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SAFIC Kenya
Country Background Report
February 2013
University of Nairobi
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SAFIC Kenya Team
Members
1.
2.
3.
4.
5.
6.
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
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
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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
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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
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
 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
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
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
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Food Processing Sector
 Table 1: Manufacturing Sector - Percentage Contribution to GDP
2007
2008
2009
2010
2011
Manufacturing % of GDP
10.4
10.8
9.9
9.9
9.4
Manufacture of Food,
beverages, tobacco % of GDP
3.2
3.1
3.2
3.1
3.2
All other manufacturing %
7.2
7.7
6.7
6.8
6.2
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Food Processing Sector
 Table 2: Manufacturing Sector - Percentage Growth
2007
2008
2009
2010
2011
Manufacturing %
Manufacture of Food,
beverages, tobacco %
6.3
3.5
1.3
4.5
3.3
8.7
-1.8
2.2
3.4
1.6
All other manufacturing %
5.2
6.0
0.9
5.0
4.0
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Food Processing Sector
 Vision 2030 stresses the importance of the manufacturing sector
and identifies food processing as the most important single subsector in terms of its contribution to GDP.
 Table 3: Manufacturing Sector - Percentage Contribution to
Employment
Manufacturing
('000)
Wage
2007
2008
2009
2010
2011
237.9
237.2
238.6
242.4
247.6
1281.7
1305.9
1346.5
1399.6
1446.6
18.2%
17.7%
17.3%
17.1%
Employment
Total Private Sector Employment ('000)
Manufacturing as % to Total Private
Sector Employment
18.6%
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Food Processing Sector
 Table 4: Number of Firms in Food Processing Sample by Product
Grouping
Broad Area
Bakery
Grain Milling
Horticulture
Juices
Sauces and Jams
Snacks
TOTAL
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No of Firms
259
203
26
67
78
277
910
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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
 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
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
Thank you!
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