2011 / 2012 Republic of Kenya

Priority Value Chain Analysis Study in Selected Districts Kenya

Youth Employment Regional Programme

2011 / 2012

Priority Value Chain Analysis Study in Selected Districts Kenya

Table of Content

Abbreviations and Acronyms ii Foreword iv Acknowledgements v Executive Summary vi

Chapter 1: Introduction 1 1.1 Background Information 1 1.1.1 Situational Analysis 1 1.1.2 Situation of Youth at National Level 2 1.1.3 District/ Constituency Level Statistics and Current Engagements 4

Chapter 2: Problems Confronting the Youth and Proposed Resolution Efforts 9 2.1 Problem and Justification 9 2.2 Study Objectives 10 2.3 Resolution Mechanisms 11

Chapter 3: Methodological Approach 14 3.1 The Evaluation Framework 14 3.2 Interrogation of the Value Chains 19

Chapter 4: The Value Chain Analyses Results and Discussions 26 4.1 Formation of the Value Chain Clusters: 26 4.2 The Generic Value Chain Mapping Outcomes 35 4.3 Engagement Options or Business Cases 36

Chapter 5: Articulation of The Youth Engagement Options 38 5.1 Detailed presentation of the youth engagement options 39 5.2 Skills Gap in the 24 Selected Constituencies 41

Chapter 6: Conclusions And Recommendations 44 6.1 Conclusions 44 6.2 Recommendations 45

References 47 Annex 48 Quantification and Costing of a Model 48

i Priority Value Chain Analysis Study in Selected Districts Kenya

Abbreviations and Acronyms

AGRA Alliance for a Green Revolution in Africa AIDS Acquired Immune Deficiency Syndrome ASAL Arid and Semi Arid Land BAACH Business Alliance Against Chronic Hunger BDS Business Development Services CDA Constituency Development Association CDF Constituency Development Fund DDP District Development Plan DVO District Veterinary Officer DYO District Youth Officer EPZ Export Processing Zone ESP Economic Stimulus Programme FAO Food And Agricultural Organization of the United Nations FGD Focus Group Discussion FTC Farmers Training Centre GDP Gross Domestic Product GOK Government of Kenya Deutsche Gesellschaft für Technische Zusammenarbeit GmbH GTZ (German Agency for Technical Cooperation) HCDA Horticultural Crops Development Authority HIV Human Immunodeficiency Virus ICT Information Communication Technology IFAP International Federation of Agricultural Producers ILO International Labour Organization IMF International Monetary Fund JK Jua Kali KARI Kenya Agricultural Research Institute KCPE Kenya Certificate of Primary Education KCSE Kenya Certificate of Secondary Education KEBS Kenya Bureau of Standards KENFAP Kenya National Federation of Agricultural producers KEPHIS Kenya Plant Health Inspectorate Services KEPSA Kenya Private Sector Alliance KIE Kenya Institute of Education KIPI Kenya Industrial Property Institute KIRDI Kenya Industrial Research Institute KNBS Kenya National Bureau of Statistics KNEC Kenya National Examination Council KSL KENFAP Services Limited LRA Long Rains Assessment MDG’s Millennium Development Goals ii Priority Value Chain Analysis Study in Selected Districts Kenya

MIG Metal Active Gas Welding MoA Ministry of Agriculture MoE Ministry of Education MoEST Ministry of Higher Education, Science & Technology MoL Ministry of Labour MoL&F Ministry of Livestock and Fisheries MoTR Ministry of Trade MoW Ministry of Water MoYAS Ministry of Youth Affairs and Sports MP Member of Parliament NEMA National Environment Management Authority NEP North Eastern Province NGO Non-Governmental Organization NYS National Youth Service PDYA Provincial Director of Youth Affairs PHO Public health Officer SMEs Small and Medium Enterprises Stichting Nederlandse Vrijwilligers (Netherlands Development SNV Organization) SWOT Strength Weaknesses Opportunities and Threats UN United Nations UNDP United Nations Development Programme UNEP United Nations Environment Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNICEF United Nations Children’s Fund UNV United Nations Volunteers USAID United States of America for International Development VC Value Chain VSO Volunteer Service Organization (United Kingdom) VTC Vocational Training Center WEDF Women Enterprise Development Fund YEC Youth Empowerment Centre YEDF Youth Enterprise Development Fund YEF Youth Enterprise Facility YERP Youth Employment Regional Programme

iii Priority Value Chain Analysis Study in Selected Districts Kenya

Foreword

enya’s economy can gain great benefits from the “youth bulge”. This can be achieved by investing in the right sectors with high potential for job creation. The Kcountry currently has a high proportion of 15-to-29 year olds relative to the adult population. According to recent studies, a large youth bulge can both have a positive impact on a country’s economy, being a vital resource which can be tapped to promote its development, and a negative impact due to its associated problems such as high unemployment rates, idleness and likelihood of misuse.

Although effort by Governments and other stakeholders in addressing these issues have been put in place, more still needs to be done towards poverty alleviation and the youth unemployment situation. In view of this realization, the UNDP/Regional Programme for Social Cohesion and Youth Employment (YERP) funded by the Spanish cooperation commissioned this study to investigate the existing value chains and to identify those with the highest potential to maximize economic growth and youth absorption.

In order to obtain this result, a value chain analysis was conducted in 24 economic constituencies in Kenya with the objective of identifying the two lead sectors in each constituency. The applied criteria to select the lead sectors were the following: quick return on investment, market availability, growth potential, availability of skills required and supportive services locally, business and employment opportunities for the youth.

The report selected eleven lead categories of value chains. Along the various stages of the selected value chains, twenty one entrepreneurial possibilities were identified in the form of constraints, resolution mechanisms or uptake of opportunities. The majority of the identified priority value chains are agricultural based. At the same time the entrepreneurial possibilities are mainly focused on transformation of the goods, a largely missing aspect of African agricultural sector. The report furthermore indicates that pre-inception physical investments requirements, supportive services and infrastructure are key factors to fast track realization of the identified entrepreneurial options.

The report concludes that clear possibilities for absorption of youth exist in the rural setup of Kenya, but lots of efforts and resources are required to release those potentialities for up take. Although grants will be necessary to initiate the adoption of engagement possibilities, the report’s findings cast light on the existence of devolved funds and competing financial products as a clear possibility for investments and as an alternative to grants.

Aeneas C. Chuma Resident representative United Nations Development Programme, Kenya iv Priority Value Chain Analysis Study in Selected Districts Kenya

Acknowledgements

his report was prepared with the support and generous contribution of the youth and rural communities, Government departments and the private sector Tamongst other organizations. My sincere appreciation goes to the Resident Representative, Mr. Aeneas C. Chuma for his leadership and to other UNDP staff who supported the study. Specifically, I wish to register my sincere appreciation Boniface M. Kitili (UNDP-Programme Analyst) for coordinating the study and providing the much needed guidance and technical inputs to the draft reports. I also wish to thank Ms. Couty Fall, the Coordinator for the Regional Programme for Social Cohesion and Youth Employment (YERP) and her team for providing the back-stopping support services while in Dakar-Senegal.

Special recognition goes to Dr. Dinah C. Mwinzi (Director-Youth Training) for co- coordinating the study with UNDP and to Isaac Odek (Principal Youth Training Officer) and Provincial Directors of Youth Affairs and Sports for linking the consultants with key respondents. The field coordination and other logistics were provided by District Youth Training Officers in the respective districts. I therefore take this opportunity to thank them and the youth leaders for guiding the process at the at the grassroots level.

The financial support by the United Nations Development Programme (UNDP)/ Regional Programme for Social Cohesion and Youth Employment (YERP) funded by the Spanish Cooperation demonstrates the importance UNDP and the Spanish Cooperation has placed on developing viable options with a special focus on the youth and women in this country. I therefore wish to commend UNDP and the Spanish Cooperation for supporting this study which will inform the design and implementation of viable economic options in this country.

Finally to the Kenya Agricultural Federation of Agricultural Producers (KENFAP) for undertaking this study

Thank you all.

Mr. James M. Waweru, CBS Permanent Secretary Ministry of Youth Affairs and Sports

v Priority Value Chain Analysis Study in Selected Districts Kenya

Executive Summary

he priority value chain analysis study aimed at accomplishing several objectives in line with youth engagement. Such engagement may fall into employment, business and entrepreneurial opportunity creation or actual participation in some chain based Tactivity. The study was conducted in 24 selected political constituencies in Kenya as guided by several objectives including: reviewing existing reports, selecting a lead sub-sector for each constituency and identifying the lead sub-sectors with potential to contribute to sustainable economic growth in Kenya. The value chain approach is an essential model in assessing the competitiveness of enterprises, enabling all the relevant actors to anticipate and meet their specific roles within and along the chain, identifying and taking advantage of opportunities in the value chain and responding to changes in their chain specific functions.

The study captured the global, regional and national youth situation, focusing largely on the youth bulge and its associated problems such as; high unemployment rates, idleness and likelihood of misuse and also the possible opportunities that could be tapped from the same. This study adopted the United Nation Development Program’s definition of a youth as a person aged between 15-35 years. The study articulated efforts that have been made to address and resolve the problems affecting the youth. Through value chain mapping and analysis, the study has identified possibilities within the value chain where the youth can be gainfully employed.

Data collection tools utilized in the study included: literature review, focus group discussions observations and key informant interviews. For effectiveness and ease of undertaking the assignment, the 24 constituencies were divided into 7 different clusters which included: Eastern, Central, Coast, Rift Valley, North Eastern Turkana and Cross Country – with the latter having a variation of agro ecological zones to form a representation sample for theteam leader.

Global, national, district and constituency statistics and information captured in thestudy have been used to formulate entrepreneurial options from the priority value chains selected by each constituency. The value chains themselves have been clustered into 11 categories namely: Rabbit production, processing and marketing; Talent Academy / creative arts; Poultry production, processing and marketing; Camel milk production, processing and marketing; Dairy cattle and goat production, processing and marketing; Beef, Chevon and Mutton production, processing and marketing; Fruit production, processing and marketing; Ceramic materials extraction, production of ceramics and marketing; Fish farming and fishing, product processing and marketing; Honey production, processing and marketing; and Fresh vegetable and tubers production, processing and marketing. The study was keen to include the dynamics of youth socio-economic issues and possible redress mechanisms, while taking great recognition of the rural and urban youth situation. Youth comparative data captured at the district level aided in bringing out the socio-economic engagements and the main livelihood support systems at the constituency level.

Twenty one (21) entrepreneurial possibilities were identified from the value chain analyses from the various stages in the form of constraints, resolution mechanisms or uptake of vi Priority Value Chain Analysis Study in Selected Districts Kenya opportunities. Those were clustered into four broad enterprise based categories to include horticulture, livestock, ceramics and talent and creative arts academy. Each possibility was unique in its own fashion and specifically targeted a certain value chain stage or a multiplicity of stages. The majority of the identified priority value chains and options are agricultural based with pre inception physical investments requirements, supportive services and infrastructure being key factors to fast track the realization of the identified entrepreneurial options or business ideas. The study has articulated the initiation/ entry, growth, sustainability and exit strategies for the business cases. However, the peculiar Arid and Semi Arid Land (ASAL) area environments need specific and appropriate resolution mechanisms designed, to befit their uniqueness.

Key unique problems that were clearly identified and require specific interventions include: illiteracy and ignorance; the presence of highly qualified youth and few engagement opportunities, and cultural inclinations and the associated effects.

The study concludes that clear possibilities for absorption of youth exist in the rural setup of Kenya, but lots of efforts and resources are required to release those potentialities for up take. It further identifies devolved funds and existence of competing financial products as a clear possibility for investments, other than continuous reliance on grants. Grants will however be necessary to enable the articulation of engagement options and possibly initiate adoption of seemingly complex options through some form of incubation. The study further quantifies the cost of each of the identified entrepreneurial possibility and levels of investments needed, as annexes to each constituency based report.

vii Priority Value Chain Analysis Study in Selected Districts Kenya

viii Priority Value Chain Analysis Study in Selected Districts Kenya

Chapter 1

Introduction

1.1 Background Information

he need to accord specific attention to the youth is informed by the global, regional, and national situational analyses, focusing on the youth bulge and its possible associated problems such as; high unemployment rates, idleness and likelihood of misuse among Tothers. Although efforts by Governments and other stakeholders in addressing these issues have been put in place, much more still needs to be done. In light of this background, the United Nations Development Program (UNDP) has developed various programs focused on youth empowerment to address some youth related problems. This study adopts the United Nation Development Program’s definition of youth as persons aged between 15-35 years and explores possibilities within priority value chains towards poverty alleviation and the youth unemployment situation.

1.1.1 Situational analysis Today’s global youth population is estimated at more than 1.5 billion. About 89% of these young people live in developing countries, with many of them unable to secure decent livelihoods. In these countries, the youth constitute about 29% of the total population and though declining as proportions of total population they are still growing in absolute numbers. On the other hand, a large majority of the people living below the poverty line are also in their youth. The same principle applies in view of unemployment statistics where many studies have placed greater proportions of youth as job seeking (www.unfpa.org).

The youth bulge is defined as a high proportion of 15-to-29 year olds relative to the adult population. Recent studies have shown that a large youth bulge can be associated with both positive and negative impacts such as vital resources that can be tapped to promote a given country’s development and a high risk of outbreak of civil conflict respectively. This youthful demographic is found principally in countries in the Middle East and Sub-Saharan Africa, but also in parts of the South American Andes, Central Asia, and the Pacific Islands. Sixty-two (62) countries located in sub-Saharan Africa, Southern Asia, the Middle East, and the Pacific Islands are considered “very young;” which indicates that two-thirds of their populations are under the age of thirty while less than 6% are above the age of sixty years.

The world is experiencing a youth unemployment crisis. Indeed the youth are on average three times as likely to be unemployed as adults. Statistics indicate that in the last ten years, the world’s youth population grew by 10.5 percent while youth employment only grew by 0.2 percent. The International Labour Organization (ILO) is also estimating that another 1 billion young people will enter the world’s labor market within the next ten years. However, it is highly unlikely that enough jobs will be created to employ the number of young jobseekers entering the labor market this decade. (http://makeadiff.in/blog/2010/02/25/the-mad-

1 Priority Value Chain Analysis Study in Selected Districts Kenya

national-conference-2010/ ) According to the 2007 World Development Report, “youth make up 25% of the working population worldwide and 47% of the unemployed.” While the global youth population continues to grow rapidly, economic opportunities in the form of access to education, employment, or entrepreneurship are not growing proportionately. Unemployment rates are much higher for youth than for adults, in some countries up to 7 times high. Demographic shifts caused by the rural exodus to urban areas, stagnant literacy rates, and static numbers of higher education opportunities all contribute to the need for greater attention to youth and their economic prospects. In many countries, unemployment, underemployment, and dubious informal sector employment contribute to the progressively growing insecurity.

1.1.2 Situation of Youth at National level The 2009 Kenya’s population and housing census, estimated the total population tobe 38,610,097 million people comprising of 19,192,458 males and 19,417,639 females. The population density was estimated to be 66 persons per square kilometer while thearea covered was 581,313.2 square kilometer. The 2007 spatial population distribution in Kenya indicates that 41% live in urban areas and 59% in rural reflecting the African scenario of the population living predominantly in rural settlements. Although the world is rapidly urbanizing, the number of rural dwellers is still high.

Kenya’s economy is suffering from a “youth bulge”. There is high unemployment rates, especially among the young population who are the majority. A population that is greatly skewed towards the young can be a challenge for any country. A large population indicates that the economy will be strained to support large and growing numbers of youths which causes a reduction in the per capita incomes.

The 2009 population and housing census for Kenya estimates that the economically active Kenyan population commonly referred to as the labour force and aged between 15and 64 years comprises of 10,505,000 males and 10,180,000 females. Earlier statistics (2006) estimated extreme poverty in Kenya to be at 19% of the population. Almost one in every three of Kenya’s poor population was between 15-29 years of age. Half of these were youth between 15-19 years and who had a poverty rate of 51%; which was much higher than the national average.

