the second largest generator of foreign exchange next to agricultural products. In 2014, tourism provided a direct GDP contribution of 4.1% (KES220.6bn) and accounted for approximately 206,500 jobs, or 3.5% of employment. When one takes into account the wider impacts of tourism (indirect and induced), tourism’s total GDP contribution is 10.5% (KES561.8bn) and accounts for 9.2% of employment. 23 Major tourist attractions include coastal beaches such as those in Malindi; national parks and wildlife reserves, such as Tsavo National Park and Maasai Mara National Reserve; world heritage sites in Mombasa and Lamu; homestay experiences; outdoor activities such as rafting and rock climbing; and luxury business/conference facilities.

22 Kenya’s Vision 2030 (pg 10)23 Travel and Tourism- Economic Impact 2015. World Travel and Tourism Council (pg 1)


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While the tourism industry has been projected to grow modestly in coming years, security concerns linked to political and terrorism-related violence have caused a substantial decline in travel by international visitors. 24 As a result, the sector has begun to diversify and re-direct its focus on domestic and business tourism. In addition, the Kenyan government is working to tighten security, has offered tax incentives to encourage local tourists, and is engaging with public relations firms to improve the country’s international image.

3.1.1 Tourism company descriptions/CSR Efforts

Kenya Tourism Fund (http://tourismfund.co.ke/) o Mission: To diversify the resource base for financing development of a sustainable

tourism industry through innovation, service excellence and stakeholder’s engagement.o Corporate body established under the Tourism Act of 2011 which came into operation

on September 1, 2012.o CSR Efforts:

Partnered with Rarua Primary School in Homa Bay

Kenya Association of Tour Operators (http://www.katokenya.org/)o Mission: To uphold the good reputation of Kenya as a tourist destination by ensuring

that Kenyan Tour Operators maintain the highest possible standards of service and value.

o Tourism trade association representing the interests of over 250 professional tour operators (safaris) in Kenya.

o Couldn’t determine CSR Efforts.

24 Islamist Militant Attacks Leave Kenyan Tourism Industry Reeling, Bloomberg Business. http://www.bloomberg.com/news/articles/2015-08-24/islamist-militant-attacks-leave-kenyan-tourism-industry-reeling


http://www.katokenya.org/

http://tourismfund.co.ke/

http://www.bloomberg.com/news/articles/2015-08-24/islamist-militant-attacks-leave-kenyan-tourism-industry-reeling

http://www.bloomberg.com/news/articles/2015-08-24/islamist-militant-attacks-leave-kenyan-tourism-industry-reeling

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KATO Members support the basic tenets of Sustainable Tourism and endeavor to: protect the environment, respect local cultures, benefit local communities, conserve natural resources, and minimize pollution.

KATO also promotes adherence to Kenya tourism industry codes of conduct (ex. Beach and Safari)

EcoTourism Kenya (http://www.ecotourismkenya.org/) o Mission: To effectively link tourism, communities and conservation for sustainable

tourism development in Kenya.o Membership organization of approximately 550 individuals, companies, and community

based organizations. One of seven private-sector associations that make up the Kenya Tourism Federation (KTF). EK is an executive board member of the newly formed Federation of Community Tourism Organizations (FECTO) and the Global Travel and Tourism Partnership (GTTP) Kenya.

o CSR Efforts: EK's policy is to ensure incorporation of sound environmental and social

practices in new and existing tourism enterprises. It seeks to increase recognition of environmental and social issues in the development of tourism in Kenya.

4 Agribusiness

Agriculture plays a vital role in the Kenyan economy, serving as a major source of income for the majority of the population, and in particular, those living in rural areas. Agriculture is also instrumental in achieving the Millennium Development Goals of reducing poverty and hunger, in addition to meeting macro-level economic development goals, like those delineated in Vision 2030.

