4.2 Value Chain Projects

C1: Improve infrastructure in Kerugoya and Kutus town centres

Each main town within KKM has a distinctive specialisation, and both play a crucial role to the local economy:

> Kutus is the main trading centre in KC, with a wholesale market that attracts traders from Nairobi and neighbouring counties. The town also hosts KyU and therefore has a large student population; > Kerugoya is the second largest town in KC and gathers key financial, education, health services.

Infrastructure improvements are needed in both town centres to support their role as trading and services centres and allow the tertiary sector to grow. For instance, despite Kutus’ crucial role in trade, the market infrastructure is very limited, causing traffic congestion and potentially deterring the competitiveness of Kutus as a trading spot in Central Kenya. Providing better facilities for traders, along with investment in the public realm around markets to facilitate mobility and reduce congestion, will support the trading sector in the Municipality.

In Kerugoya, improved public facilities around the main bus station and central square could improve the connectivity and attractiveness of the town as a place to live and set up a business – therefore consolidating its role as a service hub.

Section 5 provides details on the nature of the infrastructure to be developed in Kerugoya and Kutus. C2: Develop affordable housing to support economic development

Given the high population growth rate in KC, pressure on housing provision is likely to increase significantly in the near future.

However, population has been growing the fastest in the Mwea region, with housing encroaching on high-value agricultural land and rice fields. Ultimately, this could have a detrimental effect on the local economy, and other locations for housing development must be explored.

KKM presents a good case for housing development. As an urban area and County headquarters, its comparative advantage is that it can offer residents and workers access to various services, administrative, educational, health, and transport, and good connection to quickly reach every part of the County. This makes KKM an attractive place to live, providing the right infrastructure is in place. In addition, the growth of KyU means that there is a need to provide more student accommodation, predominantly in Kutus, where the campus is located, but also in Kerugoya.

Kerugoya already benefits from an affordable housing programme but this could be extended to respond to growing demand and target more people in need of housing. Building on the affordable programme in Kerugoya, a larger scale affordable housing programme should be developed in KKM. There should be two streams to the programme: > Housing for students: youth and students typically have difficulties accessing the housing market and are particularly vulnerable. Their needs in terms of housing also differ from the rest of the population: individual rooms, and temporary accommodation). In 2018 the

Kenyan Government launched a plan to target private investors to raise funds to build hostels to serve the growing student demand. However, uptake has been poor owing to the effects of COVID-19, the high cost of land, insufficient lending and inadequate expertise in development and management of purpose-built student hostels. The model sees a developer build a hostel, operate it for about 20 years to recoup investment before handing it over to the university. Fully private investments have also taken place in Nairobi, where demand is higher than elsewhere in the country. > Housing for other segments of the population, in particular

SIGs and other vulnerable groups such as informal settlement dwellers, unemployed or underemployed people should be prioritised, and access should not be conditional to working in the formal sector.

It is recommended that these housing projects consider adaptation and mitigation measures such as climate-appropriate designs. Community-based knowledge is fundamental for the development of urban projects that are climate-resilient. Planning is also key to prevent urban growth in hazard-prone areas.

Various institutions have been working on developing housing programmes for lower- and middle-income residents, as well as helping to transform informal settlements into sustainable homes and supporting access to micro finance.

Case Study: Providing housing to low-income communities: Reall and National Cooperative Housing Union (NACHU) partnership

Reall, a housing development scheme, has been working in partnership with Kenya’s NACHU, with the aim of providing affordable and decent housing and infrastructure to the urban low and modest-income communities.33 This approach also includes community mobilisation and training, technical support, housing finance, lobbying and advocacy. The partnership has seen more than 1,500 homes constructed, with NACHU also engaging with national and regional governments, helping to shape current housing policy to consider people on low incomes. The partnership focused on commercial low-income housing developers, and negotiations with government-backed mortgage providers and commercial banks on end-user finance. Some examples of work include:

> Nanyuki – a community-based partnership that saw

NACHU construct housing and sanitation whilst the community facilitated roads, electricity, fencing and landscaping. The scheme was backed by a savings and credit cooperative that provided financial assistance, enabling micro-mortgages for those housed.34 > Alfa-Mwanda – a project to provide homes for those previously living in densely-populated informal settlements. All tenants previously resided in unsuitable conditions with little access to safe and reliable water or sanitation. They were provided with end-user finance by

NACHU in the form of micro mortgages.35 > Nyalenda – a project to house some small-scale business traders from the local slum comprising 10,000 rented temporary structures made of substandard materials. They were provided with end-user finance by

NACHU in the form of micro mortgages.36 C3: An Entrepreneurship Centre to support entrepreneurs and small businesses

Qualitative research revealed that the Municipality has a young, dynamic and tech-savvy population, supported by various higher education institutions (KyU and Polytechnics). However, unemployment is high among youth, with limited job opportunities. There is a lack of initiatives to support individuals to develop their own businesses including aspects of marketing, product design, sales, finance, strategy, digital and e-market opportunities.