The Labour Force Analytical report 2008 states that; labor force constitutes 12.7 million employed and 1.9 million unemployed persons. Youth represent 30 percent of Kenya’s population and their unemployment is twice the country’s average. Almost one third of Kenyans are between 15 and 29 years, and the total reached almost 11 million people in 2006 (compared to 8.5 million in 1999). Youth in Kenya face serious challenges, including high rates of unemployment and underemployment. The overall unemployment rate for youth is double the adult average, at about 21%. Statistics on joblessness suggest that the magnitude of the unemployment problem is larger for youth with 38% of them neither in school nor at work (aggregating the rates of reported unemployment and inactivity) (GoK, 2007).

Poverty remains a major challenge in the country. The youthful population is affected by high levels of unemployment, lack of proper housing especially in the urban areas and health

2 Priority Value Chain Analysis Study in Selected Districts Kenya related challenges. This has contributed to high crime rate and extreme violence with more than 50% of convicted prisoners aged between 16-25 years, (GoK, 2007). A third of all HIV/ AIDS patients are between 15-35 years and over 75% of all new infections occur among the youth (UNDP, 2010). Statistics indicate that youth living in poverty are most likely to suffer from psychological problems. Other problems affecting the youth include marginalization (lack of voice in the family, the community and the national arena); poor representation in decision making and limited recreational facilities.

An impressive number of Kenyan youth have been involved in many activities that have raised the country’s profile. Some of these include athletics and sports where the country is unrivaled in the long distance track events. They have also excelled in areas such as entertainment and ICT. Indeed the youth form the majority in ICT related engagements with prospects for higher growth being seen as the technology advances. Currently the youth account for about 60% of the active labor force but with the majority estimated at 75% or three million being unemployed. About 800,000 youth enter the job market every year (UNDP, 2010). Increased emphasis needs to be placed on coordination of efforts; improvement of services and facilities in rural areas; vocational training and training for self employment among others, ifthe situation is to be addressed.

The current strategic orientation of the Kenyan Ministry of Youth Affairs (MOYA) describes the unemployed youth as facing growing poverty levels, changing family patterns and deteriorating health and environmental conditions. Though considerably multi-skilled, the majority of youth remain unemployed mainly due to the low levels of translation of potentialities into tangible engagement options. While the number of youth leaving secondary and tertiary institutions has increased, the labour market in Kenya is not able to accommodate this large group of skilled young graduates a factor attributed to the minimal link between the education system and the labour market development. Too many youth grow into adulthood unprepared to contribute productively either as employees or productive citizens, yet they are themost heavily affected by the absence of sustainable employment.

High unemployment rates and limited alternative engagements have led to heightened concerns about the potential for dissatisfied youth and the likelihood of some ofthem participating in potentially destabilizing or destructive activities. Many young people are at risk, leading to rising levels of youth delinquency. According to the MOYA’s strategic plan (2007-2010), absence of opportunities has made young people turn to self-employment in the informal sector, often working in hazardous conditions for low payment with few prospects for the future. Generations of youth on the move, attempting to generate income for their families or themselves, have become a familiar sight in rural and urban areas. According to the Ministry of Trade’s Strategic Plan (2008-2018), high unemployment, particularly in the informal sector is attributed to low labour force productivity, low level of education and skills, declining private sector investment, and labour market rigidities. The contribution of the youth towards economic growth and development is yet to be felt. Clear opportunities for requisite contribution are largely lacking in view of the narrow focus with respect to exploration of value chain related opportunities. These could exist either as constraints in optimization of benefits from a given value chain, or opportunities that could be taken advantage of.

The higher unemployment rates of youth as compared to adults are also cited with factors

3 Priority Value Chain Analysis Study in Selected Districts Kenya

such as lack of work experience, lack of information on job search and inadequate skills profile demanded in the labor market. Low levels of employment could also be associated with the background orientation of the youth, availability of opportunities in the immediate vicinity and a general low supply of possibilities in the job market. There is increased rural-urban migration leading to illegal settlements that lack basic amenities. Risk factors such as high levels of idleness, highly concentrated urban populations, economic decline, and increased perceptions and realities of social & economic exclusion as well as gender inequalities have led to the youth and especially young men being susceptible to mobilization for political violence and engagement in acts of crime.

Micro and small enterprises play a pivotal role in employment creation and improvement of livelihoods for the youth. This can be realized through analyzing and identifying priority value chains from which possibilities could be deductively inferred. Value chain analyses is critical for the design of competitive strategies to enable actors anticipate and meet buyers’ demands, identify and take advantage of end-market opportunities, resolve structural and operational constraints and respond to changes in market demands. The multiplicity of stages that produce could pass through along a value chain to the final finished form dictates the availability of options for youth engagement in the ensuing input-output systems.

1.1.3 District/constituency level statistics and current engagements The matrix below captures the situation of the youth at the district level using population, poverty dependency ratio, literacy level and current engagements/enterprises by the youth, as the main indicators captured from the survey on the ground. The youth population across all constituencies was above 25% of the total population, in some constituencies such as Yatta, the youth population was way above 50% of the total population. The poverty indices of the constituencies were informed by the district development plans (DDP’s) and E-libraries. It is cognizant that in some constituencies, poverty index is as high as 96% whereas in others as low as 27%. This disparity in poverty greatly informs the opportunities and challenges to be expected in enhancing value chain based entrepreneurial opportunities in the specific constituencies. This information also brings to the fore the great need to improve livelihoods and especially of the youth who form a majority of the studied constituencies’ population. Literacy levels of the constituencies are relatively high ranging from 5-93% with a majority of the constituencies falling in the above 50% bracket; which is an indication of ease of adoption of the enterprises by the majority population that is literate. The various ongoing activities/ business ventures in the constituencies have also been captured. All of the listed value chain based business cases have the potential of being amplified, contributing to the creation of more job opportunities in the identified constituencies.

The matrix below gives a glance the of situation in the constituencies/ districts that have

4 Priority Value Chain Analysis Study in Selected Districts Kenya informed the development of the business cases in a manner that considers all challenges and opportunities to ensure effective entry, growth, sustainability and exit strategy of the proposed priority value chain based entrepreneurial options.

Table 1: District/ constituency level statistics and current engagements

Region/ Constituency Population Poverty Literacy(%) as No education Current engagements/ province dependency per province (%) - as per enterprises of choice. ratio province (Poverty Total Youth index) Female Male Female Male (32%) Traditional museums, tourism, dairy cattle production, banana production, avocado production, coffee farming, fish farming, rabbit keeping, macadamia production, Mukurweini 83,932 26,858 34% 91.8 94.2 5.6 4.9 mango production, ceramics, ICT, talent academy, arboretum, tree nurseries library services, working in ceramic areas, coffee and dairy farming and creative arts. Boda boda, jua kali, poultry, catering, pig farming, tree nursery, Horticulture (tomato)/ green Central Kandara 156,663 50,132 33.3 % houses, dairy cattle production, SACCO, avocado production, passion fruits production and banana production. Boda boda, horticulture, fruits and juice extraction, nurseries, saloons, carving, sand trading- construction, kazi kwa vijana, Yatta 147,597 87526 66.2% tailoring, barber shops, fish farming, fruits farming, poultry farming, dairy goat farming, Bee keeping, Sports, market cleaning and hair dressing

5 Priority Value Chain Analysis Study in Selected Districts Kenya

Boda boda, barber shops, saloons, m-pesa, hotels, hawking, fish farming, nurseries, bee keeping, Gatanga 113,094 36,190 48.4% rabbit keeping, pig rearing, energy solutions, fish farming and kazi kwa vijana among others.

Teachers, m-pesa, accountant, secretaries, boda boda, saloon Gichugu 124,672 39,895 35.6% and barber shops, mini shops, kazi kwa vijana, buying and selling of french beans and milk

Horticulture- tomatoes, dairy goats, information Communication technology (ICT), coffee farming, fish farming, Tetu 78,320 25,062 34% rabbit keeping, bee keeping, indigenous chicken, sericulture- silk worm farming and avocado production

Cabbage production, tree tomatoes, dairy goats , dairy Mathira 148,847 47,631 27% cattle, rabbit keeping, bananas, fish farming and green house enterprises- fresh leafy vegetables

Horticulture, ICT, indigenous poultry (chicken), fish farming, 53,062 beef cattle production, dairy Kieni 165,812 32% cattle production, bee keeping, rabbit keeping and dairy goat production Dairy goat production, rabbit keeping, poultry (chicken), fish farming, bee keeping, creative Laikipia East 142,034 45,450 38% arts, camel milk, aloe vera, orch plant, eco-tourism services, sheep and goats (Shoats)

6 Priority Value Chain Analysis Study in Selected Districts Kenya

Bee keeping, jua kali (carpentry), greenhouse (tomato and onion farming), sand harvesting, tree nursery, beef cattle (trading), dairy cattle production, poultry production (indigenous and exotic), arts theatre and sports, maize (posho mill), Kapenguria 181,063 57940 44% goat production (local/ indigenous variety), hotel and food kiosks, charcoal burning, herbalists (medicinal plants), motorcycle (boda boda), ICT and computer services, car wash, sports, uniform/clothes making, mangoes, avocadoes, onions and brick making Gold mining, beekeeping, buying and selling goats, fish farming, beef cattle, jua kali (washing vehicles), fruit Sigor 175,616 56197 53% farming (mangoes, oranges, lemon, paw paws), maize, baking, metal works, poultry keeping ( indigenous) and boda boda Beef production, improved Rift valley 73.2 83.9 17.4 10.2 animal production, sheep and goats production, beekeeping Baringo 133,189 42,620 35% and honey processing, maize East farming, sorghum production, acca production ( Gum Arabica) and eco- tourism Horticulture, brick making, beekeeping, dairy cattle production, ICT, poultry keeping, Irish potatoes Saboti 387,366 123,957 54.83% production, Passion fruit production, boda boda, matatu, flower farming and sweet potato production

Poultry keeping, sugarcane production, horticulture (onions, tomatoes, kales), Bungoma 408,598 130,751 52% tourism, dairy cattle production, tree nursery, brick making, fish farming and dressmaking

Beekeeping, horticulture, dairy farming, selling of timber, tree nursery, fish Mt. Elgon 172,377 55,160 56% farming, tree planting, poultry keeping, irish potatoes farming, boda boda, tourism and beans production.

7 Priority Value Chain Analysis Study in Selected Districts Kenya

Indigenous poultry, ICT, boda boda, brick making, cassava, fresh vegetables (leafy), fish Nyanza Siaya 493,326 100,668 58% farming, performing arts, and community based tourism, executive transport, and mango production. 79.8 89.4 7.1 1.8 Fresh vegetables production, banana production, pineapples production, South 159,049 50,895 66% indigenous poultry Mugirango production, stone carving, tree nursery and tree planting (afforestation) Milk production, beef trade, skin/leather trade , cloths Wajir South 130,070 41622 70% trade, vegetable production/ trade, beekeeping and honey production Simsim production and sale, milk production, hides/skin Mandera trade, livestock trade, mango *288,687 92380 86.3% East production and sale, beef trade, fodder production and sale Livestock (goat) production, North 6.4 29.5 93.4 71.1 processing and marketing, Eastern horticulture (fresh vegetable) Turkana *254,606 81,473 96.94% production and marketing, Central boda boda services, M-pesa Services, hotel/conference facilities and tree planting Livestock (goat) production, processing and marketing, fish production, processing and Turkana 72,441 marketing, irrigation along *226,379 96.14% South river banks, building and construction, weaving and basketry, Jua kali workshops and burial services Dairy cattle production, livestock (beef, skin and hooves) production, mango production, khat (Miraa) Garsen 96,664 30932 41% production, shops, boda (Tana Delta) boda, tailoring, matatu, Coast 65.6 88.2 29.6 10.0 M-Pesa, Café, entertainment- discos, videos, bars and water vendors Dairy cattle production, camel Bura(Tana production, boat production, 143,411 45892 84% River) chicken rearing, selling of cold drinks and barber shops Bee keeping, dairy cattle production, indigenous chicken production, tomatoes Igembe 48,920 production in green house, Eastern 152,878 58% 81.6 91.7 8.4 3.5 South fish farming, sports, carpentry, tailoring, driving, salon, bakery and potatoes production

Source: Statistics adapted from District Development plan (DDP), 2003 Kenya demographic and 8 health survey and the priority value chain study Priority Value Chain Analysis Study in Selected Districts Kenya

Chapter 2

Problems Confronting the Youth and Proposed Resolution Efforts

ccording to studies, it is estimated that on average the youth experience higher unemployment rates than adults. The recently released 2009 population and housing census report for Kenya indicates that out of about 14 million youth (15 – 35 years who compriseA about 36% of the population) only 35% are absorbed in the job market leaving about 65% jobless. Factors such as lack of work experience, information on job search and inadequate skills profile demanded in the labour market contribute to the high unemployment levels. Low levels of employment could also be associated with the lifestyle background of the youth, availability of opportunities in the immediate vicinity and a general supply of possibilities in the job market. Additionally every year, approximately 800,000 youth are released from educational institutions to the job market, while employment opportunities are very limited or not available (only 25% are employed), thereby compounding the problem (UNDP, 2009).

There is increased rural urban migration leading to illegal settlements (slums) that lack basic amenities. Settlement in slums is a risk factor even as it is further compounded byhigh levels of idleness, highly concentrated urban populations, economic decline, and increased perceptions of social and economic exclusion as well as gender inequalities leading to the youth and especially young men being susceptible to mobilization for political violence and engagements in acts of crime and violence.

The entire situation emanates from low and increasing un-availability of engagement opportunities as a derivative of a slowly opening economy. The Kenyan economy has largely not been effectively challenged to innovatively target progressive absorption of the population joining the job market on a regular basis, or grow to enhance such synchrony over time. In other words opportunities are not systematically derived and expunged to delimit growth of the multi-skilled though possibly inexperienced jobseekers.

2.1 Problem and justification

Youth unemployment resulting to idleness and subsequent deviant behavior leading to engagement in crime, violence, drug and substance abuse is a big challenge to Kenya thus calling for innovative strategies to address the vice. Opportunities for employment creation in Small and Medium Enterprises (SME’s) can be identified through value chain analyses. A value chain encompasses value transformation where inputs are ordered to generate preferred outputs in an organized manner.

Although primary products may be consumed in a raw state; transformation to secondary and even tertiary forms is feasible which can be widely explored as an effort to creating employment opportunities thus addressing youth unemployment. Many value addition options exist in the different value chains thus the need for identification ofthemost competitive chain. Exploration of the multiplicity and requirement of the value chain exposes engagement opportunities for the youth, hence the sole purpose of this study.

9 Priority Value Chain Analysis Study in Selected Districts Kenya

Micro and small enterprises will play a pivotal role in employment creation and improving livelihoods for the youth. This can be realized through identifying, analyzing, prioritizing and supporting key value chains from which opportunities could be deductively inferred. Value chain analyses is critical for the design of competitive strategies to enable all actors to anticipate and meet their specific roles in the chain, identify and take advantage of these opportunities, resolve structural and operational constraints and respond to changes in their functions. The multiplicity of stages a product could pass through along a value chain to the final finished form dictates the availability of options for youth engagements in the ensuing input-output systems.

2.2 Study objectives

The main objective of this study is to review existing reports, select a lead sub-sector for each constituency and identify the lead sub-sectors with potential to contribute to sustainable economic growth in Kenyan political constituencies through the value chain approach. The value chain analysis was critical for the design of the competitiveness strategy to enable actors to: a) Anticipate and meet specific roles within and along the chain b) Identify and take advantage of opportunities in the value chain c) Respond to changes in their chain specific functions

The specific objectives include: a) To review existing works and familiarize self with the industry, its market and business environment in which it operates as well as identifying sources for additional information (statistics on exports,/imports, local, regional and global trade figures etc); b) To lead a process of and identify the lead sub-sector in each of the focus regions by establishing a value based ranking of economic activities in each of the focus regions in order of contribution/engagement to the majority of households (rank by economic value); c) To establish a market share based comparative analysis for the key product sources and key market destinations (Localized, National, Regional and International Markets). d) To identify the value chain players and influencers (actors) including those who increase costs but not the value of the product and explain their roles and a SWOT Analysis Strength/ Weaknesses/ Opportunities/Threats) of the commodity market regime in Kenya, taking into consideration each section and player of the chain (i.e. physical infrastructure, logistics (such as customs procedures and facilities), technical barriers to trade (such as standards for product quality and testing, certification processes, etc), other supporting services, business/investment climate e) To carry out a value chain mapping and identify constraints and opportunities along selected sub-sector value chain; f) To design a plan to make the chain more competitive for both short and long-term intervention by: • Identifying appropriate BDS interventions (Services and Providers) required along the value chain and highlight BDS provision gaps (BDS Mapping) that require to be addressed to make each sub-sector vibrant; • Identifying and planning for strategies to overcome the constraints • Developing an action plan for implementation

10 Priority Value Chain Analysis Study in Selected Districts Kenya

It was critical to carry out a comprehensive study of the viable value chains to have a clear understanding of opportunities and constraints and develop appropriate upgrading strategies leading towards employment creation. Value chain analyses assisted in the identification of technological and skills gaps and recommended ways for the development of programs that promote youth engagement and subsequent improvement of their livelihoods. Value chain analyses enabled the identification of sources of raw materials, quantities and quality requirements, quality standards, consumer demands and preferences, markets and competition for the various commodities, products and services within and outside the constituency. This information was imperative for business development as the youth can identify the avenues they will engage in along the value chain.