Every year, Kenya produces approximately 6 million tons of food crops, 4.2 million tons of horticultural crops, and 500,000 tons of industrial crops. An estimated 40% of all crops are lost to diseases, pests, and weeds. Furthermore, domestic production does not cover local demand for maize, wheat, rice and various horticultural and industrial crops commodities and imports are essential to meeting food security needs.25

Livestock production and marketing, a subsector of the agricultural industry, accounts for 30% of the agricultural GDP. While Kenya is self-sufficient in terms of many livestock products, it is a net-importer of red meat in the form of cattle, shoats, and camels from Somalia, Ethiopia, Sudan, Uganda, and Tanzania.26

25 KALRO Website.26 An Overview of Livestock Sub-sector in Kenya (pg 5).


http://www.ecotourismkenya.org/

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4.1 Tea Overview Tea is a major cash crop for Kenya and competes with horticulture and tourism to be the leading foreign exchange earner for the country. The Kenyan tea industry earned US$1.38 billion in 2014, with the biggest share coming from exports.27 Most tea produced in Kenya is black (it is the leading exporter in the world), with green tea, yellow tea, and white tea produced on order by major tea producers.

Tea cultivation and manufacturing occurs in 15 of Kenya’s 47 counties. An estimated 60% of all tea in Kenya is grown by smallholders, followed by estates owned by multinationals, and finally, locally owned estates. The Kenyan tea industry employs around 600,000 smallholder households and 150,000 tea estate workers.28

Tea in Kenya is controlled by different institutes and government bodies. They are:

Ministry of Agriculture, Livestock and Fisheries: bears responsibility to the government. , Agriculture Fisheries and Food Authority -Tea Directorate: manages the tea industry in Kenya

on behalf of the government. Kenya Tea Development Agency (KTDA): Manages small scale trades. East Africa Tea Trade Association (EATTA): to facilitate tea trade in East Africa and southern

Africa. Tea Research Foundation of Kenya (TRFK): to facilitate tea research in Kenya.

27 http://www.comunicaffe.com/kenyan-tea-industry-earned-us1-38-billion-in-2015/28 The World's Largest Black Tea Exporter, GAIN.2013.


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4.1.1 Tea company descriptions/CSR Efforts

Unilever- Unilever East and Southern Africa (ESA) (https://www.unilever-ewa.com/)o Subsidiary operating in Kenya, Uganda, Tanzania, Zimbabwe, Zambia, Mozambique,

Malawi. o Unilever operates two businesses, the consumer business dealing with FMCG and the

tea plantations business in Kenya and Tanzania.o The plantations business is the biggest employer in Unilever with a workforce of 25,000

(10% of Unilever workforce).The Consumer business employs over 1,500 people directly.

o Has 120 distributors spread across the 7 countries reaching more than 100,000 retail outlets each week.

o CSR Efforts: Unilever Corporate Social responsibility program provides support to the region’s communities in the fields of health, education, water, hygiene, nutrition, and environment. Launched Unilever Sustainable Living Plan in 2010 aimed at doubling the size of business while reducing environmental footprint and increasing positive social impact

Finlays (http://www.finlays.net/tea-estates/kenya)o Maintains a tea estate in Kericho, Kenya with 4 factorieso Produces 23 million kgs of made tea every year o Employs nearly 9,000 peopleo CSR Efforts: Commitment to sustainable development/operations, self-sufficient in

sustainable timber and power (50% hydro-electric), provide employees and families with housing, schooling and medical services, etc.

This amounts to more than 12,000 houses, 13 dispensaries, 14 primary schools, 49 nursery schools, 1 secondary school and 3,000 kitchen gardens.

Kenya Tea Development Authority Holdings (http://www.ktdateas.com/)o One of the largest private tea management agencies in Nairobi, Kenya. o In 2014, KTDA had 65 tea processing factories (owned by 54 Factory Companies)

with over 560,000 small-scale tea farmers as individual shareholders in the company.

o CSR Efforts: KTDA Foundation- a non-profit affiliate company raising funds and building partnerships to support programs that improve the welfare of small-scale tea farmers in four key areas: environmental sustainability, education, health and economic empowerment.

