safic kenya country background report february 2013 university of nairobi iso 9001:2008 1 certified

SAFIC Kenya Country Background Report

February 2013

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

1. Prof. Dorothy McCormick - Country Coordinator2. Dr. Paul Kamau – Team member 3. Prof. Lotte Thomsen – Team member 4. Dr. Jackson Maalu – Team member5. Dr. Radha Upadhyaya – Team member 6. Mr. Wamalwa Nyukuri H– Team member and Project

Assistant/ PhD Candidate 7. Mr. Nester Peter K’Ochupe – MA student recipient of

the 2012 SAFIC project grant8. Ms. Zidi Odhiambo – MBA student recipient of the

2012 SAFIC project grant

SAFIC Kenya Team Members


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.

Kenya


GDP Growth at Market Prices


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.

Political and Economic History


TradeGlobal: 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).

International Context


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.

Business Climate


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

Study Motivation


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.

Study Methodology - Mapping exercise


NMA Map


Table 1: Manufacturing Sector - Percentage Contribution to GDP

Food Processing Sector


2007 2008 2009 2010 2011Manufacturing % of GDP 10.4 10.8 9.9 9.9 9.4Manufacture of Food, beverages, tobacco % of GDP 3.2 3.1 3.2 3.1 3.2All other manufacturing % 7.2 7.7 6.7 6.8 6.2

Table 2: Manufacturing Sector - Percentage Growth



2007 2008 2009 2010 2011

Manufacturing % 6.3 3.5 1.3 4.5 3.3Manufacture of Food, beverages, tobacco % 8.7 -1.8 2.2 3.4 1.6All other manufacturing % 5.2 6.0 0.9 5.0 4.0

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



2007 2008 2009 2010 2011

Manufacturing Wage Employment ('000) 237.9 237.2 238.6 242.4 247.6

Total Private Sector Employment ('000) 1281.7 1305.9 1346.5 1399.6 1446.6

Manufacturing as % to Total Private Sector Employment 18.6% 18.2% 17.7% 17.3% 17.1%

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



Broad Area No of FirmsBakery 259Grain Milling 203Horticulture 26Juices 67Sauces and Jams 78Snacks 277TOTAL 910

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.

Food Processing Equipment

Manufacturing Sector


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

Further Investigation – Policy relevance


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.

Further Investigation – methodological issues


Thank you!

SAFIC


safic kenya country background report february 2013 university of nairobi iso 9001:2008 1 certified

Documents

certified http

gdp growth

lotte thomsen team member

jackson maalu team member

radha upadhyaya team

paul kamau team member

growth rates

member of wto regional