Through value chain analyses, legal and regulatory framework for small and medium enterprises development were analyzed. This gave the opportunity to explore any legal constraints and subsequent policy recommendations to foster an enabling environment for business development while focusing on the youth. By mapping out the opportunities and constraints along the value chain and providing relevant information for taking advantages of the possibilities, the study confirmed that the youth enterprises can be initiated and profitably run in a sustainable manner.

The value chain analysis was critical for the design of a competitive strategy as the information produced enables actors including the youth to: anticipate and meet buyers’ demands, identify and take advantage of end-market opportunities, and respond to changes in market demand. For the identified and selected value chain, the study provides a better understanding of the actors involved, their characteristics, strengths, competitive and comparative advantages (where they exist) and the inefficiencies within the production and marketing systems (locally, regionally and globally) which could be amplified for youth employment. Upon successful implementation of the intervention strategies it is hoped that this program will be up-scaled and replicated in other constituencies.

2.3 Resolution mechanisms

The youth are known to be creative in the face of problems and have demonstrated an ability to contribute to the development processes and economic growth. Promoting their roles in leadership and channeling their energy, initiatives and resolve towards dealing with development challenge is key for progress. Engaging the youth positively can increase the general social well being and benefit to a given country’s economy, through stimulation and direction of entropy towards faster and better returns/ outputs.

Youth related problems are phenomenal the world over; with varied efforts being put in place to address them. Four Millennium Development Goals (MDGs) directly relate to the youth development index; a tool for measuring youth development, including goal 2 on universal primary education; goal 3 on gender equality, and women empowerment (ratio of girls to boys in secondary and tertiary education and ratio of literate females to males); goal 6 on combating HIV/AIDS, malaria, and other diseases and goal 7 on environmental sustainability. Achievement of the MDGs will critically depend on the extent and nature of involvement of the youth.

11 Priority Value Chain Analysis Study in Selected Districts Kenya

The international community has initiated many programmes to increase youth employment. Organizations such as USAID, UNDP, UNESCO, SNV, UNV, IFAP, AGRA and VSO among others are keen towards development of gainful employment for the youth. UNDP is currently implementing a Sub-Saharan Africa regional program for social cohesion and youth employment whose main focus is employment generation particularly for the youth, improved livelihood and social cohesion in line with priorities of the UNDP’s strategic plan 2008-2011. The International Federation of Agricultural Producers (IFAP) has organized youth into young farmers globally. The global IFAP young farmers committee initiated in the year 2000 articulates young farmers’ issues and organizes world congress for young farmers every three years. UNESCO strives to help empower young people, reaching out to them, responding to their expectations and views, and fostering useful and long lasting skills. They encourage young women and men to participate in UNESCO and its various networks and partner organizations so as to open up opportunities for dialogue. They foster partnerships between UNESCO and young people’s networks and organizations aimed at causing integration of youth concerns and issues into policy agendas of member states. The United Nations in collaboration with the International Labor Organization (ILO) has developed the Youth Employment Network which has come up with recommendations advising governments to incorporate broad based policies that enhance the capabilities of young people. Recommended areas for national action include employability, creating equal opportunities for men and women, entrepreneurship and employment creation.

There are many initiatives by the government and other actors geared towards alleviation of suffering among the Kenyan youth. Under the economic pillar of Kenya’s blue print Vision 2030, the value of agriculture, livestock and fisheries is projected to increase through an innovative, commercially oriented and modern sector which will contribute towards increased competitiveness and incomes for the producers (GoK, 2007). It also recognizes that young people today and in the future will be the principle stakeholders and beneficiaries of opportunities. Therefore issues affecting the youthful community should be fully integrated and harmonized into every aspect of public policy and across all ministries and government agencies. Under the vision, specific policies and interventions are factored for implementation to fully develop their potential as well as prepare and engage them in socio economic development of the country. Interventions for youth cover the following fundamental areas; building capacity and empowerment to equip youth and engage in productive activities, creating employment opportunities, providing the youth with necessary support such as; financial and market linkages, support initiatives that mould character, strengthening programmes to advance youth health and well being and giving the youth a voice to articulate their issues as well as participate in decision making.

Kenya established the Ministry of Youth Affairs in 2005 to address youth concerns in the country. The Ministry has four technical departments; National Youth Service, Youth Training, Youth Sports and one support department with two parastatals namely; Youth Enterprise Fund (YEF) and Youth Stadia. Under the youth training, the Ministry is establishing Youth Polytechnics to develop vocational training skills among the youth and envisages establishing at least one youth polytechnic at constituency level. The Kenya government through the Ministry of Youth Affairs has developed a national youth policy and established a national youth council. The policy addresses numerous challenges that the youth face and how to overcome them. The national youth policy also provides the framework for the integration of

12 Priority Value Chain Analysis Study in Selected Districts Kenya the youth in national development. It is being operationalized through the creation of the Youth Enterprise Fund administered by the Youth Enterprise Development Fund Board. YERP focuses on enterprise development to increase economic opportunities for and participation of youth in nation building. According to the Youth Enterprise Development Fund status report (2009), the fund aims at increasing access to capital by young entrepreneurs, providing business development services, facilitating linkages in supply chains, creating market opportunities locally and abroad for products and services for youth enterprises and facilitating creation of commercial infrastructure to support growth of youth businesses. Other ministries that have a mandate related to the youth include: The Ministry of Education with a responsibility towards education and vocational training; the Ministry of Health on youth health and HIV/ AIDS issues; Ministry of Information and Technology on ICT; Ministry of Labor on employment and the Ministry of State for Planning and Vision 2030 with a responsibility for population, sexual and reproductive health education and adolescent reproductive health. Others include nongovernmental organizations, faith based organizations and producer organizations like KENFAP and the private sector that also have youth related programs in relation to health, agriculture and education. Agenda 4 of Kenya’s National Accord and Reconciliation Act (2008) clearly articulates the provision of innovative recommendations for the creation of a conducive environment for progression in youth and human development and in economic prosperity.

To support development of the private sector, generate wealth and alleviate poverty in Kenya, the Ministry of industrialization with the assistance of the World Bank is implementing the Micro, Small and Medium Enterprises (MSME) competitiveness project through Public and Private sector partnerships (PPP). The main objective of the five year programme which started in 2005 was to increase growth and competitiveness of MSME’s. This is achieved by providing access to finance: strengthening enterprise skills and market linkages and improving the business environment. The youth will benefit from the culture of innovation, training, and opportunities for MSME’s (Jitihada, 2010). Ministry of Higher Education Science and Technology progressively has increased universities enrolment from 1% to 8.5% through initiating programmes and strategies including parallel degree programmes, E-learning, upgrading middle level institutions which enhance the education level of the youth and their business acumen.

Inspite of all the interventions, there still remains prospects for optimizing opportunities for youth employment. The youth are interested in tangible solutions, quick money and savvy technology which necessitates top- of-the -range solutions and innovations. One best intervention lies in the exploration of value chain based opportunities. UNDP therefore, sought consultancy services to identify, select and analyze value chains with the greatest potential to contribute to sustainable economic growth.

At the constituency levels, a good percentage of women and youth have been sensitized on the youth, women enterprise and other devolved funds and the process of accessing them. Programmes have been put in place to ensure that they are trained on the management of these funds for maximum benefits that will be sustainable. Active civil society movements are apparently operating in the constituencies though mostly relying on funding from donors.

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Chapter 3

Methodological Approach

3.1 The Evaluation Framework

ENFAP Services Limited (KSL) expressed interest to undertake priority value chain analysis in selected constituencies in Kenya and was successfully considered for the award of the same. After various communications, consultations and ensuing discussions, KSL Kpresented their proposed approach to UNDP which led to the awarding and signing of the contract. UNDP provided requisite literature which KSL used to undertake intensive review and produce a draft inception report. The draft inception report was discussed at a multi- stakeholder inception workshop where the initial thoughts and stakeholder discussions and inputs enabled finalization of the inception report. The same was presented to UNDP for approval. Data collection tools/instruments were developed for administration to focus group discussions at constituency level. Data collected at the constituency level was analyzed for consolidation of multiple outputs into case studies from each of the constituencies and comparative analyses of inter constituency outputs.

Deductive inferences of the value chain opportunities and follow-up conclusions from both primary and secondary data have been consolidated into this report. This report details value chain possibilities and exploitation approaches in each of the studied constituencies. The methodology utilised for the studies included: consolidation of facts through literature review; acquisition of constituency-based input through focus group discussions with the use of an interview guide and pre-discussion, identification and prioritization of lead value chains through pair wise ranking, actual value chain analyses and the ensuing identification of entrepreneurial options, articulation of those options and requisite reporting. These activities are discussed in detail below.

3.1.1 Scope of study The analysis was conducted in 24 selected political constituencies in Kenya. Twenty (20) constituencies were within the UNDP priority value chain programme. These include Kapenguria, Mt. Elgon, Saboti, Laikipia East, South Mugirango, Tetu, Bura, Garsen, Mandera East, Wajir South, Sigor, Turkana Central, Turkana South, Baringo East, Mukuruweini, Gichugu, Kandara, Mathira, Kieni and Igembe South.

Thereafter, an additional four constituencies under the Business Alliance Against Chronic Hunger (BAACH) namely Gatanga, Yatta, Siaya and Bungoma were incorporated into the study.

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Figure 1: Map of Kenya showing the areas of study

Key:

• Mukurweini Constituency: Ceramics and Rabbit Keeping • Turkana Central Constituency: Goat Production, processing and market- • Yatta Constituency: Poultry and Dairy Goat ing, Fish production • Gatanga Constituency: Talent academy, Holticulture High value/High Value • Turkana south constituency: Goat production, processing and marketing indigenous vegetables. value chain, Fresh Vegetable production and Marketing value chain • Kandara Constituency:avocado,Dairy cattle • Bungoma Constituency:Poultry,Dairy cattle • Gichugu constituency: Passion fruits, Rabbit Keeping • Siaya District constituency; fresh vegetables farming, poultry • Tetu Constituency: Rabbit Keeping, Tomatoes • Baringo east constituency: Bee keeping, Improved animal Production • Mathira constituency: Dairy Cattle,Holticulture • South Mugirango Constituency: Fresh Vegetables, Bananas • Kieni East Constituency: Fish farming, indigenous poultry • Garsen Constituency: Beef Cattle, Dairy Cattle • Laikipia East Constituency: Creative arts, Indigenous Poultry • Bura Constituency: Goat and Camel • Igembe south Constituency; Dairy Cattle Production. Indigenous poultry • Wajir South constituency: Milk Production, Vegetables • Kapenguria Constituency: Beef cattle. Poultry • Mandera east Constituency:Camel,Sheep and Goats • Sigor Constituency; Beef cattle, Poultry • Mt Elgon Constituency; Irish Potatoes, Dairy Cattle • Saboti Constituency: Irish Potatoes, Dairy cattle

Source: consultant’s own

3.1.2 Literature review Prior to the collection of primary data, Intensive literature review formed part of the initial exercise carried out by the consulting firm, KENFAP Services Ltd (KSL). The United Nations Development Program (UNDP) provided some of the documents which included reports and case studies that formed part of the literature review. Other sources of secondary data were documents such as the national plans, district development plans (DDPs) where applicable, district strategic plans, reports, books, vision 2030, and ongoing initiatives from the virtual

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and e-libraries collected from institutions such as the Kenya National Bureau of Statistics, Kenya Revenue Authority, Ken Invest, Ministry of Agriculture, Ministry of Trade, Ministry of Planning National Development and Vision 2030, Ministry of Industrialization, Ministry of Youth Affairs and Sports amongst others. The documents were critically read and reviewed to garner information and utilize the same to critique the primary data towards enhancement or nullification. Information was also gathered through direct institutional responses through consultation with relevant institutions including UNDP, EntWise consultancy, and African Development Initiative Kenya among others.

3.1.3 Development of the data collection tools Different tools to be used in the survey were developed including interview guide, observation guide and key informant interview guide. This involved the design of a sufficiently enriched interview guide to capture as much information as possible. The interview guide was sub- divided into five main areas of focus in order to address the core concerns of the select value chain, identify possibilities and flag out business opportunities. The priority value chains were evaluated with respect to the six generic stages including pre-inception/ production, production, post product management/ handling, transformation, marketing and consumption. Through this process, several possible engagement opportunities were identified by way of further enhancing the priority value chain. Those were later on interrogated to clearly articulate how engagement opportunities could be realized in view of entry, growth, sustainability and exit strategy. The instruments specifically focused on the following thematic interrogation: • Entry: The first part of the interview guide focused on identifying the entry strategy for each of the selected business cases. Some of the variables that were captured included gender involvement, role of the youth, policy issues, engagement possibilities and inception requirements. • Growth: The second part of the interview guide focused on skills required to realize the business cases. SWOT analysis along the different stages of the value chain was conducted to identify growth/development constraints and opportunities, some of which were further articulated to drive the business cases. • Sustainability: The discussion focused on market & market demand, tastes and preferences, information sources and availability, business development resources and scope engagement. This discussion further focused on other existing business ventures that the youth have been engaged in, negative and positive effects of engaging in such businesses and other factors related to the businesses. The competitive edge whether positive or negative was articulated with respect to the existing chains. • Exit strategy: Throughout the interrogation process, efforts were made to identify fall back mechanisms and outgrowth concerns with respect to the engagement opportunity. This enables the investors to shift gear or exit to some related forms of engagement. • General questions formed the last part of the interview guide. They captured variables such as demography, level & quality of education, income levels & sources, employment amongst others. The general questions were applicable to all the value chains and therefore the information captured was the same for the two identified priority value

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chains in each study area. This was useful in ascertaining the performances of the proposed interventions. An observation guide was developed to capture constituency information including livelihood systems and patterns, economic activities, physical features and infrastructure. A key informant guide was also developed to capture information relevant to validate that gathered from the focus group discussions. These targeted key informants deemed to be knowledgeable in the identified value chains and the constituencies.

3.1.4 Preparation for data collection Training for the enumerators was held to make it possible for the whole team to have a common and clear understanding of the tools and the methodology to be used. The participants were taken through the objectives of the study, concept of value chain analysis, pair wise ranking and the interview guide. The mode of administration of the interview guide was substantially discussed, to enable the paired interviewers articulate the expected data as they proceeded to different parts of the country.

The team appreciated that the constituencies had a diverse number of value chains and by extension possible income generating activities that could contribute to business and employment opportunities for the youth as well as to the economy of the constituency. Consequently, to objectively identify and select the lead value chains, the team developed a criterion that was used in the prioritization of the same. The criterion was discussed by the whole team and agreed upon to include the following: • Quick return on investment • Market availability • Growth potential • Availability of skills required and supportive services locally (labor and technology requirements) • Business and employment opportunities for the youth

The whole team consisting of 14 people participated in the pre-testing of the interview guide which was undertaken in Mukurweini constituency. The interview guide was later finalized with input from the pre testing exercise.

3.1.5 Distribution of responsibilities For effectiveness and ease of undertaking the assignment, the 24 constituencies were divided into 7 different clusters based on their regional uniformity in terms of agro ecological zones/ bio-geographical indicators, possible economic activities, relationships in terms of socio economic status, uniqueness of the region and cross sectional validation. Different members of the study team were assigned the clusters which included: Eastern, Central, Coast, Rift Valley, North Eastern Turkana and Cross Country. The cross country which had a variation of agro ecological zones was specifically designed as a crosscutting one to form a representative sample for the team leader. Cluster leaders were to be supported by research assistants who recorded data during the focus group discussions. Clustering of the 24 constituencies/ districts and apportionment of responsibility was as tabulated below. For each constituency visited, the focus group discussions were held in venues within the district headquarters on the dates also captured in the table below.

