1. SAFIC Kenya Country Background Report February 2013 University of Nairobi ISO 9001:2008 1 Certified http://www.uonbi.ac.ke

2. 1.Prof. Dorothy McCormick - Country Coordinator 2.Dr. Paul Kamau – Team member 3.Prof. Lotte Thomsen – Team member 4.Dr. Jackson Maalu – Team member 5.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 grant 8.Ms. Zidi Odhiambo – MBA student recipient of the 2012 SAFIC project grant SAFIC Kenya Team Members University of Nairobi ISO 9001:2008 2 Certified http://www.uonbi.ac.ke

3. 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 University of Nairobi ISO 9001:2008 3 Certified http://www.uonbi.ac.ke

4. GDP Growth at Market Prices University of Nairobi ISO 9001:2008 4 Certified http://www.uonbi.ac.ke

5. 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 University of Nairobi ISO 9001:2008 5 Certified http://www.uonbi.ac.ke

6. 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). International Context University of Nairobi ISO 9001:2008 6 Certified http://www.uonbi.ac.ke

7.  Unfavourable business climate:  Kenya ranked 106 th 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 University of Nairobi ISO 9001:2008 7 Certified http://www.uonbi.ac.ke

8. 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 University of Nairobi ISO 9001:2008 8 Certified http://www.uonbi.ac.ke

9. 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 University of Nairobi ISO 9001:2008 9 Certified http://www.uonbi.ac.ke

10. NMA Map University of Nairobi ISO 9001:2008 10 Certified http://www.uonbi.ac.ke

11.  Table 1: Manufacturing Sector - Percentage Contribution to GDP Food Processing Sector University of Nairobi ISO 9001:2008 11 Certified http://www.uonbi.ac.ke 20072008200920102011 Manufacturing % of GDP10.410.89.9 9.4 Manufacture of Food, beverages, tobacco % of GDP3.23.13.23.13.2 All other manufacturing %7.27.76.76.86.2

12.  Table 2: Manufacturing Sector - Percentage Growth Food Processing Sector University of Nairobi ISO 9001:2008 12 Certified http://www.uonbi.ac.ke 20072008200920102011 Manufacturing %6.33.51.34.53.3 Manufacture of Food, beverages, tobacco %8.7-1.82.23.41.6 All other manufacturing %5.26.00.95.04.0

13.  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 Food Processing Sector University of Nairobi ISO 9001:2008 13 Certified http://www.uonbi.ac.ke 20072008200920102011 Manufacturing Wage Employment ('000)237.9237.2238.6242.4247.6 Total Private Sector Employment ('000)1281.71305.91346.51399.61446.6 Manufacturing as % to Total Private Sector Employment18.6%18.2%17.7%17.3%17.1%

14.  Table 4: Number of Firms in Food Processing Sample by Product Grouping Food Processing Sector University of Nairobi ISO 9001:2008 14 Certified http://www.uonbi.ac.ke Broad AreaNo of Firms Bakery259 Grain Milling203 Horticulture26 Juices67 Sauces and Jams78 Snacks277 TOTAL910

15. 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 University of Nairobi ISO 9001:2008 15 Certified http://www.uonbi.ac.ke

16.  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 University of Nairobi ISO 9001:2008 16 Certified http://www.uonbi.ac.ke

17. 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 University of Nairobi ISO 9001:2008 17 Certified http://www.uonbi.ac.ke

18. Thank you! SAFIC University of Nairobi ISO 9001:2008 18 Certified http://www.uonbi.ac.ke