4.2 Coffee Overview


http://www.ktdateas.com/

http://www.finlays.net/tea-estates/kenya

https://www.unilever-ewa.com/

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After its introduction to Kenya in 1896,29 coffee became one of the country’s most important agricultural exports, comprising up to 40% of the total until its production peak in 1988. Today, coffee is still a major cash crop; however, it accounts for only 6% of agricultural exports, behind tea and horticultural goods.30 Current challenges to coffee production include climatic concerns, such as erratic rains; the predominance of crop-damaging pests and diseases, such as Coffee Berry Disease and Coffee Rust); the high cost of labor and inputs, such as fertilizers, pesticides, and equipment; competition posed by other farm enterprises; and poor governance of farmer organizations.31

Image Credit32

29 Coffee Production in Kenya, Coffee Research Foundation Presentation, 2013. (pg 2)30 Analysis of Incentives and Disincentives for Coffee in Kenya, FAO, 2013 (pg 5) 31 Coffee Annual Report, USDA. 2015 (pg 2).32 Analysis of Incentives and Disincentives for Coffee in Kenya, FAO, 2013 (pg 7)


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Image Credit33

The primary coffee-producing regions in Kenya are located in the fertile highlands. The coffee harvest takes place from September-December (“fly” or early crop) and March-July (“main” or late crop).34 Kenya’s dual production system is composed of approximately 600,000 small-scale farmers (clustered within ~550 cooperative societies) and 3,300 coffee estates.35 The industry is increasingly moving towards smallholder production as real estate developments near Nairobi creep onto what were once large coffee plantations. In 2013-2014, smallholder production was 55% of the total, and this number is expected to surpass 60% in 2015-2016, according to the Coffee Directorate.36 Furthermore, programs to kick-start new production areas and rehabilitate abandoned farms in the Northern Rift Valley, on the coast, and in western regions have been initiated by both national and country governments.

33 Analysis of Incentives and Disincentives for Coffee in Kenya, FAO. 2013 (pg 6)34 Coffee Annual Report, USDA. 2015 (pg 2)35 Analysis of Incentives and Disincentives for Coffee in Kenya, FAO. 2013 (pg 6)36 Coffee Annual Report, USDA. 2015 (pg 2)


Coffee Production in Kenya, 2013

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Image Credit37

4.2.1 Coffee company descriptions/CSR Efforts

The Kenya Coffee Traders Association (K.C.T.A.) (http://www.kenyacoffee.co.ke/aboutus.html)o Voluntary, non-profit and non-political association with the following objectives :

To represent all member companies engaged in the coffee industry, either in the export trade or its related services – it is important to mention that the current member register includes Millers / Marketing Agents / Warehousemen / Coffee Equipment suppliers and Transporters.

To act as a forum for discussion and exchange To disseminate coffee industry information to its members To assist in the promotion of Kenyan coffee and its industry on the international

marketo Couldn’t determine CSR Efforts.

Kenya Coffee Producers Association (http://kcpa.co.ke/)o National membership organization of coffee farmers with the following mission:

To contribute to the socio-economic empowerment of coffee farmers through education and training, dissemination of information, enhancing good industrial labor relations in the sector, and lobbying for an enabling environment that supports: production, processing , and marketing of quality coffee while ensuring farmers get good returns for their efforts and are actively involved in policy reforms.

o Couldn’t determine CSR Efforts.37 Coffee Production in Kenya, Coffee Research Foundation Presentation, 2013. (pg 3)


Coffee Production in Kenya, 2013

http://kcpa.co.ke/

http://www.kenyacoffee.co.ke/aboutus.html

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Coffee Board of Kenya (http://www.coffeeboardkenya.co.ke/)o To regulate and promote growth, sustainability. and competitiveness of the Kenya

Coffee industryo Formulate policies and rules to regulate and develop the coffee industry in the

consultation with the Ministry of Agriculture.o Encourage environmentally friendly, ethical and hygienic coffee production, processing

and marketing practices, in order to enhance quality of coffee and sustainability.o Identify, develop and promote new and emerging domestic and global marketso Couldn’t determine CSR Efforts.

Rockbern (http://www.rockbern-coffee.com/)o Private coffee exporter, blender, and roaster in Nairobi.o Owns small-scale coffee estates which are exported as micro lots.o CSR Efforts: Program to establish library for students in local primary schools in the

coffee growing region of Kirinyaga

Rashid Moledina & Co. , (Msa) Ltd. (http://rashidmoledina.com/)o Private coffee exporter in Mombasa.o Couldn’t determine CSR Efforts.