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Table 2: Schedule of field study

Cluster Constituency Date Venue Responsibility

Lead personnel Assistant Eastern / Mukurweini 10/6/2010 DC’s Boardroom, Mukurweini Dr. John Whole team Central Mutunga Yatta 12/7/2010 DC’s Boardroom, Yatta Prisca Githuka Nicholas Mutembei Gatanga 13/7/2010 DC’s Boardroom, Gatanga Kandara 14/7/2010 CDF’s Boardroom, Kandara Gichugu 15/7/2010 CDF’s Boardroom, Gichugu

Eastern / Tetu 16/7/2010 CDF’s Boardroom Peter Mwangi Nathan Central Gikunda Mathira 19/7/2010 CDF’s Boardroom, Karatina Kieni 20/7/2010 DC’s Boardroom, Chaka Laikipia East 21/7/2010 DC’s Boardroom, Nanyuki Igembe South 22/7/2010 CDF’s Boardroom, Maua Rift valley Kapenguria 16/8/2010 District Development Planning Prisca Githuka Grace Ronoh Boardroom, Kapenguria District Development Planning Sigor 17/8/2010 Boardroom, Sigor Saboti 18/8/2010 DC’s Boardroom, Kitale Mt. Elgon 19/8/2010 District Development Planning Boardroom, Kapsokwony Bungoma 20/8/2010 District Development Planning Boardroom, Bungoma South Cross Siaya 15/7/2010 District Business Service Centre Dr. John Delfina Kaaniru country (DBSC), Siaya Mutunga Baringo East 16/7/2010 DC’s Boaradroom, Chemoligot South 20/8/2010 Baringo East Mugirango CDF’s hall, Nyamarambe Coast Bura 13/7/2010 Bangale Primary School, Bangale Gorret Kamau Grace Ronoh Garsen 15/7/2010 CDF’s Office, Garsen North Wajir South 20/7/2010 CDF’s Office, Wajir Anita Msabeni Rose Memeu Eastern Mandera East 22/7/2010 Mandera East County Hall Turkana Turkana 12/8/2010 County council office, Lodwar town Kevin Kinusu Samuel Ariong Central 13/8/2010 County council office, Lodwar town Turkana South

Source: consultant’s own

3.1.6 Organization of the focus group and verification of the priority value chains The focus group discussions mainly comprised of officials/members of the Constituency Development Association (CDAs). The CDA’s are registered or in the process of registration and comprised members who are residents, associates and corporates interested in the social, economic and development goals in the constituency. Other participants in the FGD were officials from Ministry of Agriculture, Ministry of Livestock Development, Ministry of

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Cooperatives, youth representatives and officials from other relevant Ministries, departments and organizations working with youth in the constituency.

Respondents were taken through the background of the study, the definition and explanation of the value chain concept and value chain analysis process. Definitions of sector, sub-sector and value chain were also carefully expounded for due clarification and understanding. Respondents were then taken through the objectives of the study which includes identifying the 2 key lead sub-sectors in the constituency with the greatest potential to create business and employment opportunities for the youth.

Respondents were further taken through the aforementioned criterion which was utilized in identification and selection of the two lead subsectors. Using the criteria, the respondents were asked to propose sub-sectors that could be lead in line with the current economic activities in the constituency. The respondents came up with potential value chains in each of the 24 constituencies, which were listed on a flip chart and subjected to a critical evaluation.

Pair wise ranking methodology was utilized in the prioritization of the value chains whenever either the priorities earlier identified differed with their propositions or just as verification checks. Identified value chains were critically subjected to this methodology in line with the pre-determined criterion and consensus built on the top priorities.

3.2 Interrogation of the value chains During the discussions, the following generic value chain mapping was used to clearly bring out the issues in the value chains identified.

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Figure 2: Generic value chain mapping

Detailed value chain

Processing Pre-production Production Product handling Consumption Marketing •Advisory on •Production •Sorting and choice of /assembly cleaning Main outlet enterprise •management •Grading •Open air •Inputs and •Preparation & •Investment •Transportation market equipments (raw Drying •Value /distribution •Organized materials) Packaging • transformation •Raw product marketing Acquisition of Labeling/bran • • •Investments selling chains factors of ding Primary •Finished processed •Institutions production Storage • •Preparation for products selling •Retail sector Contractual Transport • • consumption •Registration/ obligation •Bulking trademark Incubation • •Market intelligence •Interpretation of service available research •Promotion information activities etc Advanced transformation • • Seconda •Standardization & •Canning & preservation ry certification

Association, chambers, institutions and consumer organizations –service providers

Government (line ministries) and public agencies – regulatory framework

Source: Consultant’s own

At the pre-production/inception stage, respondents discussed all the functions undertaken in preparation for production. These include advisory on choice of enterprise, Inputs and equipments (raw materials), acquisition of factors of production, inputs and equipment, contractual obligations, incubation and interpretation of available research information among others. At the production stage, respondents discussed the functions undertaken including production/assembly, management and Investment. In product handling, issues on sorting and cleaning, grading, preparation and drying, packaging, labeling/branding, storage, transport and bulking were analyzed. In marketing stage, information on transportation/distribution, raw product selling, finished processed products selling, registration/trademark, market intelligence services, promotional activities, standardization and certification were explored in details. Processing encompasses information on value transformation; investments as well as preparation for consumption among others were discussed. Finally, at the consumption stage, main market outlets including open air market, organized marketing chains, institutions and retail sectors were explored as well as product and consumer related matters.

The table below shows a summary of the identified potential value chains, the selected two lead value chains and the challenges faced during data collection in each of the 24 constituencies

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Table 3: Lead value chains and challenges faced during data collection

Constituency Comprehensive list of value Lead/ Priority Challenges faced during data collection chains as identified value chains

Mukurweini 1. Dairy cattle • Ceramics 1. Limited understanding of the value chain concept. 2. Bananas • Rabbit keeping 2. Certain logistical expectations by respondents were not 3. Avocadoes • ICT met. 4. Coffee 3. Perceptions on financial support (instant funds). It seemed 5. Fish farming as if the respondents particularly the youth were expecting 6. Rabbit keeping immediate financial support on the selected value chain, 7. Macadamia a position that was immediately clarified not only to this 8. Mangoes group but all the others. 9. Ceramics 4. Excitement in choice of certain value chains especially ICT 10. ICT though respondents lacked sufficient knowledge in them. 11. Talent academy 5. Low focus on other youth within the larger constituency. 12. Traditional museums The youth who participated in the activity were acting a lot 13. Tourism(Arboretum) more personal than collective. 14. Tree Nurseries 6. Representation of respondents was not balanced. Majority 15. Library services were youth leaders from different locations. Certain key informants were missing in the focus group discussions. Yatta 1. Horticulture • Poultry 1. The participants had the misconception that projects 2. Fish • Dairy and local related to the selected value chains would be implemented 3. Fruits farming goat immediately by UNDP. 4. Construction materials 2. The youth were ignorant and lacked information on the 5. Poultry existing opportunities for them. 6. Dairy goat 3. The youth were not fully represented in terms of numbers 7. Bee keeping and contribution. 8. Sports 9. Market cleaning 10. Tailoring 11. Hair dressing 12. Transport (boda boda)

Gatanga 1. Irish Potatoes • Talent academy 1. The youth representatives lacked appropriate knowledge 2. Fruits farming • Horticulture- and they were a bit passive during the discussion. 3. Livestock farming high value/ 2. Limited understanding of the available opportunities. 4. Rabbits tuber 3. Misconception where the participants expected immediate 5. Fish indigenous funding for the value chains picked. 6. Transport (boda boda) vegetables 7. Uniform making and (arrowroots, selling sweet potatoes) 8. Talent academy 9. Dog breeding 10. Horticulture- high value tuber vegetables e.g arrow roots, sweet potatoes) 11. Carwash 12. Guidance and Counseling 13. Bee keeping 14. Jua kali 15. Beauty 16. Avocado 17. Pig farming 18. Resource centre 19. Recording studio 20. Goat farming 21. Tree and fruit nursery 22. Molding

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Kandara 1. Poultry • Avocado 1. There was another meeting for the administrators that day 2. Catering • Dairy cattle as the President was touring the region, which delayed the 3. Pig farming starting time but all went well. 4. Tree nursery 2. Youth became impatient due to delay of the meeting. 5. Horticulture (tomato)/ 3. Some youth members were biased in support of the value green houses chains they had interest in without bearing in mind that 6. Dairy cattle they were representatives of the larger constituency. 7. SACCO 8. Avocado 9. Passion fruits 10. Bananas 11. Rabbit keeping 12. Dairy goats 13. Talents academy 14. Bakery 15. Bee keeping 16. Firewood 17. Cereals 18. Fish farming 19. Detergent and soaps 20. ICT 21. Tourist centers Gichugu 1. Rabbit keeping • Passion fruit 1. It came out clearly that the youth were marginalized with 2. Sericulture • Rabbit keeping respect to making important constituency decisions. The 3. Bee keeping CDA and other influential people impose ideas on them, 4. Cyber café which brought out heated debates between the groups 5. Boda boda during the session. 6. Dairy cattle 2. The perception that funds will be availed immediately to 7. Tomatoes start the selected value chains related projects. 8. French beans 9. Wimax tower 10. Fish farming 11. Poultry 12. Dairy goat 13. Floriculture 14. Strawberry 15. Passion fruits 16. Maize (green) 17. Pumpkin 18. Talents development and marketing 19. Building and construction/ bricks making 20. SACCO 21. Salon 22. Tree nursery Tetu 1. Horticulture- tomatoes • Rabbit keeping 1. Limited participation by the youth. 2. Dairy goats • Tomatoes 2. Low concentration levels. 3. Information 3. Lack of proper understanding of the value chain concept. Communication Technology (ICT) 4. Coffee 5. Fish Farming 6. Rabbit Keeping 7. Bee Keeping 8. Indigenous chicken 9. Sericulture-silk worm farming 10. Avocados

Mathira 1. Cabbage production • Dairy cattle 1. Limited participation by the youth. 2. Tree tomatoes • Horticulture- 2. Low concentration levels. 3. Dairy goats Fresh leafy 3. Lack of proper understanding of the value chain concept. 4. Dairy cattle vegetables ( 5. Rabbit keeping green houses) 6. Bananas 7. Fish farming 8. Green house enterprises - fresh leafy vegetables 9. ICT

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Kieni 1. Horticulture • Fish farming 1. Congestion at the interview venue. 2. ICT • Indigenous 2. Very high expectations by the participants. 3. Indigenous poultry poultry (Chicken) 4. Fish farming 5. Beef cattle production 6. Dairy cattle production 7. Bee keeping 8. Rabbit keeping 9. Dairy goat production 10. Sericulture Laikipia East 1. Dairy goat production • Creative arts 1. Limited participation by the youth 2. Rabbit keeping • Indigenous 2. Low concentration levels 3. Poultry (chicken) poultry 3. Lack of proper understanding of the value chain concept 4. Fish farming 5. Bee keeping 6. Creative arts 7. Camel milk 8. Aloe vera 9. Orch plant 10. Eco-tourism services 11. Sheep and goats (Shoats)

Igembe South 1. Honey value chain • Dairy cattle 1. The meeting started late, at around 1:30 pm. 2. Dairy cattle production production 2. Problems of communication with the CDA chairman. 3. Indigenous chicken • Indigenous 3. Limited participation by the youth. 4. Green houses poultry 4. Low concentration levels. 5. Fish farming 5. Lack of proper understanding of the value chain concept. 6. Tomatoes 7. Sports 8. Carpentry 9. Tailoring 10. Driving 11. Saloon 12. Bakery 13. Potatoes Kapenguria 1. Bee keeping. • Beef cattle and 1. Some of the youth were not well versed in the English 2. Jua kali (carpentry) goats language. This was countered by mixing both English and 3. Greenhouse (tomato and • Poultry Kiswahili languages during the discussions. onion farming) 2. Some of the youth were identifying more with the returns 4. Mushroom (monetary) than the other criterias under discussion. 5. Sand harvesting 6. Tree nursery 7. Beef cattle (trading) 8. Dairy cattle production 9. Poultry (indigenous and exotic 10. Arts theatre and sports 11. Maize (posho mill) 12. Goat production (local/ indigenous variety.) 13. Mineral water processing. 14. Hotel and food kiosks. 15. Charcoal burning 16. Herbalists (medicinal plants). 17. Motorcycle (boda boda) 18. ICT and computer services. 19. Car wash. 20. Sports. 21. Uniform/clothes making. 22. Mangoes, avocadoes 23. Onions. 24. Brick making

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Sigor 1. Gold mining • Beef cattle 1. Poor road network 2. Beekeeping • Local sheep and 2. Hot weather and therefore the participants were 3. Goats (buying and selling) goats requesting for water. 4. Fish farming 3. Limited understanding of the interrogation purpose since 5. Beef cattle they wanted us to identify another subsector after we had 6. Jua kali (washing vehicles) already prioritized and analyzed the two lead value chains. 7. Onions 8. Tomatoes 9. Fruits (Mangoes, oranges, lemon, paw paws) 10. Maize 11. Baking 12. Metal works 13. Bananas 14. Camel 15. Poultry ( indigenous) 16. Boda boda

Saboti 1. Horticulture • Irish potatoes • The meeting started late. 2. Brick making • Dairy cattle • The participants were very impatient since they had been 3. Maize informed that the exercise was a meeting and would take 4. Beans 2 hours only. They wanted us to complete the assignment 5. Beekeeping quickly. 6. Dairy cattle 7. ICT 8. Poultry 9. Irish potatoes 10. Oranges 11. Passion fruit 12. Boda boda 13. Matatu 14. Flower farming 15. Sweet potatoes

Mt. Elgon 1. Beekeeping • Irish potatoes • Misconception that we were developing a program for the 2. Horticulture • Poultry region. 3. Dairy farming • Dairy cattle • A few individuals were convinced that dairy cattle 4. Timber /tree nursery production should be a lead value chain despite the fact 5. Passion fruit that it was third in order of priority. This was resolved by 6. Fish farming interrogation of the dairy cattle value chain also. 7. Tree planting • Unbalanced gender representation –There was no female 8. Tea representation from the youth groups. 9. Poultry 10. Maize 11. Tomato 12. Irish potatoes 13. Boda boda 14. Onions 15. Tourism 16. Beans Bungoma 1. Poultry • Poultry • The meeting started late. • Dairy cattle • Misconception that we were developing a program for the 2. Sugarcane region. 3. Maize 4. Beans 5. Horticulture 6. Onions 7. Tomatoes 8. Kales 9. Tourism 10. Dairy cattle 11. Tree nursery 12. Brick making 13. Fish farming 14. Dressmaking 15. Beekeeping

24 Priority Value Chain Analysis Study in Selected Districts Kenya

Siaya 1. Indigenous poultry • Fresh vegetable 1 Fairly argumentative respondents thus time wastage in 2. ICT farming covering only the introduction. 3. Boda boda • Poultry 2 Politically influenced development initiatives work better. 4. Brick Making 3 Highly placed expectations 5. Cassava 4 Imagination that the whole interventions would start soon 6. Fresh vegetables (leafy) after. 7. Fish farming 8. Performing arts 9. Community based tourism 10. Executive transport 11. Mangoes

Baringo East 1. Beef production • Beekeeping 1. Very poor road network that even challenged the 2. Improved animal • Improved researchers. production animal 2. Late arrival of essential goods and information. 3. Sheep and goats production 3. Serious gender imbalance in the focus group discussion production (only one lady). 4. Beekeeping and honey 4. Over expectations on outcomes. processing 5. Long distances to the venue due to vastness of the 5. Maize farming constituency. 6. Sorghum production 6. Representation of the very local people fairly lacking. 7. Acca production ( Gum Arabica) 8. Eco- tourism South 1. Fresh vegetables • Fresh 1. Fairly adult- dominated interactions. Mugirango production vegetables 2. Lack of land for youth to engage in agriculture. 2. Bananas • Bananas 3. Mindset changing a bit difficult. 3. Pineapples 4. The ratio of women to men among the participants was 4. Indigenous poultry wanting. 5. Stone carving 5. The participants were not sure of some of the details 6. Tree nursery required especially supply of agricultural information within 7. Tree planting ( the area. afforestation) 6. Lack of enthusiasm in answering of questions.

