Agribusiness for Africa’s Prosperity. Country Case Studies
effects. There is an increasing awareness about the developmental potential of agro-industry in Kenya (see JICA/MoTI 2007), and the Kenya Vision 2030 even considers the possibility of a globally competitive and prosperous Kenya (see RoK 2007). The stabilizing role of agro-industry in the political and economic system is emphasized as a major factor for Kenya. The potential is not yet used, and the sector is highly vulnerable to raw material supplies. As 33 per cent of manufacturing output is dependent on agriculture output, the linkages between agriculture and industry are important and should be further strengthened. Compared to other country cases, the degree of internationalisation of the sector in Kenya is much higher as many multinationals are operating there. Because of the low levels of international competitiveness of Kenya’s products the theme of the Vision is important and timely. Kenya can benefit from further East African Community (EAC) integration, and Kenyan agro-industries will benefit especially from this process. Kenyan firms have a strong position in these markets, and they also will benefit from the free movement of labour and capital in the region. The relatively advanced communication and transport infrastructure also give Kenya a favourable position (OECD/AfDB 2010). The mixed performance of the agro-industry sector is highlighted in the case study, which is revealed also by the indicators of country performance and of the contribution to GDP and employment. An examination of the agro-industrial production index (AIPI) reveals that vegetable and fruit processing, oil processing, and canning continue to have stable and strongly rising trends, followed by beverages. A problem seems to be the lack of data and statistical evidence from independent sources outside of government. Besides agro-based manufacturing, the agroindustry-related services constitute an important part of Kenya’s agribusiness. The low pay for women in important segments of agro-industry is mentioned as a severe distributional problem, so that public intervention is needed to care for these workers. Other distributional problems matter with regards to the agro-industry. A major issue is how to broaden the narrow export basket of Kenya by coherent policies on agricultural and agro-industrial development. Diversification is a major issue for Kenya so as to become less vulnerable in markets and in production. Competitiveness issues are also very important as Kenya is more and more dependent on exports to COMESA markets and the markets of China and India, but has increasing difficulties in exporting to EU markets. However, no workable strategies to address this fundamental issue are apparent. Obviously economic policy has a strong influence on agro-industry exports and on agro-industry sector developments, as the review in chapter four points out. Strategic frameworks are integrated in the Vision and in other documents. Improving institutional capacity, reviewing the export incentives and the role of the export processing zones, and renewing and extending the infrastructure are key points mentioned. The bad state of local infrastructure and of water supplies creates severe problems as they are crucial to agro-industries advancement. Coordinating much better agricultural and agro-industrial policies on the one hand and policies on agribusiness promotion on the other is seen as important for future development. Improvements of institutional quality for these sectors are now given more priority, as coordination problems affect the working of the institutions and the synchronization of policies and actions. Logistical problems throughout the domestic production and the export marketing chains impact upon the decline of competitiveness. Institutions for the development of PPPs are there, but mutual distrust impedes their working. Kenya is working on creating the environment for such PPPs in the field of agroindustry, rather than focussing on concrete projects. The Micro, Small and Medium Enterprises (MSMEs) Competitiveness Project is intended to promote the creation of PPPs between the public sector and these enterprises, but the achievements of the project are not yet observable. The involvement of large domestic and foreign enterprises would also be important for its success. From the point of view of the key policy factors, working on the erratic supply of agricultural raw materials is most important for Kenya, but becoming more adaptable and flexible in value chain management and upgrading – by quality, integration and logistical infrastructure investments – is also a priority issue. It is also important to target small producers and processing units to link them 22