Dormans (http://dorman.co.ke/) o Coffee roaster and exporter in Nairobi.o Couldn’t determine CSR Efforts.

Mwangi Coffee Exporters (http://www.mwangicoffee.com/) o Coffee exporter in Mombasa.o Couldn’t determine CSR Efforts.

Sannex Coffeeo Licensed coffee dealer, exporter, and roaster in Nairobi.o http://www.sannexcoffee.com/ o Couldn’t determine CSR Efforts.

Africoff Trading Co. Ltd (http://www.africoff.co.ke/)o Coffee blending company in Nairobi.o Couldn’t determine CSR Efforts.

o Diamond Coffee Company Ltd (http://www.diamondcoffee.co.ke/)o Coffee company in Nairobi.o Couldn’t determine CSR Efforts.


http://www.diamondcoffee.co.ke/

http://www.africoff.co.ke/

http://www.sannexcoffee.com/

http://www.mwangicoffee.com/

http://dorman.co.ke/

http://rashidmoledina.com/

http://www.rockbern-coffee.com/

http://www.coffeeboardkenya.co.ke/

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4.3 Horticulture Overview

Horticulture is a one of the top foreign exchange earners for Kenya, generating 1 billion USD each year. It was responsible for 2.8% of the GDP in 2014, and more specifically, floriculture contributed 1.52%. This translated into a flower export volume of 136, 601 tons, or Kshs 54.6 billion.38 It is estimated that over 500,000 people (including over 90,000 flower farm employees) depend on the floriculture industry, impacting over 2 million livelihoods. While Kenya’s flowers are sold throughout the world, 38% are exported to the European Union.

Horticulture areas in Kenya are located around Lake Naivasha, Mt. Kenya, Nairobi, Thika, Kiambu, Athi River, Kitale, Nakuru, Kericho, Nyandarua, Trans Nzoia, Uasin Gishu and Eastern Kenya. The main cut flowers grown in country are roses, carnations, and Alstromeria, log with Gypsophilla, Lilies Eryngiums, arabicum, hypericum, Statice, and a range of summer flowers. 39

38 Kenya Flower Council Website. http://kenyaflowercouncil.org/?page_id=94. 39 Kenya Flower Council Website. http://kenyaflowercouncil.org/?page_id=92.


http://kenyaflowercouncil.org/?page_id=92

http://kenyaflowercouncil.org/?page_id=94

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4.3.1 Horticulture Company Descriptions/ CSR Efforts

Desire Flora (Kenya) Ltd (http://www.desireflora.com)o Grower and exporter of fresh cut Kenyan roses in Kajiado County at Isinya.o Mission is to generate employment, create awareness on gender equality, financial stability,

and to provide training and education to employees. o CSR Efforts: Provides a range of trainings on occupational health and safety, first aid, safe

use of pesticides, HIV awareness, etc.

o Oserian Flower Farm (http://www.oserian.com/)o Grower/exporter of a variety of fresh-cut flowers based near Lake Naivasha. o One of largest and most technically advanced flower farms in Kenya.o 4,600 employees in permanent employment , sells to over 60 countries o CSR Efforts: Provides highest floricultural wage in Kenya and generous benefits, free medical

services at health centers, financial education, free schooling to employee children, vocational training, housing for employees, health campaigns, community infrastructure projects.

o Strong commitment to eco-friendly processes/production, wildlife/land conservation.

Sian Roses Group (http://www.sianroses.co.ke/index.html)o Composed of 3 farms (Agriflora Kenya Limited, Equator Flowers Kenya, Maasai Flowers Ltd)


http://www.sianroses.co.ke/index.html

http://www.oserian.com/

http://www.desireflora.com/

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Producer of roses and zantedeschia calla lilies, located in Nakuru. Eldoret, and JKIA. Main markets are EU, USA, Dubai, and Australia. CSR Efforts: Various initiatives focused on improving educational opportunities and

school conditions/resources. Fair trade certified.