Garsen 1. Dairy • Beef cattle 1. Poor roads. 2. Livestock (beef, skin and • Dairy cattle 2. Initial disagreement on logistics which was later cleared. hooves) 3. Mangoes 4. Khat (Miraa) 5. Shops 6. Boda boda 7. Tailoring 8. Matatu 9. M-Pesa 10. Café 11. Entertainment-discos, videos, bars, water vendors, Bura 1. Cows (Dairy) production • Goat 1. Language barriers. An interpreter was used to translate 2. Camel production • Camel the questions which were administered through Swahili to 3. Goat production Somali for the participants to understand. 4. Chicken rearing 2. Confusion on the venue. I.e. two meetings arranged on 5. Selling of cold drinks same day at Bangale and Bura town. This was countered by 6. Barber shops carrying out the meeting in Bangale and going to Bura for verification from key informants. 3. Mode of transport was very complicated. There was no direct means from Bura to Garsen. The researchers had to go to Garissa, then Hola then Garsen.

25 Priority Value Chain Analysis Study in Selected Districts Kenya

Wajir South 1. Milk production • Milk production 1. Communication barrier, not well versed in English and 2. Beef trade • Vegetables Kiswahili. 3. Skin/leather trade 2. Limited understanding of the value chain model. 4. Cloths trade 3. Cultural prejudice to all activities identified and discussed. 5. Vegetable production/ 4. Limited concentration span – heat, and preparing for lunch trade time prayers. 6. Beekeeping and honey 5. Perceptions about financial support, that is, they expected production instant funds. 6. Limited knowledge on the various value chains that they identified. 7. Unbalanced gender representation -2 women invited to the discussion. 8. Participation affected by other logistical interests. 9. Unsettled consultations with low level of participation at times. Mandera East 1. Simsim production and • Camel 1. Communication barrier, not well versed in English and sale • Sheep and Kiswahili. 2. Milk production Goats 2. Limited understanding of the value chain model. 3. Hides/skin trade 3. Limited concentration span. 4. Livestock trade 4. Perceptions about financial support, that is, they expected 5. Mango production and instant funds. sale 5. Limited knowledge on the various value chains that they 6. Beef trade identified. 7. Fodder production and 6. Unbalanced gender presentation, with only one woman sale invited to the discussion. Turkana South 1. Livestock (Goat) • Goat 1. Interruptions when the consultation happened to take long. production, processing production, 2. Harsh hot temperatures; uncomfortable for long meetings. and marketing processing and 2. Horticulture (fresh marketing Value vegetable ) production Chain and marketing • Fresh Vegetable 3. Boda Boda services production and 4. M-pesa Services marketing Value 5. Hotel/Conference facilities Chain 6. Tree planting Turkana Central 1. Livestock (goat) • Goat 1. Interruptions when the consultation happened to take long. production, processing production, 2. Harsh hot temperatures; uncomfortable for long meetings. and marketing processing and 2. Fish production, marketing processing and marketing • Fish production 3. Irrigation along river banks and processing 4. Building and construction 5. Weaving and basketry 6. Jua Kali work shops 7. Burial services

Source: consultant’s own

26 Priority Value Chain Analysis Study in Selected Districts Kenya

Chapter 4

The Value Chain Analyses Results and Discussions

alue chain analysis is undertaken to clearly articulate the various actors/ operators and their functions at micro; and supporters at meso and macro levels. Using these, the study has hived out all the possibilities in terms of opportunities and constrains for the Vconstituency specific value chains. A value chain map was used to best demonstrate these possibilities.

4.1 The generic value chain mapping outcomes Six (6) specific value chain stages were carefully mapped out including; pre-inception/ production, production, post production handling, transformation, marketing and consumption. It becomes important to note that products could be marketed soon after production, meaning that they could bypass the transformation stage. This is predicted to be the African agricultural development demise where, by and large, products are mainly sold in their raw form to date. For producers, consumption may also occur soon after harvest meaning that both transformation and marketing functions are bypassed. On the other hand, not all products have special (unique) post handling operations meaning that even part of handling may be avoided. During the value chain mapping, extra caution was taken to ensure that the entire value chain stages were undertaken, some of which yielded information that was not so common to the community of focus. The generic value chain mapping was conducted at the field level as reported in chapter 3, and the outcomes in form and content described below.

Pre-production/inception entailing pre-investment or pre- initiation value chain stage was conducted for the multiplicity of the value chains in the 24 focal research areas. Being preparatory in nature, the pre- production stage encompasses all the operations that set the stage for inception to occur. Outcomes of this stage analyses included but not necessarily limited to the acquisition of factors of production and putting them into the utmost levels of operational readiness for production/enterprise initiation. Some business cases or engagement options were derived at this stage though not solely for the stage as many adopted a cross- stage approach in their content meaning that cross functional attributes were apparent.

The production process that encompasses ordering and utilization of productive resources to garner results was analyzed through the chain approach. Through such a process, care must be taken to optimize outputs, failure to which, results may fall short of expectations. Results indicate that different event products and service lines require a multiplicity of production actions, which could be accumulatively regarded as crucial to the raw material production. Based on the fact that priority value chain was integrated through the study, unlocking the production potential leads to yield improvement under the agricultural domain value chains. Several challenges as identified required alleviation for benefit optimization in improving outputs and outcomes. Several business cases (see Chapter 5) were clear derivatives of the production process constraint redressing mechanisms; in as far as amplification of the concerned value chain was the primary concern.

Post production management/handling forms the third and equally important value chain stage. If not properly handled, losses ranging from 25% to 75% of products depending on the nature and extent of protection may be incurred, especially for the highly perishable

27 Priority Value Chain Analysis Study in Selected Districts Kenya

agricultural goods. Analytical work yielded a few business cases of post production handling nature, the sole problem being the investment costs and the extent/state of the country’s development.

Processing/transformational attributes were quite preferred as engagement options’ developed stage during the value chain analyses processes probably because it is largely not significantly ventured into. To say the least, transformation has not been much exploited leading to lots of produce existing and trading/exchanging in raw form. It is no wonder that the migration from agriculture has not really occurred in the African context due toslow transformation of the African agricultural products. The youth were enthusiastic thatthe analytical process could open the window of opportunity for off farm alternative engagement as realized in most constituencies. With most of the business cases deriving their focus on transformation, there is therefore great demand for more engagement forms in the domain.

The market function may occur at the raw produce or the finished/transformed produce level. However, the function has its intricacies in both structure ad functions if survivability was to be premised. Moreover, this forms the bulk of the chain based promotion where chain amplification will majorly rely on the uptake of products and services from the production process. The market (commodity exchange) functions could alone cause/make a difference in whatever is to happen to a value chain in view of the impact to a given community. With the demand and supply dependence on equilibrium market prices, marketing can make or break a given value chain. Results indicate that some business venturing occur in the function of the commodity exchange at various conceptual levels.

Consumption has not really come out as a strong driver towards value chain promotion apart from locating and sustaining a given outlet, which could be regarded as a market function. However, many consumption promoting outlets could be set up to stimulate demand for specific products through increased consumption of the same. Only a few business cases centered on consumption pass despite a variety of combinations being apparently feasible. The product differentiation can stimulate consumption and diversification of product outlet. The focus on consumer tastes and preferences can stimulate off take of chain based products thus stimulating the chain activities.

Table 4: Comprehensive value chain analysis

Value chain` Constituency Comprehensive value chain analysis Business case Pre-production Production Product handling Transformation Marketing and Consumption trading Rabbit Mukurweini formation Rabbit sorting , grading establishment Contracting Product Rearing and selling keeping - Gichugu of slaughter husbandry and valuation of collection and Promotion awareness of breeding stock groups practices slaughter unit (value Tetu packaging in and marketing Establishment and entering into (feeding, cages slaughtering of breeding of rabbit operationalisation Contracting watering stock, mature products) of slaughter slab disease control, wool rabbit skill Housing Product enhancement rabbits, rabbit Market Establishment of breeding etc) products (pelt, penetration Acquisition of Promotion for inspection promotion and Adherence unit selling meat, minced Household consumer units in Breeding stock to contracts packaging/ products, level skill urban centres Inputs (feeds requirements canning canned enhancement products, and Drugs) Market mincing (cooking Rabbit urine/ Technical intelligence and packing lessons, recipe droppings for package information (sausage) promotion, fertilizer) Cost benefit rabbit parts packaging Promotion Transportation analysis branding and for breeding Market survey labeling purposes Product Promotion

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Value chain` Constituency Comprehensive value chain analysis Business case Pre-production Production Product handling Transformation Marketing and Consumption trading Talent Gatanga Consolidate Design and Categorization Generation Develop Sensitization Establishment academy/ Laikipia East investment construction of trade marking of packaged recognition and of products - of a talent creative group the requisite and copy right products – reward systems local media, development arts Identification infrastructure reserve (DVDs, VCDs, ( Accreditation, roadshows and promotion and Need Acquisition of CDs, VHS, etc) certification Identify and centre – training, categorization identification product specific Sorting, etc) sensitize recording, documentaries. of the Develop intellectual branding, promote and target group investment property rights labeling popularize (capture target Theatric activities, product artifacts packages/skills curricula (IPR) Develop Performing audience) groups and Acquisition Preparation of Innovate skills and Continuously of relevant appropriate competencies theatres (TVs, interest niche the different travelling business products storage and (talents) market intelligence retrieval theatres, Training Produce concerts) Develop a mechanisms documentaries and skill for products – promote and bankable enhancement business plan(s) catalogues and popularize – talent product libraries documentary Consolidate search and (CDs, VHS, etc) off take and realize development factors of (auditions) generate and production distribute Management promotional Site selection and quality materials – and planning control brochures etc

Chicken Yatta Formation Chicken Disaggregate Slaughtering Promotion Product Establishment of :( Both Kapenguria of breeding, husbandry and differentiate Inspection to and marketing awareness a one stop shop exotic and hatchery and practices products (eggs, of chicken comprising of a Mt. Elgon ensure quality Market indigenous) marketing (feeding, meat, live products penetration hatchery, breeder Bungoma groups watering chicken, manure, Packaging (advertising) and collection disease control, fish feeds) Market outlets centre Siaya Acquisition Grading and trademark breeding etc) branding – eating of Breeding Collection, Transportation houses, Establishment of a stock, Inputs Adherence grading, separating processing plant Indigenous Kieni (e.g. feeds and to contracts weighing, into parts Establish appropriate chicken Laikipia East Drugs, , feeders) requirements sorting/grading (drumsticks, and storage of wings, neck, Distribution Igembe South Technical Market channels package intelligence the products back) (eggs, chicks, etc) (advisory information product Contracting services) Change of Enhance quality diversification- Marketing entering into mindset from control of the sausages, Contracting subsistence to products minced chicken, commercial Establish cold marinated Prepare chicken bankable chicken storage business plans production Packing canning (enhance production of Market survey commercial pillows and production Establishment decorations from of indigenous of hatchery/ feathers collection breeds) centre and breeding unit

29 Priority Value Chain Analysis Study in Selected Districts Kenya

Value chain` Constituency Comprehensive value chain analysis Business case Pre-production Production Product handling Transformation Marketing and Consumption trading Camel (milk) Bura Zoning Promote Range Establishment Promote Product Enhance Establishment of Mandera East production improvement of cold storage indigenous differentiation product a milk processing areas initiatives facilities at processing and promotion knowledge and promotion Registration of (increase collection centres technologies Create niche Create centre producers pasture Observe (e.g. milk market and awareness on capacities) fermentation Contracting quality control Promote local uniqueness Lobby for requirements Promote consumption of the camel Identification appropriate Enhance product Product grading, (buying and milk (health and citing legislation of packaging, selling) in benefits) of collection transportation to camel milk available outlets labeling and urban centers Widen the centers branding of production Establishment Product primary distribution Acquisition of collection Establish modern zones mechanism of transport grading and centers - Lay packaging processing Formation of camel mechanisms out minimum facilities at of marketing milk and milk hygiene Enhance product the secondary associations/ products requirements handling skills collection cooperatives Establish and Innovate centers – to promote agree on product handling Promote camel milk enforcement equipments Production of consumption mechanisms for producers long shelf life based on its - delivery and collection milk unique qualities centre itself timings, quality, Promote Develop a handling e.g. aluminum community containers production of Set up other products based camel minimum Invest in – cheese, butter, milk promotion standards and Expanded scale ghee, powdered and marketing infrastructure for preservation milk strategy for clean milk capacity – intake accessible and affordable to producers

Dairy cattle Kandara Growing fodder Dairy cattle Establishing Milk processing Establish Establish Establishment and Mathira and pastures for Management collection centers – pasteurization efficient appropriate operationalisation the animals practices and transportation distribution of an animal feeds Igembe South Clean milk Acquisition of (Feeding, handling, homogenization, systems channels factory Saboti appropriate watering, collection and Product Distribution Product Establishment of disease and Mt. Elgon milk handling storage diversification Trademark knowledge a milk processing equipment - – pest control) - pasteurized plant Bungoma cold storage Contracting stainless steel Good Milking (coolers) milk, fermented, Garsen Construction of practices flavored, cream, Cooperatives yoghurt, ghee, Wajir South Housing for the Milk filtration, Market cheese, powder cattle cooling and intelligence storage milk, UHT Dairy goat AI services Drugs and medication Yatta Commercial feeds and feed supplements Availability of sufficient water Registration and herd book keeping (STUD book)

30 Priority Value Chain Analysis Study in Selected Districts Kenya

Value chain` Constituency Comprehensive value chain analysis Business case Pre-production Production Product handling Transformation Marketing and Consumption trading Local sheep Sigor Information on Acquisition of Establishment of Establishment Promotion Promotion Buying , fattening and goats Mandera East breeding and breeding stock auction yards – of a SHOATS of diversified of diversified and selling of local breeding stock and Breeding sorting, grading abattoir products from shoats sheep and goats and pricing primary and products Beef Cattle Formation of Animal housing Inspection and Establishment of Kapenguria producer and Branding based certification secondary availability a meat processing Animal processing at local and Sigor marketing Management on rules of origin Production and plant (abattoir) groups Market national levels Garsen practices Establishment of Differentiation of Establishment of a Information (Feeding, hoarding grounds various products intelligence s tannery on available watering, (fattening, and pricing Branding Local goats Establishment of Yatta Veterinary Rearing, disease control regimes primary only Cold storage bone meal plant Bura services (pest disease and etc) processing – transport and disease pest control meat and skin Turkana Transportation to system to large control, drugs) etc) market centre products, horns, urban centers South hoofs and bones, Information on Animal Establishment Turkana requirements branding/ blood and bone Improved Central of appropriate for Supportive tattooing for Secondary level distribution animal Kapenguria infrastructure identification processing along production channels Information on Registration specialized lines– Credit services and herd book tanning, meat Baringo East keeping (STUD canning, glue book) production and blood and bone Range meal, leather (for improvement livestock feed Provision of processing) extension and Tertiary level veterinary processing – services (Public shoes, belts, and private) bags, Awareness creation on differentiated market channels Provision of value addition information

Fruit Assess the Establishment Establish Develop Promotion for Market Establishing production feasibility of and nurturing collection centres multipurpose specific fruit penetration multipurpose fruit and fruit production of fruit tree (multipurpose) processing unit type marketing processing plant Kandara Sensitization processing Formation nurseries Develop Product specific Product on whole Avocado Gichugu of producer Conduct collection diversification promotion fruits Passion fruit groups relevant crop framework and as per the and marketing consumption husbandry procedures commodity (primary and South Coach producer Product practices (Land secondary Mugirango groups on Development Avocado – awareness – Bananas husbandry, preparation, of Packing primary: oil, products) new products marketing, planting, and packaging juice, secondary: transportation sensitization Tetu gross/net weeding, crop materials(for soap and distribution among local Tomatoes margins protection, transportation) channels and urban harvesting etc) Passion – Site selection Observe the primary: juice, branding and populations and planning Pay particular standards secondary: labeling Establishment attention to and control ( adding flavor of market Awareness fruit fly control Product building on sorting, grading, banana – patenting (IPR) outlets credit sources Identify outlets weighting, primary: juice, Enter into for the variety pricing) puree, flour, contractual Information of products on appropriate crisps secondary: agreements husbandry Enter into cakes, wine, with (seedling base necessary ingredients for processors to or top working, contractual baby formula supply puree/ pest and agreements food pulp, and disease control) Establish tomato – concentrates Information necessary primary: puree, on sources linkages and paste, juice, of planting synergies with soup, sauce, materials and appropriate canned inputs stakeholders Information initiate and on service conducting providers and relevant markets consultations among group members