Hence, there is an opportunity to develop an Entrepreneurship Centre for small businesses in KKM to provide support for entrepreneurs, students, and graduates. Support can include technical assistance, business advice, access to investors, and access to a co-working space. The structure should be well-linked with local educational institutions, so that entrepreneurs can learn from professors and collaborate with other students in various disciplines such as marketing, computer science, actuarial science, or engineering, In turn, this provides students with real-life application of their knowledge.

33. Reall website, accessed at: We are Building an Affordable Homes Movement | Reall 34. Reall website, Nanyuki project. Accessed at: https://www.reall.net/data-dashboard/kenya/nanyuki/ 35. Reall website, Alfa-Mwanda project. Accessed at: Alfa-Mwanda Housing — Reall—Affordable Housing Charity 36. Reall website, Nyalenda project. Accessed at: Nyalenda Housing Cooperative — Reall—Affordable Housing Charity

Various entrepreneurship and business support networks exist in Africa, such as the African Incubator Network, 2Scale or ILO’s C-BED programme that are able to provide resources and support.37,38,39 The Kenyan Ministry of Industrialization, through the department of micro and small industries (MSI) also implements incubation programmes through partner support.

Given the economic specialisation of KC and the plans to develop agri-processing and industry, there is potential for this centre to help entrepreneurs mainly in the agri-business sector, however this should not necessarily be limited to these activities. This offer would complement the joined-up education strategy (Action B1) that focuses more specifically on providing skills related to agri-processing and industrial development.

The Entrepreneurship Centre should also develop low-cost and accessible opportunities for out-of-school youth and PWD with low literacy levels. For example, business and marketing training should be available to support those who are already own businesses, and those who would like to start one.

37. African Incubator Network website, accessed at: AAIN | INCUBATING INCUBATORS FOR JOB AND WEALTH CREATION (africaain.org) 38. Scale website, accessed at: Our partnerships create genuine impact and accelerate inclusi - 2scale 39. C-BED website, accessed at: TRAINING TOOLS | CB-TOOLS.ORG

Case Study: An agri-business incubator: CURAD, Uganda

The Consortium for Enhancing University Responsiveness to Agribusiness Development limited (CURAD) is a public-private organisation and one of the six agri-business incubators in Africa that was initiated by the Forum for Agricultural Research in Africa. CURAD has supported 71 SMEs with more than 5 technologies commercialised, 2 organisational models developed and up-scaled, and more than 2,000 jobs created.40

CURAD answers two main issues that face agri-business entrepreneurs. First, entrepreneurs lack specific support for the first years of their business, where they need to build a cash flow and do not always have the expertise to grow their business. Second, agri-business entrepreneurs lack the provision of production spaces, greenhouse space or farmland, and more traditional incubators tend to provide workspace and desks instead. CURAD provides support to students’ interested in starting agri-business, existing agri-business SMEs wishing to develop innovative technologies, scientists looking to commercialise their technologies, and wholesale and retail SMEs along the value chain.41

Case Study: Learning entrepreneurship without a trainer: C-BED programme42

The Community-Based Entrepreneurship development (C-BED) is an International Labour Office (ILO) initiative that provides training programmes to help entrepreneurs and micro-businesses improve their business.

The key aspect of C-BED is that training can be carried out without external trainers or resources and it has been designed to be used by marginalised and vulnerable communities. Only a facilitator is required, and participants work together in small groups to solve problems and share existing knowledge and experiences. The programme is therefore action-based and combines local insights with analysis. All C-BED resources are free to access.

40. Agribusiness incubation in Uganda and sub Saharan Africa, the missing links | iBAN (inclusivebusiness.net) 41. CURAD Incubator – My source of wealth 42. C-BED Community-based enterprise development https://cb-tools.org/

C4: IMPROVE THE ECO-TOURISM OFFER TO ALIGN WITH GREEN BLUE BENEFITS

KC has several assets that can be further emphasised and promoted to encourage eco-tourism. This includes Kamweti trekking route to Mt Kenya, Kerugoya urban forest, the Rutui River, and water sports activities across the County.

KIDA has developed plans to further develop eco-tourism, including ambitions to improve the trekking route in Kamweti to attract new tourists, and the development of one or several eco-lodges along the route.