4.4 Sugar Overview

The sugar industry is a major contributor to the agriculture sector in Kenya, comprising 15% of the total. The livelihoods of 25% of the population are tied to the sugar industry in some capacity. This is particularly true for households located in Western Kenya in Nyanza, Rift Valley, and Western Provinces. There are more than 250,000 smallholder farmers who supply over 92% of the product received and processed by sugar companies, while the rest is produced by factory-owned estates.

4.4.1 Specific Company Descriptions including CSR Efforts

Parastatal Factories

Nzoia Sugar Company: Nzoia Sugar Company (NSC), located between Webuye and Bungoma Towns of Western Province was commissioned in 1978 with an initial rated capacity of 2,000 TCD, which was later expanded to 3,000 TCD.


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Sony Sugar Company: South Nyanza Sugar Company Limited (SonySugar) was established in 1976 with the objective of increasing national sugar production to reduce dependence on importation, creating employment opportunities and enhancing regional development.

Muhoroni Sugar Company: Muhoroni Sugar Company Limited was incorporated in 1964 as East Africa Sugar Industries Limited and started operations in 1966 with initial capacity of 850 TCD. At the time of incorporation, majority shareholder was UKETA a company which is part of the Mehta Group of Companies.

Chemelil Sugar Company: Chemelil Sugar Company situated in the Nyando Sugar Belt was incorporated on 5th July 1965 as a Limited Company. The sugar cane factory is located in Nyando District, 50 km from Kisumu Town.

Private Factories

Kibos & Allied Sugar Company: Kibos Sugar and Allied Industries limited is located a few kilometers from Kisumu town. Their main aim is to produce high quality refined sugar for the Kenyan market among other sugar products.

Butali Sugar Mills Ltd: Sugar milling company located at Butali area in Western Kenya. BSML has more than 30,000 contracted farmers whose agricultural extension services are provided from over 30 satellite offices scattered within the Western Sugarcane belt and are staffed by over 70 agricultural field extension officers.

SOIN Sugar Company: Soin Sugar Company is situated in Kericho District Soin Division is a privately owned company established in 1999.

West Kenya Sugar Company: West Kenya Sugar Company Ltd. (WEKSOL) was incorporated in 1979 with an Open Pan Boiling System (OPS) for producing Mill White Sugar. The technology was chosen in line with government policy for the creation of rural employment and development.

4.5 Livestock and Dairy Overview

Kenya’s livestock subsector accounts for 10% of the GDP and yet receives only 1% of the total annual budget allocation. Approximately 50% of the national agricultural workforce is employed in the livestock industry. 40 More than 70% of the national livestock herd is raised by pastoralists, and, in 2005, the estimated worth in arid and semi-arid lands (ASALs) was Kshs 60 billion ($800 million USD), with an internal trade in pastoral areas around Kshs 6 billion ($80 million USD) per year.41

40 An Overview of Livestock Sub-sector in Kenya (pg 4)41 End Market Analysis of Kenyan Livestock and Meat (pg 3)


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Kenya’s livestock population is comprised of the following: 14.1 million indigenous cattle, 3.4 exotic (primarily dairy) cattle, 17.1 million sheep, 27.4 million goats and 3 million camels. 42 The livestock population fluctuates based upon climatic changes (i.e. drought), political instability, conflicts, and disease outbreaks, both locally and in counties which purchase Kenya’s livestock products.43 Cattle is the most important source of red meat in Kenya. Production is dominated by pastoralists, who are responsible for 80-90% percent of the red meat consumed in-country. Only 2% of red meat originates from ranches and the remainder from the highlands. Kenya’s exports of meat and meat products are minimal, accounting for only 0.2-0.3% of the country’s export earnings. Major export slaughterhouses are as follows:

1. KMC: slaughters significant numbers of animals for export. 2. Farmers Choice: primarily processes pork for the domestic market with limited exports to the

Middle East and Mauritius3. Hurlingham: primarily targets the domestic market, with minor exports on the side.