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Figure 3: Value chain mapping of the chicken value chain

Pre- production Production Product handling Processing Marketing Consumption

Formation of breeding, Chicken husbandry Slaughtering Product Promotion and Product hatchery and marketing groups practices (feeding, Inspection to diversification- marketing of awareness Acquisition of breeding stock, watering disease ensure quality sausages, minced chicken products inputs (e.g. feeds and drugs, control, breeding Packaging chicken, marinated (advertising) Market feeders) Adherence to contracts Grading and chicken Trademark penetration Technical package (advisory Disaggregate and branding Canning Transportation services) differentiate products Separating into Production of pillows Establish Market outlets – Entering into contract (eggs, meat, live parts (drumsticks, and decorations from appropriate eating houses Prepare bankable business chicken, manure, fish wings, neck, back) feathers Distribution plans feeds) channels Market survey Collection, weighing, Establishment of sorting/grading and hatchery/collection centre and storage of the products breeding unit requirements (eggs, chicks, etc) Market intelligence information Enhance quality control Change of mindset from of the products subsistence to commercial Establish cold storage chicken produ ction Packing

Slaughter slab Vaccination Outlet shops Suppliers Provision of Packaging/ Actual poultry feeds production branding Transportation

Animal feed Hoteliers stockiest/ Poultry farmers

Consumers Hardware shops Butchers Supermarkets and timber marts Poultry Brokers farmers Breeding Open air market

Incubation of Setting up a chicks, breeding unit Brooding chicks

MOLD, KARI MOLD, MOA, NGOs, FO DVM, PHO Consumer NGOs organization/

Local Authority, Public Health Officers, Ministry Of Livestock Development, NEMA, KEBS

Source: Consultant’s own Legend

Function Operators Service Government Constraints and Consumer provider opportunities

Macro Macro Meso Level Level Level

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Figure 4: Price mapping of the chicken value chain At farm gate at wholesale market at retail market Production Product Marketing handling

Sales price 300 800 1,080 per chicken Supply in Kshs

Margin per 100 200 chicken in Kshs

Cost of Transport- Cooking, production – Storage- license, 200 300 employees, handling, etc

Share of 9% 19% end prices 9%

Note: The sales price per chicken is the price at which the chicken/ products are sold at each level.

The margin is the difference between the selling price and the cost price (the selling price at the previous level) plus the various costs incurred at that stage. The percentages are the ratio of the margin to the retail price. It shows the income distribution along the value chain.

Source: consultant’s own

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Figure 6: Chicken BDS mapping

Pre- intervention Project activities Outputs Outcomes Impacts activities

• Select the value Facilitate integration Market Access: Increase chain into value chains in sustainable market • Analyze 1) Form / link producer outlets for chicken constraints and groups with lead firms; producers opportunities in promote inter-firm Training and Extension: Value chain Performance: value chain collaboration and Increase in provision of • Improved • Increased Growth in sales, • Identify priority strategic alliances commercially viable household participation of productivity, and solutions / (vertical and horizontal extension (e.g. training, incomes for smallholders in trade in overall Services and linkages) technical assistance, chicken high-value chicken value other needs for 2) Upgrade through advisory services, smallholders portions of chain the chicken value promotion of information services, and • Increased chicken value Firm-level chain commercially viable new technologies) to remunerative chains / markets Performance: • Design business services (private chicken producers employment for • Improved Increased sales, interventions and extension agents, agro Input Supply: Increase in the youth. competitiveness productivity, and compete & award vets stockist, embedded commercially viable in the entire value tenders. services by lead firms, provision of inputs (e.g. trade for chain training agro vets supplies). participating • Sustainable 3) Improve enabling smallholders in upgrading of Environment, especially chicken SMEs. end markets

Physical, Social & Economic Context

Source: Consultant’s own Source: consultant’s own

34 Priority Value Chain Analysis Study in Selected Districts Kenya

Value chain` Constituency Comprehensive value chain analysis Business case Pre-production Production Product handling Transformation Marketing and Consumption trading Ceramics Mukurweini Identify and Operationalise Identify, Establish Promote Identify and Establishment (clay) zone ceramics the bankable categorize and processing and market target niche of a ceramics productive business plan differentiate factory within differentiated markets with processing areas Develop various products production area clay products specifically and marketing Develop a cyclical based on quality Establish (pots, energy branded infrastructure a detailed progressive Develop storage cascaded saving jikos, products bankable BP clay excavation infrastructure for products flower pots) Establish a for ceramic framework the differentiated processing order Promote distribution production/ and land clay products Establish and market system to refining and reclamation Apply product specific differentiated entrench the products Conduct a Geographical generation lines ceramics market (crockery, products thorough indicated Establish value Promotion of Conduct study on the protection (vases, tiles, specifically addition unit crockery) detailed site/ rejuvenation system based on targeted area planning mechanism of (Patenting) differentiated Acquire market consumption to establish excavated land Design an clay raw product appropriate Apply the appropriately materials information position of quality efficient Refine and sell Embark on processing standards to transport promotional plant differentiated price different mechanism clay products activity on Conduct EIA ceramics Institute an mindset and SIA products Establish change on local attractive institution for Sensitize (pricing package products, origin mechanisms) ceramics value and value community commensurate addition especially Manage the to the Establish/ land owners labour force as benefits(from conduct (ceramic zones appropriate the clay) branded ) on usefulness Develop transportation and extent of a waste system extraction/ management excavation system of the clay (ceramic content) Negotiate and realize long term extraction mechanisms (contracts) Establish the investment entity (youth, Constituency?)

Fish farming Kieni Information on FF-Excavation Sorting, grading, Product Scaling and Market Realize and weighting and Fishing Turkana Inputs – fish and diversification – gutting to outlets- fast managing fish pricing Central gear ( fishing Construction of Fillets enhance foods, processing plant nets, boats, the fish ponds Preservation(Cold product Fish bones Product FF-fish feed feeds, stock) FF-stocking of storage/ smoking/ marketability knowledge production and sun drying) and Mgongo Site the fingerlings Wazi(filleting Specialized Promote distribution identification FF-Routine bi-product - fish transport various and selection management meal production, systems cooking for processing practices buttons Packaging and methods – plant (feeding, Canned fish branding of deep frying, construction. control of products roasting, pests, security) Medical products boiling - supplements, Develop FF- protein (stitching Communication Design and Management thread) infrastructure of to support planning of Training and skill the processing transportation timely supply aspects of enhancement and delivery plant for processing by fingerlings Establish FF-formation (specialized) the constituents of fish farming Appropriate groups Fishing distribution FF-Harvesting channels and FF-site marketing identification of units pond location FF-designing and planning FF-Information on sources of feeds, fingerlings FF-Advisory services on fish ponds/farming

35 Priority Value Chain Analysis Study in Selected Districts Kenya

Value chain` Constituency Comprehensive value chain analysis Business case Pre-production Production Product handling Transformation Marketing and Consumption trading Beekeeping Baringo East Inception study Popularize the Establishment Establishment Packaging, encourage Modern honey on appropriate modern hive of collection of a modern Branding, local honey production and technology and technology centers processing plant standardization consumption processing equipment Purpose to Capacity Building at Chemoligot in and quality Production of Decision on progressively on honey Nginyang control appropriate modern honey Break socio- harvesting Process honey Product modern hives production cultural barriers (entrenchment into different patenting Formation Practical of practical skills) products – of producer training on hive Establish product primary: crude groups handling quality and honey, refined honey, wax, Reforestation Acquisition of standardization procedures propolis, royal and planting appropriate jelly, venom of appropriate hives and ensure forage trees adherence to the Secondary: Establishment same medicinal Identify sources of apiaries Adoption of products, of hives, Organization candles, polish, equipment, appropriate (sequencing) product handling syrup etc Site selection of husbandry and packaging and decisions practices procedures on location Establishment Sorting, grading of Group and pricing of dialogue crude honey sessions

Fresh Mathira Site selection Establishment Establish Drying or Promotion Processing of Seed potato vegetables South and planning for and nurturing collection and desiccation for specific the vegetables production Mugirango production of of seedling information To enhance and marketing of Buying and fresh vegetables nurseries centre vegetables Siaya promote milling selling of the Processing plant Business plan- Conduct Develop plant (Tubers) specific Product vegetables in Wajir South (for value addition cost benefit relevant crop collection Product promotion bulk of potatoes-chips Turkana analysis husbandry framework and diversification- and marketing South practices (Land procedures (primary and Establishment and Formation vegetables operationalization of producer preparation, Development -dried ,fresh and secondary Indigenous of fresh vegetable groups planting, of Packing blenched(semi products) vegetables/ Gatanga promotion centre weeding, crop and packaging cooked) canned transportation tubers Coach producer protection, Establishment of groups on materials(for vegetables and distribution Irish crop rotation, cold storage and Saboti husbandry, transportation) Tubers-Flour channels potatoes spraying collection centre Mt. Elgon marketing, harvesting etc) Observe the porridge/baking, branding and gross/net standards Baby food labeling Identify outlets margins and control ( formula, Crisps Product for the variety sorting, grading, chips soaps Identification of products patenting (IPR) and choice of weighting, superior inputs Enter into pricing) necessary Establish Marketing contractual survey appropriate agreements storage facilities Determination Establish (cold storage) of source necessary of farm linkages and input(fertilizers, synergies with pesticide appropriate sprayer, jembe stakeholders etc) Information on appropriate initiate and husbandry conducting relevant Awareness consultations building on among group credit sources members Identification of appropriate irrigation/water harvesting technologies Identify sources, information and technology of certified/ clean seeds production(Irish potatoes)

36 Priority Value Chain Analysis Study in Selected Districts Kenya

4.2 Detailed presentation of the value chain clusters:

Value chain analyses yielded results on the basis of the chain enterprise of choice, the specificity and peculiarity to the geographical and agro-ecological locality, and the extent to which a given enterprise (value chain) is amplified (common and developed) in the given region (constituency/district). Only a few of the identified priority value chains appeared singly and/or uniquely alone (viz beekeeping in Baringo East and ceramics in Mukurweini). Within the 24 constituencies/districts, several value chains were prioritized in two constituencies (viz talent academy in Gatanga and Laikipia East, camel milk production and processing in Bura and Mandera East and Fish farming/fishing in Kieni East and Turkana Central respectively). All the rest of the value chains appeared in multiplicity of other constituencies. The latter informed the study team to adopt some cluster approach to put together those value chains which share certain major characteristics. Through this process, eleven (11) clusters were derived as follows:

• Rabbit production, processing and marketing • Talent academy and creative arts • Chicken (indigenous and exotic) production, product processing and marketing • Camel milk production, processing and marketing • Dairy cattle and goat production, milk processing and marketing • Beef, chevon, mutton production, processing and marketing • Fruit production, processing and marketing • Ceramic materials extraction, production of ceramics and marketing • Fish farming and fishing, product processing and marketing • Honey production, processing and marketing • Fresh vegetable and tubers production, processing and marketing

Each of the value chain was analyzed at the constituency (20 in number) or the district (4 in number) level. To consolidate the immense information gathered through the process and to capture an acceptable level of detail, several value chains were clustered together. Some information may have been assumed at the generalized presentation version which could be extracted from the individual constituency reports where necessary, availed by the KENFAP Services Limited study crew. In other words, the constituency based reports are further enhanced in form and content, while this particular combined version bears the elements in their summarized version.

4.3 Engagement options or business cases The value chain analyses yielded several business possibilities from the various stages as identified in the form of constraints resolution mechanisms or uptake of opportunities. Each possibility was unique in its own fashion and specifically targeted a certain value chain stage or a multiplicity of stages. The cases were later on clustered in view of the commonality factor with regard to those cases that are apparent in several value chains. Although specificities and peculiarities can not be completely assumed, broad overview and categorization was adopted to enhance the business case clustering. These cases are presented in the table below:

37 Priority Value Chain Analysis Study in Selected Districts Kenya

Table 5: Specific value chain based engagement options/business cases/entrepreneurial opportunities

Value chain District/ constituency Business/entrepreneurial opportunity • Rabbit production, processing and • Mukurweini • Raising and selling of breeding stock marketing • Gichugu • Establishment and operationalization of • Tetu slaughter slabs • Talent Academy / creative arts • Gatanga • Establishment of a talent development and • Laikipia East promotion centre • Acquisition of tools for Production (recording, documentaries and theatric activities) • Chicken production, processing • Yatta • Establishment of a one-stop- shop and marketing • Kapenguria comprising of a hatchery, brooder, chicken • Mt. Elgon collection centres and slaughter slab • Siaya • Kieni • Igembe South • Bungoma • Laikipia East • Camel milk production, processing • Bura • Establishment of a milk processing and and marketing • Mandera East promotion centre

• Dairy cattle and goat production, • Kandara • Establishment and management of a milk processing and marketing • Mathira processing plant • Igembe South • Establishment and operationalization of an • Saboti animal feeds factory • Mt. Elgon • Bungoma • Garsen • Wajir South • Yatta • Beef, Chevon and Mutton • Sigor • Buying, fattening and selling of stock production, processing and • Mandera East • Establishment of a meat, hide and skins and marketing • Kapenguria related processing plant • Garsen • Yatta • Bura • Turkana South • Turkana Central • Baringo East • Fruit production, processing and • Kandara • Establishment of some multi purpose fruit marketing • Gichugu processing plant • South Mugirango • Tetu • Ceramic materials extraction, • Mukurweini • Establishment of a ceramics processing and production of ceramics and marketing infrastructure marketing • Fish farming and fishing, product • Kieni • Realization and management of fish processing and marketing • Turkana Central processing plant • Fish feed production and distribution

• Honey production, processing and • Baringo East • Modern honey production and distribution marketing of appropriate modern hives

• Fresh vegetable and tubers • Mathira Processing/value addition of the chain based products production, processing and • South Mugirango including: marketing • Siaya • Seed potato production and bulking • Turkana South • Establishment and operationalization of • Gatanga fresh vegetable and tubers promotional • Saboti centres • Mt. Elgon • Establishment of cold storage chains and • Wajir south market outlets • Realization of a processing plant

Source: consultant’s own

38 Priority Value Chain Analysis Study in Selected Districts Kenya

Chapter 5

Articulation of the Youth Engagement Options our (4) broad categories of business cases, identified as the youth engagement options could be hived out of the study results. The detailed version of the cases (contained in constituency specific reports) encompasses the necessary peculiar actions perthe Forientation of the enterprise case. Principally, broad based categories were agreed upon by the research team to both cluster and elaborate the options under the clusters. Apparently, initiation or actual realization of each business or engagement option will followthe constituency/district based interpretations.

The options encompassing promotion of specific value chains come in to advantageously amplify the chain through introduction of improved delivery mechanisms, or alleviation of the identified constraints to promote the chains’ competitiveness. Lots of emphasis appears to edge on promotion of transformation, a largely missing aspect of African agricultural set- up. The options are elaborated with respect to entry (initiation requirements and actions), growth (developmental aspects), sustainability (long term operations) and the exit strategy (transition and form transformation) aspects. These steps are considered to be particularly important as they define the critical success factors of the identified engagement options as derived from the study towards strong investment choices.

Resources are obviously required to yield results from the identified options. The research team took a deliberate option to focus on the available financial package in the market to both reduce dependency on grant, make the engagement options more realistic, people based and sustainable. In each of the constituency based reports, a clear computation of the requirements for establishment, minimizing and sustainability of the engagement options has been realized, implying that in each constituency of choice, the youth could actually be engaged sooner than later. As a back up to the human and financial resource requirements, the study clearly points out the intake/inception (entry) process which specifically detail the form into which youth could be ordered to engage. This promoted cooperative model squarely resting in the hands of communities has been proven to stand long-term strain, as long as the community is effectively engaged. The idea is to encourage youthful Kenyans to learn and try out locally driven economic engagements without necessarily relying on off-site employment.

