The Master Plan Study for Kenyan Industrial Development (Mapskid) in the Republic of Kenya
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JAPAN INTERNATIONAL COOPERATION AGENCY (JICA) MINISTRY OF TRADE AND INDUSTRY (MOTI) THE REPUBLIC OF KENYA THE MASTER PLAN STUDY FOR KENYAN INDUSTRIAL DEVELOPMENT (MAPSKID) IN THE REPUBLIC OF KENYA FINAL REPORT January 2008 SANYU CONSULTANTS INC., JAPAN KRI INTERNATIONAL CORP., JAPAN PREFACE In response to a request from the Government of the Republic of Kenya, the Government of Japan decided to conduct a study on “the Master Plan for Kenyan Industrial Development” and entrusted to the study to the Japan International Cooperation Agency (JICA). JICA selected and dispatched a study team that is headed by Mr. Yoshio NAGAMINE of SANYU Consultants INC., and consists of SANYU CONSULTANTS INC. and KRI International Corp. between February 2006 and December 2007. The team held discussions with the officials concerned of the Government of the Republic of Kenya and conducted field surveys in the study area. Upon returning to Japan, the team conducted further studies and prepared this final report. I hope that this report will contribute to the promotion of Kenyan industrial development and to the enhancement of friendly relationship between our two countries. Finally, I wish to express my sincere appreciation to the officials concerned of the Government of the Republic of Kenya for their close cooperation extended to the study. January 2008 Seiichi Nagatsuka, Vice-President Japan International Cooperation Agency Master Plan Study for Kenyan Industrial Development (MAPSKID) in the Republic of Kenya LOCATION MAP CONTENTS Introduction Outline of Master Plan PART I : Recent Trend of Kenyan Economy/Industry and National/Industrial Development Policy Chapter 1 Kenyan Economy and Trend of Industry ..........................................................4 1.1 Industrialisation in Kenya ...........................................................................................4 1.2 Trend of Sectors ............................................................................................................5 1.3 Outline of Manufacturing Sector ...............................................................................10 1.4 Domestic Market ........................................................................................................12 1.5 International Market..................................................................................................13 1.6 Labour Markets ..........................................................................................................18 Chapter 2 National/Industrial Development Policy and Framework of National Economic Development and Industrial Development...................................23 2.1 National Development Policy and Industrial Development Policy ..........................23 2.2 Necessity to Establish the Master Plan.....................................................................30 Chapter 3 Ministry of Trade and Industry (MOTI) --- Its Role and Organization.........32 3.1 Role and Organization of MOTI.................................................................................32 3.2 Institutional Capacity Development of MOTI...........................................................46 Chapter 4 Institutional Framework Relating to Public Administration ........................53 4.1 Public Institutional Framework ................................................................................53 4.2 Infrastructure Relating to Industry...........................................................................63 4.3 Statistical Data on Trade and Industry.....................................................................80 Chapter 5 Contents of Industrial Development Support.................................................86 5.1 Framework of the Support System ............................................................................86 5.2 Technological Development ........................................................................................89 5.3 Management and Market Development ..................................................................103 5.4 Export Promotion ..................................................................................................... 110 5.5 Investment Promotion.............................................................................................. 115 5.6 Financing ..................................................................................................................124 5.7 Human Resource Development................................................................................134 5.8 Industry Network .....................................................................................................142 Chapter 6 Consideration of Environment and Social Aspects in Industrial Development .....................................................................................................................149 6.1 Consideration of Environment.................................................................................149 6.2 Safety, Health and Gender .......................................................................................153 i Chapter 7 Future Directions and Development Framework.........................................155 7.1 Preconditions of the Kenyan Industry.....................................................................155 7.2 Industrialisation Scenarios ......................................................................................161 7.3 Development Framework .........................................................................................166 Chapter 8 Action Plan of Industrial Development.........................................................186 8.1 Establishment of Action Plan...................................................................................186 8.2 Scenario of Implementing Action Plan ....................................................................187 8.3 Outline of Action Plan ..............................................................................................188 8.4 Details of Individual Action Plan.............................................................................197 Chapter 9 Selection of the Target Sub-sectors ...............................................................222 9.1 Intention of target sub-sector selection ...................................................................222 9.2 Selection process.......................................................................................................222 9.3 Part 1: Competitiveness evaluation.........................................................................223 9.4 Part 2: Strategic Evaluation ....................................................................................245 Chapter 10 Development Plan of Target Sub-sectors ......................................................252 10.1 Development Plan of Agro-processing Sub-sector ...................................................252 10.2 Development Plan of Agro-machinery Sub-sector...................................................276 10.3 Development of Electrics, Electronics / ICT Sub-sector..........................................295 ii List of Tables Table 1-1 Performance of Sub-sectors in Manufacturing Sector ..................................11 Table 1-2 Classification and Membership of Manufacturing Industry by KAM..........12 Table 1-3 Shares of Export to Kenya for Top 25 Major Importing Partners................17 Table 1-4 Shares of Import from Kenya for Top 25 Major Exporting Partners ...........18 Table 1-5 Employment by Sector ...................................................................................19 Table 1-6 Total Number of MSE and Their Employment .............................................20 Table 1-7 Sectoral and Urban-Rural Distribution of MSEs..........................................20 Table 1-8 Two-Digit ISIC Grouping of MSEs ................................................................20 Table 2-1 Development Target in Sessional Paper No.2 1997 ......................................26 Table 3-1 Distribution of Staff among Departments.....................................................33 Table 3-2 Deployment of Commercial Attaches and the Trade Partner Rankings......41 Table 4-1 IPRs.................................................................................................................59 Table 4-2 Number of Industrial Property Registration in Kenya.................................59 Table 4-3 Power and Energy Forecasts..........................................................................67 Table 4-4 Generation Capacity Additions......................................................................69 Table 4-5 Transmission Line Additions .........................................................................69 Table 4-6 Distribution and System Reinforcements .....................................................69 Table 4-7 New Institutional Arrangements for the WSS..............................................72 Table 4-8 New Institutional Arrangements for NWRMS..............................................73 Table 4-9 Number of Vehicles Registered ......................................................................75 Table 4-10 Kenya Railway Line System..........................................................................75 Table 4-11 KR Volume of Freight and Passengers..........................................................76 Table 4-12 Summary: Volume of Freight Handled by KPA 2001-05 ..............................76