While the beef industry is one of Kenya’s fastest-growing sectors, domestic production of red meat does not meet local consumption needs and thus 20-25% percent still comes from neighboring countries such as Ethiopia, Somalia, Tanzania and Uganda. A small volume also comes from select European countries, Brazil, and the United Arab Emirates (UAE).44

Kenya also has one of the most developed smallholder dairy industries in Sub-Saharan Africa. Over1 million smallholder dairy farmers produce more than 80% of the marketed milk in Kenya.45

A range of actors form a part of Kenya’s livestock industry and interact at various levels of the value chain. They include “input suppliers, pastoral producers, livestock traders, ranch owners and managers, slaughterhouses, butcheries and processors, and meat packers and exporters. Important service providers (who are not technically value chain actors) include brokers, who negotiate between pastoralists and traders and play an important price-setting role, veterinarians and community animal health workers, and transportation providers.”46

42 End Market Analysis of Kenyan Livestock and Meat, (pg 3)43 An Overview of Livestock Sub-sector in Kenya (pg 7)44 End Market Analysis of Kenyan Livestock and Meat (pg 37)45 End Market Analysis of Kenyan Livestock and Meat (pg 25)46 End Market Analysis of Kenyan Livestock and Meat (pg 3-4)


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Image Credit47

47 End Market Analysis of Kenyan Livestock and Meat (pg 18)


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5 Key Business Entities and their Activities/Program


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Association Contact Information

Membership Mandate

American Chamber of Commerce in Kenya

Non-profit organization with membership open to American companies, multinationals, and local companies having strong business ties with the United States. It is an important forum for American and international investors in Kenya and their friends to share experiences and discuss areas where we can coordinate our contributions to the Kenyan economy and community.

Kenya Private Sector Alliance

Business association of private sector organizations in Kenya. The objective of KEPSA is to provide “one voice” for the private sector to engage in public policy dialogue and influence public policy formulation.

Kenya Association of Manufacturers

Representative organization of manufacturing industries in Kenya. KAM provides an essential link for co-operation, dialogue, and understanding by representing the views and concerns of its members to the Government of Kenya.

Kenya Investment Authority

Objective is to promote investments in Kenya. Their website highlights the opportunities available in Kenya.

6 Recommendations for approaching private sector/extractives industry

The


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7 Works Cited

A Primer to the Emerging Extractive Sector in Kenya: Resource Bliss, Dilemma or Curse. Institute of Economic Affairs. Editors: Miriam W. Oiro Omolo, PhD and Prof. Germano Mwabu. Nov 2014.

An Overview of Livestock Sub-sector in Kenya: Perspectives, Opportunities and Innovations for Market Access for Market Access for Pastoral Producers. Community of Practice for Pro-Poor Livestock Development (Date?).

Analysis of Incentives and Disincentives for Coffee in Kenya, FAO, 2013. Analysis of Incentives and Disincentives for Tea in Kenya, FAO, 2013. CIA Online Factbook, 2015. Coffee Annual Report, USDA. 2015 Coffee Production in Kenya, Coffee Research Foundation Presentation, 2013. End Market Analysis of Kenyan Livestock and Meat: A Desk Study. USAID. March 2012. Export Promotion Council Website, http://www.epckenya.org/index.php?

option=com_content&task=view&id=50&Itemid=70. Extractives Industry and Local Content Early Gap Analysis- Summary Report. Kenya Extractive

Industries Development Programme. Adam Smith International, Sept 2015. Feed the Future Website. https://www.feedthefuture.gov/country/kenya. Kenya Flower Council Website. http://kenyaflowercouncil.org. Kenya Overview, World Bank. http://www.worldbank.org/en/country/kenya/overview. Kenya Tea Industry Earned $38 Billion in 2015. Comunicafe.

http://www.comunicaffe.com/kenyan-tea-industry-earned-us1-38-billion-in-2015/. The World's Largest Black Tea Exporter, GAIN.2013.


http://www.comunicaffe.com/kenyan-tea-industry-earned-us1-38-billion-in-2015/

http://www.worldbank.org/en/country/kenya/overview

http://kenyaflowercouncil.org/

https://www.feedthefuture.gov/country/kenya



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