If successful, as the research team fore-sees, then we will easily cause an economic turnaround where non-farm agriculture will form the basis for effective migration out of agriculture and yield the much needed jobs. The mainstream private sector will also see the opportunity in engaging small holder farmers in production for transformation or market ventures. A large scale practice of this concept would quickly transform the mental cum psychological dependence on employment among individuals and communities to becoming entrepreneurs and employers. This will further change our education and research system to focus a lot more on chain based promotional attributes, and addressing the core identified constraints in various sectors of the national economy. The conviction to start with the youth was a very logical and plausible idea.

39 Priority Value Chain Analysis Study in Selected Districts Kenya

5.1 Detailed presentation of the youth engagement options The business cases were clustered with respect to enterprise inclinations as follows: Livestock based processing enterprises (dairy, beef, fish, beekeeping, rabbits, SHOATS, camel), Horticulture based enterprises (fruits, vegetables, tubers, Irish potatoes), establishment of a ceramics processing and marketing and establishment of a talent development and promotion centre. The outcomes of the clustering process have been articulated further into entry, growth, sustainability and exit strategies as detailed in the matrix below (Table 6).

Table 6: Clustering of the value chains

BUSINESS CASE ENTRY GROWTH SUSTAINABILTY EXIT STRATEGY

1. Livestock based Acquisition of relevant, Amplification of Market intelligence – Promotion of product processing appropriate and practical engagement of current trends, consumer management among enterprises – information factors of production( tastes and preferences, prospective investors dairy, beef, , Assessment of availability processing) continuous branding Engagement of private fish, poultry, of relevant credit Sustained use of Product diversification sector for ownership beekeeping, services processing Intensive product and documentation and rabbits, SHOATS, promotion of business camel Identification of Increased promotional promotion to ensure requirements towards activities Available and sustained cases to would be investors promotion of the Active research to markets initative ascertain customer Addressing customer Increased public interest Recruitment of youth satisfaction satisfaction and buy in through public offers into task person on Improvement of Enhanced groups’ competence basis products to meet ownership, cohesiveness Amalgamation with Formation of relevant changing tastes and – governance and related interests and chain based groups preferences accountability empire building (producer groups, Maintenance Capacity building towards marketing groups) of appropriate improved performance Establishment of the infrastructure – good Accrual of political goodwill necessary infrastructure roads, electricity for processing Capacity building on Expanding market entrepreneurship – gross Capacity building on outlets margins, market dominance specific livestock Investment – capital or product processing and industry linkages marketing Application of Recruitment and knowledge based deployment of all management through required staff categories continuous capacity Resource mobilization enhancement and consolidation of factors of production (personnel, land, equipment, capital Fulfillment of appropriate legal and regulatory requirements

40 Priority Value Chain Analysis Study in Selected Districts Kenya

BUSINESS CASE ENTRY GROWTH SUSTAINABILTY EXIT STRATEGY

2. Horticulture Action research Expand information Strong focus on efficiency Promotion of based Strategic siting gathering and synergies and effectiveness transformation initiatives enterprises Physical infrastructure Capacity building of Integration of accountability Promotion of product – fruits, management committee mechanisms management among vegetables, through hiring and purchase of space and staff Increased focus on prospective investors for tubers, Irish ease of buying potatoes Recruitment of farmers Establishment and community involvement into horticultural product continuous polishing of Negotiation of soft credit Transformational engagement the standards operating terms investment procedures Formation of producer Linkage with other devolved Engage community in groups and management Expand owner funds management of the recruitment businesses committees Sharpening the entities Awareness creation Promotion of sub edge against competitors centers functions among Capacity building community members Conducting action research on shortcoming Production ordering in Establishment of the wards for knowledge based necessary linkages and management Election of management synergies committees Initiate and promote Produce market sourcing improvement plan over Recruitment of staff Expansion of collection time Establishment of input and handling units Promoting growth through supply line Promotion of real product differentiation and Resource acquisition success stories through branding the local media Inculcating promotional activities into the leadership and clergy Product promotion among users and others Improve on nature of products with time Improved organization of staff and efficient service delivery

3. Establishment Relevant, appropriate Acquisition and Market intelligence – Promotion of product of a ceramics and practical information engagement of the current trends, consumer management among processing acquisition sustained acquisition tastes and preferences, prospective investors and marketing Availability of affordable and use of factors of continuous branding Enhance community and infrastructure credit services production Product diversification landowners’ involvement Promotion of the value Sustain production of Intensive product and ownership chain initiatives ceramic products promotion to ensure Involve private sector for Identification and zoning Engagement of credit Available and sustained ownership of ceramic production facilities markets Promote and document areas Availing of other Customer satisfaction benefits of the ceramics Price differentiation supportive services – Enhanced groups research, managerial etc Engage landowners cohesiveness – governance, and community Appropriate accountability (youth) from the initial infrastructure – good Cultivated political goodwill roads, electricity stages, and legalize the Lobby for appropriate engagements. Expanding markets legislation Organize youth for Investment – capital, Capacity building on relevant engagement. processing unit entrepreneurship – gross Recruitment of youth Products promotion and margins, market dominance into production and market expansion participation in the value chain Capacity building on production, value addition and marketing of ceramics Resource mobilization and consolidation of factors of production (personnel, land, equipment, capital) Appropriate legislation

41 Priority Value Chain Analysis Study in Selected Districts Kenya

BUSINESS CASE ENTRY GROWTH SUSTAINABILTY EXIT STRATEGY

Establishment Relevant and appropriate Acquisition and Market intelligence – Promotion of products of a talent information acquisition engagement of the current trends, consumer among prospective development Availability of affordable sustained acquisition tastes and preferences, investors and promotion credit and supportive and use of factors of continuous branding Promote and document centre services production Product diversification industry benefits Promotion of the holistic Sustain production Intensive product Acquisition of appropriate value chain – arts, Engagement of credit promotion to ensure information and artifacts, theatre, sports facilities Available and sustained dissemination to the etc Availing of other markets market Recruitment of youth supportive services – Customer satisfaction Involve private sector for into producer groups and research, managerial etc Enhance groups ownership marketing groups Appropriate cohesiveness – governance, Involve youth Capacity building on arts infrastructure – halls, a nd accountability and talents stadia, exhibition halls, Cultivated political goodwill Resource mobilization electricity , recording studios and equipment Enforce appropriate and consolidation of legislation – copyrights factors of production Expanding markets Change of mindsets (personnel, equipment, Investment – capital, capital) industries, Appropriate legislation Site selection

Source: Consultant’s own

5.2 Skills Gap in the 24 selected constituencies Skill gap analyses are vital in helping the constituency and development agencies understand gaps in performance and possible areas for training and development. The skill gap analyses will act as a benchmark for the competencies needed for ideal performance/ implementation of the business cases in the 24 selected constituencies.

Table 7: Skills Gap in the 24 selected constituencies

CONSTITUENCY VALUE CHAINS IDENTIFIED SKILL GAP Mukurweini • Ceramics • Science of ceramics • Rabbit keeping • Entrepreneurial skills • Water treatment skills • Rabbits breeding

Yatta • Poultry • Dairy goat breeding and husbandry skills • Dairy goat • Clean Milk production and handling • Chicken value addition skills (transformation) • Records keeping

Gatanga • Talent academy • Formal performing art training • Horticulture-high value/ • Vegetable handling and preservation skills tuber indigenous vegetables • Savings and investment

Kandara • Avocado • Avocado and milk handling skills (post harvest) • Dairy cattle • Marketing skills

Gichugu • Passion fruit • Marketing skills • Rabbit keeping • Rabbits breeding skills • Fruits processing skills • ICT skills

42 Priority Value Chain Analysis Study in Selected Districts Kenya

Tetu • Rabbit keeping • Green house farming • Tomatoes • Fruits handling skills • Marketing skills • Rabbits breeding skills Mathira • Dairy cattle • Marketing skills • Horticulture • Horticulture handling and preservation skills Kieni • Fish farming • Fish preparation for market skills • Indigenous poultry • Fish handling and preservation skills

Laikipia East • Creative arts • Marketing skills • Indigenous poultry • Entrepreneurial skills • Formal creative art skills

Igembe South • Dairy cattle production • Negotiation skills • Indigenous poultry • Investment skills

Kapenguria • Beef cattle • Marketing skills • Poultry • Negotiation skills

Sigor • Beef cattle • Meat handling skills (beef and goats) • Local sheep and goats • Marketing skills • Record keeping skills • Conflict management skills

Saboti • Irish potatoes • Marketing skills • Dairy cattle • Record keeping skills • Post harvest potatoes handling and processing skills • Blight detection skills

43 Priority Value Chain Analysis Study in Selected Districts Kenya

Mt. Elgon • Irish potatoes • Post harvest handling and processing • Poultry • Marketing skills • Conflict management skills • Blight detection skills Bungoma • Poultry • Modern dairy farming • Dairy cattle • Entrepreneurial skills • Poultry breeding skills Siaya • Fresh vegetable farming • Vegetable farming and preservation skills (post harvest handling) • Poultry • Appropriate Entrepreneurial skills Baringo East • Bee keeping • Modern hive construction • Improved animal • Bee farming and harvesting skills production • Honey processing skills South Mugirango • Fresh vegetables • Vegetable farming and preservation skills (post harvest handling) • Bananas • Water harvesting and storage skills • Marketing skills • Bananas value addition/ processing Garsen • Beef cattle • Entrepreneurial skills • Dairy cattle • Record keeping skills • Water harvesting and storage skills

Bura • Goat • Marketing skills • Camel • Record keeping skills • Entrepreneurial skills Wajir South • Milk production • Milk and vegetables post production handling skills • Vegetables • Record keeping skills • Conflict management skills • Water harvesting and storage skills Mandera East • Camel • Entrepreneurial skills • Sheep and Goats • Record keeping skills • Hygiene skills • Water harvesting and storage skills • Group dynamics skills Turkana South • Goat production, • Vegetable production skills processing and marketing • Record keeping skills Value Chain • Entrepreneurial skills • Fresh Vegetable • Modern animals production production and marketing • Hygiene skills Value Chain • Conflict management skills Turkana Central • Goat production, • Fishing skills processing and marketing • Post harvest handling and processing skills • Fish production • Record keeping skills • Entrepreneurial skills • Hygiene skills

Generally, the following skills lack in all the constituencies • Engineering

• Agriculturalists • Medical practitioners

44 Priority Value Chain Analysis Study in Selected Districts Kenya

Chapter 6

Conclusions and Recommendations

6.1 Conclusions he study exposed a range of underlying factors affecting the business environment and its ability to absorb the ever increasing number of the youth. There is however need for some efforts in the direction of making the possibilities a reality. Among the many Tfindings the study conclud es the following:-

• There is need to underscore the importance and uniqueness of identifying priority investment options prior to actual investment

• It is important to involve youth and community in identifying possibilities and options for engagement

• Most of the priority value chains identified are agricultural which clearly concurs with the placement of the Kenyan economy as agricultural based (WDR, 2008)

• There is need for supportive services and operational infrastructure development to fast track realization of any identified business ideas.

• Value chain analysis offers a comprehensive mechanism for identification and concretization of youth engagement possibilities.

• Most proposed businesses can be easily established using the available resources and the skills at the devolved level.

• It is important to recognize the role majority of youth can play in deciding their plight under the current socio economic order.

• The ASAL environment is peculiar. May require some specialized interventions.

• Some of the technologies available are not adequately appropriate for the ASAL environments e.g. beehives in Baringo East.

• The majority of the identified options refer to pre inception physical investments, although other stages are also implied.

• There are several ongoing enterprises that can be easily up-scaled and fall under the following categories: transport – boda boda, financial – M-pesa, saccos, and many agricultural based among others.

• In most of the constituencies, the demanded competencies are available, but only requiring basic polishing and guiding.

45 Priority Value Chain Analysis Study in Selected Districts Kenya

• Specific skills gap exist in view of local institutional outputs and the business cases as identified in the study

• There is a general preference by the youth to acquire education and skills from institutions outside the constituency.

• There is a general preference by the youth to acquire employment and alternative engagement from opportunities existing outside the constituency.

• Youth prefer employment as compared to self employment/entrepreneurship.

• Political inclinations/support to some extent affect the uptake of business opportunities

• Three types of unique problems were clearly identified o Problems associated with illiteracy and ignorance requiring specific interventions o Presence of highly qualified youth and few engagement opportunities o Cultural inclinations and the associated effects • Devolved funds available at the constituency level could be accessed if the economic activities identified are effectively transformed into bankable business plans.

6.2 Recommendations

In order to engage the youth and lay out strategies to tackle the youth bulge and the attendant problems, the following recommendations are made.

• Correctly identify and place the contribution of the youth in the entire economic order through incorporation of true youth representation in all development structures at all levels, and having a platform for sharing information and updating the youth on ongoing projects/initiatives.

• Develope and implement programmes focusing on attracting the youth and rural communities to agribusiness. Additionally streamline this intervention within government structures.

• Clear articulation and recognition of the role of majority of the youth in deciding their plight under the current socio economic order, through deliberate efforts to appreciate and involve the youth at all stages of project/initiative development.

• Design specific and appropriate resolution mechanisms for peculiar ASAL area environment through carrying out issue specific baseline surveys to inform the development processes.

• Further research to effectively detail/resolve problems associated with identified

46 Priority Value Chain Analysis Study in Selected Districts Kenya

technological options e.g. beehives in Baringo East.

• Adopt enterprise and value chain development approaches to identify specific entry points into the businesses for recognition of interventional options, formulation and adoption of appropriate programs.

• Stagger identified entreprises through piloting and fully support investments in the specific pilot areas.

• Critically review easily adoptable business ventures with respect to the associated problems/issues through prioritization of the ventures and providing advise on the best approach for example the boda boda services and M-pesa among others.

• Verification on the available skills and competencies through skill gap analyses and the development of back up mechanisms such as review of existing curriculum and the introduction of new curriculum to tertiary institutions to deliver more rounded and qualified youth.

• Invest in rural non- farm economic activities to contain the youth in the rural areas, and facilitate out migration from agriculture.

• Impact attitudinal change by mainstreaming entrepreneurial skills and focusing of the young generation with expertise for self employment.

• Develop appropriate youth structures or empower the existing ones for ownership and management of the identified business cases in the constituencies.

• Delink the identified opportunities from any form of political alignment through involvement of the community from the project/initiative planning stage, with special emphasis on the youth, and competitive recruitment for the relevant positions while focusing on the identified interests of the community.

• Carry out further studies on the effects of the environmental setting (cultural, ignorance, illiteracy among others) in determining the feasibility of business development.

• Deliberate/intentional planned migration from out of farm to non- farm agriculture through creation of opportunities for private sector investment through development of appropriate business plans with clear returns on investment.

47 Priority Value Chain Analysis Study in Selected Districts Kenya

References

Export Processing Zones Authority, 2005. Meat Production in Kenya Export Processing Zones Authority, 2005. Dairy Industry in Kenya Government of Kenya, 2010. Dairy Master Plan Volume II Government of the Republic of Kenya, 2007. Kenya Vision 2030, the government printer Government of Kenya 2009. Ministry of Trade Strategic Plan, 2008-2012 Government of Kenya 2009. Ministry of Youth Affairs and Sports, Youth leisure, Recreation and Community Service Component of the MOYAS Strategic Plan (2007-2012) Government of Kenya, 2009. National Youth Policy Ministry of Youth Affairs and Sports Government of Kenya, 2009. National Youth Situation Analysis Report 2009, Ministry of Youth Affairs and Sports Government of Kenya, 2010. The Kenya 2009 Kenya Population and Housing Census, Kenya National Bureau of Statistics Government of the Republic of Kenya, 2008. The Ministry of Trade Vision 2030, Sector Plan for Trade, 2008-2012 Kenya Institute for Public Policy Research and Analysis, 2009. Kenya Economic Report, 2009 Kleemann Gunter (ed.) Wiesbaden, 1999. Service Management in Livestock Development Ministry of Agriculture, 2005. National Irish Potato Policy Ministry of Agriculture2010. Yatta District Brief, 2010 Self help Africa, 2010. Dairy Cattle Training Manual, 2010 Ssajjiemba Faustin Kennedy, 2008. Value chain analysis – Fresh tomatoes in Uganda and Kenya United Nations Development Program, 2010. Kenya National Human Development Report, 2009

URL’s http://www.biosciences.elewa.org/JABS/2009/16/10.pdf http://www.fao.org http://www.infonet-biovision.org http://www.ke.undp.org http://www.kenyakim.com http://www.kilimo.go.ke http://makeadiff.in/blog/2010/02/25/the-mad-national-conference-2010/ http://www.youthaidscoalition.org

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Annex

Quantification and costing of an investment model

The Fresh vegetable value chain business/ engagement opportunities During the analysis of the fresh vegetable value chain, in the pre-production stage, a very viable investment opportunity was identified. This was as a result of the lack of a centralized unit for all information required for the production and sale of fresh vegetables. This opportunity would be handled by the establishment of a fresh vegetable promotion centre.

Due to its small size, the fresh vegetable market in South Mugirango lacked sufficient quantities of vegetables that would be collected and transported to different markets. However, the establishment of fresh vegetable promotion centre would avail an increase in quantities that would be sufficient for transportation to other neighboring markets. These fresh vegetables would need to be collected at various locations in South Mugirango, thus the need to establish collection centers that would be managed by the youth.

Fresh Vegetable Production and Promotion Services Analysis of the vegetable promotion value chain established that most of the stakeholders engaged in the promotion of fresh vegetables but lacked sufficient information. These stakeholders include those who sell farm inputs (seeds, fertilizers and agro-chemicals). In some cases, they do not have the knowledge to specifically advise prospective produce users on the detailed value chain specific content but only give information on the details available on that particular product required according to the details on the product label. Some are not licensed to provide certain products thus resulting in the provision of sub- standard products.

The Ministry of Agriculture office in South Mugirango has information on the general topography of the area but information on soil conditions and suitability for vegetable production/ promotion is not available to the farmers. This is mainly due to the lack of effective sensitization of the community on the availability of the information. The information is also not farmer specific; it has not been tailored for the specific farmer’s productive land. There is therefore a great opportunity for the South Mugirango youth to establish and run a resource centre for fresh vegetable promotion which could be centrally located at the district headquarters and supported with sub-centers. Such a centre could specialize in data acquisition and management and grow to a one-stop-shop for all those who aspire to promote fresh vegetables in this area. Information considered useful for selling in such centers include, soil types and characteristics, fertilizers based on soil types, classification of the various vegetable types suitable for the area, information on products and service providers, together with contacts for such points. Information on costs of production can also be availed at the centre.

Requirements for establishment of a Fresh Vegetables Promotion Centre (FVPC) Establishment of a vegetable promotion and resource centre infrastructure will include a

49 Priority Value Chain Analysis Study in Selected Districts Kenya

building that would house the variety of information acquisition, compilation units, storage and retrieval capacity, a meeting area and various offices. The information would later be packaged upon assessment of the needs of the enquiring farmer. From the same district, youthful personnel who are readily available would be sought to support initiatives of the centre and the related promotional activities.

Required investments for Fresh Vegetables Promotion Centre (FVPC) and Fresh Vegetable Collection Centre (FVCC) The education levels in the community are considerably high thus availing skilled and semi- skilled youth to participate in effectively establishing and running the centres. There are several tertiary institutions including the Moi Institute of Technology, Gusii Institute of Technology, Kenya Institute of Highways, Kenya Institute of Management, St. Ann Computer College and Kisii University College all of which are known to produce intermediate level, and high level or professional competencies which would usefully package the resource centres and the envisaged sub units across the constituency landscape. Education support initiatives are available in the district including the Constituency Development Fund (CDF) bursaries. About 20% drop out of primary schools resulting from early marriages, lack of school fees, early pregnancies and child labour implying that they are all available to provide casual labour. We therefore have no scarcity of managers, middle level technicians and casual labour suppliers.

Those institutions offer such courses as tailoring, building and construction, motor mechanics, shoe making, carpentry, business management and nursing among others. Taking the above as the experts packaging, it is therefore apparent that establishment of a resource centre would not have a problem with the personnel to be engaged in the variety of disciplines that would run the business effectively. Several cost centres are envisaged among which include the actual centre infrastructural establishment, establishment of information sources; business contacts with the data sources, acquisition of data capture and storage facilities, marketing of the centre and operational costs among others are as below:

a) Estimates of costs of establishing a center

Inputs Loan Amount 6,872,800.0 Annual Interest Rate 12.00% Term of Loan in Years 5 First Payment Date 1/1/2011 Frequency of Payment Monthly

Summary

Rate (per period) 1.000% Payment (per period) 152,882

Total Payments 9,172,898.44 Total Interest 2,300,098.44 Interest Savings (0.04)

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Due Additional No. Date Payment Due Payment Interest Principal Balance

6,872,800 1 1/1/2011 152,881.64 0.00 68,728.00 84,153.64 6,788,646.36 2 2/1/2011 152,881.64 0.00 67,886.46 84,995.18 6,703,651.18 3 3/1/2011 152,881.64 0.00 67,036.51 85,845.13 6,617,806.05 4 4/1/2011 152,881.64 0.00 66,178.06 86,703.58 6,531,102.47 5 5/1/2011 152,881.64 0.00 65,311.02 87,570.62 6,443,531.85 6 6/1/2011 152,881.64 0.00 64,435.32 88,446.32 6,355,085.53 7 7/1/2011 152,881.64 0.00 63,550.86 89,330.78 6,265,754.75 8 8/1/2011 152,881.64 0.00 62,657.55 90,224.09 6,175,530.66 9 9/1/2011 152,881.64 0.00 61,755.31 91,126.33 6,084,404.33 10 10/1/2011 152,881.64 0.00 60,844.04 92,037.60 5,992,366.73 11 11/1/2011 152,881.64 0.00 59,923.67 92,957.97 5,899,408.76 12 12/1/2011 152,881.64 0.00 58,994.09 93,887.55 5,805,521.21 13 1/1/2012 152,881.64 0.00 58,055.21 94,826.43 5,710,694.78 14 2/1/2012 152,881.64 0.00 57,106.95 95,774.69 5,614,920.09 15 3/1/2012 152,881.64 0.00 56,149.20 96,732.44 5,518,187.65 16 4/1/2012 152,881.64 0.00 55,181.88 97,699.76 5,420,487.89 17 5/1/2012 152,881.64 0.00 54,204.88 98,676.76 5,321,811.13 18 6/1/2012 152,881.64 0.00 53,218.11 99,663.53 5,222,147.60 19 7/1/2012 152,881.64 0.00 52,221.48 100,660.16 5,121,487.44 20 8/1/2012 152,881.64 0.00 51,214.87 101,666.77 5,019,820.67 21 9/1/2012 152,881.64 0.00 50,198.21 102,683.43 4,917,137.24 22 10/1/2012 152,881.64 0.00 49,171.37 103,710.27 4,813,426.97 23 11/1/2012 152,881.64 0.00 48,134.27 104,747.37 4,708,679.60 24 12/1/2012 152,881.64 0.00 47,086.80 105,794.84 4,602,884.76 25 1/1/2013 152,881.64 0.00 46,028.85 106,852.79 4,496,031.97 26 2/1/2013 152,881.64 0.00 44,960.32 107,921.32 4,388,110.65 27 3/1/2013 152,881.64 0.00 43,881.11 109,000.53 4,279,110.12 28 4/1/2013 152,881.64 0.00 42,791.10 110,090.54 4,169,019.58 29 5/1/2013 152,881.64 0.00 41,690.20 111,191.44 4,057,828.14 30 6/1/2013 152,881.64 0.00 40,578.28 112,303.36 3,945,524.78 31 7/1/2013 152,881.64 0.00 39,455.25 113,426.39 3,832,098.39 32 8/1/2013 152,881.64 0.00 38,320.98 114,560.66 3,717,537.73 33 9/1/2013 152,881.64 0.00 37,175.38 115,706.26 3,601,831.47 34 10/1/2013 152,881.64 0.00 36,018.31 116,863.33 3,484,968.14 35 11/1/2013 152,881.64 0.00 34,849.68 118,031.96 3,366,936.18 36 12/1/2013 152,881.64 0.00 33,669.36 119,212.28 3,247,723.90 37 1/1/2014 152,881.64 0.00 32,477.24 120,404.40 3,127,319.50 38 2/1/2014 152,881.64 0.00 31,273.20 121,608.44 3,005,711.06 39 3/1/2014 152,881.64 0.00 30,057.11 122,824.53 2,882,886.53 40 4/1/2014 152,881.64 0.00 28,828.87 124,052.77 2,758,833.76 41 5/1/2014 152,881.64 0.00 27,588.34 125,293.30 2,633,540.46 42 6/1/2014 152,881.64 0.00 26,335.40 126,546.24 2,506,994.22 43 7/1/2014 152,881.64 0.00 25,069.94 127,811.70 2,379,182.52 44 8/1/2014 152,881.64 0.00 23,791.83 129,089.81 2,250,092.71 45 9/1/2014 152,881.64 0.00 22,500.93 130,380.71 2,119,712.00 46 10/1/2014 152,881.64 0.00 21,197.12 131,684.52 1,988,027.48 47 11/1/2014 152,881.64 0.00 19,880.27 133,001.37 1,855,026.11 48 12/1/2014 152,881.64 0.00 18,550.26 134,331.38 1,720,694.73 49 1/1/2015 152,881.64 0.00 17,206.95 135,674.69 1,585,020.04 50 2/1/2015 152,881.64 0.00 15,850.20 137,031.44 1,447,988.60 51 3/1/2015 152,881.64 0.00 14,479.89 138,401.75 1,309,586.85

51 Priority Value Chain Analysis Study in Selected Districts Kenya

52 4/1/2015 152,881.64 0.00 13,095.87 139,785.77 1,169,801.08 53 5/1/2015 152,881.64 0.00 11,698.01 141,183.63 1,028,617.45 54 6/1/2015 152,881.64 0.00 10,286.17 142,595.47 886,021.98 55 7/1/2015 152,881.64 0.00 8,860.22 144,021.42 742,000.56 56 8/1/2015 152,881.64 0.00 7,420.01 145,461.63 596,538.93 57 9/1/2015 152,881.64 0.00 5,965.39 146,916.25 449,622.68 58 10/1/2015 152,881.64 0.00 4,496.23 148,385.41 301,237.27 59 11/1/2015 152,881.64 0.00 3,012.37 149,869.27 151,368.00 60 12/1/2015 152,881.68 0.00 1,513.68 151,368.00 0.00

Cost Centre Unit cost Total cost

Building Infrastructure Total cost of construction at Headquarter 1,500,000.00 Rent payment for five sub-centers 300,000.00 Communication Estimated at Head quarter 500,000.00 infrastructure(marketing and Five sub-centers 150,000.00 promotion of the enterprise) Data collection and processing Estimated at Head quarter 500,000.00 Five sub-centers 50,000.00 Information storage and packaging Estimated at Head quarter and five sub centres 200,000.00 100,000.00 Establishment of business relations and Estimated at Head quarter and five sub centres 250,000.00 links with stakeholders 250,000.00 Sub-totals Estimated at Head quarter and five sub centres 2,950,000.00 850,000.00 Add: Miscellaneous 10% for total HQ costs 295,000.00 Five sub- centres 85,000.00

Headquarter 3,245,000.00 Five sub- centres 935,000.00

Total Kshs. 4,180,000 b) Operation and maintenance costs

Initial establishment cost = Kshs. 4,180,000.00 Remunerations Basic salaries and wages (Approximately) Centre Manager Kshs. 30,000.00 Asst. Manager Kshs. 20,000.00 Data Officer Kshs. 20,000.00 Promotion and marketing Officer Kshs. 20,000.00 Extension Officer Kshs. 20,000.00 5 sub centre task persons @ 12,000 Kshs. 60,000.00 Officettendant/ a receptionist Kshs. 10,000.00 Cleaners (2 @ 5,000) Kshs. 10,000.00 Security personnel Kshs. 14,000.00 Total Kshs. 204,000.00 Add 10% miscellaneous allowance Kshs. 20,400.00 Total Kshs. 224,400.00 x 12 Grand Total Kshs.2,692,800.00

52 Priority Value Chain Analysis Study in Selected Districts Kenya

The initial outlay is expected to be provided by application of a term loan; therefore it is assumed that there shall be no salary increments during the loan repayment period. c) Cost of the borrowed money:

Total loan amount = Kshs. 6,873,800 Total Repayment = principal /period in years + total interest /period in years. Interest rate is assumed to be 12% Repayment period is 5 years as this kind of loan is a term loan.

Loan amortization schedule: Comparison Table

Assuming no extra payments Frequency Payment Total Interest Annually 1,906,581.61 9,532,908.05 2,660,108.05 Semi-Annually 933,793.30 9,337,933.00 2,465,133.00 Quarterly 461,960.12 9,239,202.40 2,366,402.40 Bi-Monthly 306,869.99 9,206,099.70 2,333,299.70 Monthly 152,881.64 9,172,898.40 2,300,098.40 Semi-Monthly 76,302.17 9,156,260.40 2,283,460.40 Bi-Weekly 70,422.92 9,154,979.60 2,282,179.60 Weekly 35,181.89 9,147,291.40 2,274,491.40 d) Expected revenue calculations

The centre is expected to offer information packages for the farmers. It was established that Kshs. 100 per package was a viable cost. Assuming that the headquarter sells five packages per hour while the sub centre handles three packages, the expected revenue will be; 100*5*8= Kshs. 4,000 per day 4,000*24= Kshs. 96,000 per month Total income per year from the Headquarter =96,000 *12 =Kshs. 1,152,000

100*3*8*5 =Kshs. 12,000 per day 12,000*24 =Kshs. 288,000 per month Total income per year from the sub- centres =Kshs. 288,000*12 =Kshs 3,456,000 Total income from the entire investment =Kshs. 4,608,000 p.a

Cash flow analysis The centre is assumed to achieve its target revenue of Kshs. 4,608,000 p.a in phases such that the total revenue with respect to the payment period; by a fifth every year.

53 Priority Value Chain Analysis Study in Selected Districts Kenya

Cash flow projections for the first five years:

Estimated Year Estimated annual Annual Loan Total out flow Variance income costs repayment 1 921,600 224,000 1,906,582 2,130,582 (984,982) 2 1,843,200 224,000 1,906,582 2,130,582 (63,382) 3 2,764,800 224,000 1,906,582 2,130,582 858,218 4 3,686,400 224,000 1,906,582 2,130,582 1,779,818 5 4,608,000 224,000 1,906,582 2,130,582 2,701,418

With effective marketing and promotion of the centre and effective sensitization ofthe farmers, increase in the quantities of packages sales per month would cause the investment to be very successful.

Establishment and operation of the Fresh Vegetable Collection Centers. (FVCC)

Through the value chain analysis, a clear gap was identified concerning the organization of production and marketing of vegetables within and possibly outside the constituency. Thus the need for establishment of a centre for collection of the fresh vegetables at centralized locations that would enhance their easy transportation to the markets.

To sustain the operations of the collection centres, the participating farmers would be required to register with the centre so as to identify all the beneficiaries. Subscription of Kshs 100 per month and renewal of the same was found very viable. The revenue should be ideal to off-set all the centre costs.

Cost of Establishing and operation of a collection center

South Mugirango has 11 wards therefore the need for a centralized collection centre was found to be more viable.

Management cost of the centre

Payee Total Manager Kshs 20,000 20,000 Assistant manager Kshs 15,000 15,000 Three support assistants Kshs 10,000 each 30,000 Two cleaners Kshs 6,000 each 12,000 TOTAL 77,000

Administration costs estimated at Kshs 30,000 per month Sub-total costs = Kshs. 107,000 10% allowance for miscellaneous costs = Kshs. 10,700 Total operational costs = Kshs. 117,700 per month Total Cost per year = Kshs. 1,412,400.00

54 Priority Value Chain Analysis Study in Selected Districts Kenya

To sustain such a centre, the membership should not be less than 1,177 farmers per year each paying Kshs 100 per month. Since with time such centres will be established per administrative division (wards), there is growth potential in both number of members and amount of money made. This will ensure requisite business growth.

Planting material multiplication units

It was also established that many youth would wish to engage in the multiplication of the fresh vegetable seedlings. However, this was found to be best suited to be undertaken on individual basis or the youths would form groups that would liaise with the promotion centre so as to be the suppliers of the fresh vegetable seedlings.

55 Priority Value Chain Analysis Study in Selected Districts Kenya

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