However, a strengthened, more global, and coordinated strategy would need to be proposed to ensure the development of the sector. This strategy should be developed by a working group gathering key stakeholders in the tourism industry, such as national park managers, hotel business owners, and KIDA, to ensure a plural representation that accounts for various needs and expertise. The strategy should take the following approach:

> Assessing tourism offer: this consists in identifying tourism assets in the County and evaluating their potential for development. Some assets might be prioritised because they act as a “flagship” destination, with spill-overs on nearby secondary assets. In addition to assets, there should be an evaluation of infrastructure, e.g. Roads, hotels, and restaurants, and the hospitality sector, such as the type of employment and skills it has. > Assessing tourism demand: the point here is to understand tourism in the region – who tourists are, their age, and socio-economic background, where they come from, are they locals, from neighbouring counties, Nairobi, the rest of Kenya, or outside Kenya, why they come to the

County, for leisure, or business, and what assets are most visited. Neighbouring counties where tourism is more developed – in particular those around Mt Kenya – could also be used as a good benchmark to understand demand.

Identifying best practices from other parts of the country will also be interesting. > Create an action plan: based on the two above assessments, a tourism action plan should be developed that identifies (i) a targeted market; (ii) targeted assets to focus on; (iii) key infrastructure and sectoral gaps to improve; (iv) improvement policies including skills and employment. Considerations with regards to job creation and training, e.g. For hotel employees, drivers, tour guides are fundamental and could support the inclusiveness principles, such as youth inclusion. > Design a skills and employment strategy. > Develop a marketing strategy: once the County’s unique offer and target market is well-known, a marketing strategy can be developed. These elements will help guide the type of marketing support, such as a prospectus, radio, magazine, and online advertising, branding and strategy, to adopt.

4.2 Value Chain Projects

Identifying the UEP value chain opportunities for KKM was a four-stage process:

> Long-list process: an extensive list of economic opportunities, reflecting government policies, VC studies, exports and imports assessment, inputs requirement, outputs and processes, linkages with key policies and programmes, and market linkages. > Diagnostic alignment: the long-list was assessed against the SWOT analysis and other factors identified in the Diagnostics stage. The resulting list was presented to stakeholders. > Evaluation: the SUED evaluation framework was used to sift the opportunities, including criteria for the SUED principles (included within Appendix B). The PSG, the

Municipal Board and other stakeholders identified the relative importance of each criteria for KKM, to provide weightings for final evaluation and identification. > UEP selection: Eight short-listed VCs were further assessed in detail, including their costs and revenues, competitiveness and land and infrastructure requirements, utilising the wider

SUED assessments. Husk products and banana flour have been prioritised due to their ability to develop the agri-processing sector within KKM. The husk products: lumber and tableware would capitalise on the high production of rice in the County, which currently generate about 24,000 tonnes of rice husk each year, and the increasing volume of husk from coffee and macadamia nuts providing about 4,000 tonnes of husk per year.

This VC is a great example of circular economy opportunities in line with the SUED principles described in Section 1.4. The banana flour VC would also capitalise on the growing international niche market for banana flour, and KC being one of the leading producers of banana in Kenya. These two prioritised VCs are detailed in the sections below.

These VCs have been assessed against climate resilience and social inclusion, scoring highly. They have also been assessed to have higher readiness for investment than the other shortlisted VCs, and as such are suitable as initial projects to spur further growth, given County’s competitive advantages.

The remaining six shortlisted VC opportunities were selected for further assessment as presented in The Technical Briefing Paper (Appendix B). These VCs have high potential to be considered as next stage VC developments and could utilise the infrastructure provision, collection network and waste systems put in place for the prioritised VCs at Sagana green industrial park. These VCs include: > Fruit and vegetable canning: mixed fruit (tomato, mango, passion fruit, melon, pawpaw, etc.) canning facility, with potential for processing some vegetables (French beans, sweetcorn). > Avocado processing: opportunity for a processing plant to produce avocado oil through extraction process as first step and charcoal briquettes from waste materials (stone, skin and pulp). > Rice beer: use low-value broken rice grains to make a range of alcohol products including wine (sake), beer, vinegar and gin. The first step could be to produce rice beer as there is no need to develop the market. > Integrated chicken farming: to fully integrate the farming operation including a hatchery, broiler pens and slaughterhouse with packing. The focus will be on chicken meat production, supplying day-old-chicks (layers and broilers) to local farmers, and taking in broilers and old layers for slaughter. > Banana papyrus: this covers the production of fibreboards and veneered boarding from banana pseudo-stems, for use in construction and furniture production. > Feed mill: using by-products from agri-processing. Then focus on chicken feed mixes to support the expansion in egg production across KC, fish feeds as well as mixes for dairy cow and goat on zero-graze regimes.

4.2.1 VC 1: Banana Flour

This VC project is for a commercial-scale banana flour production facility that would source fruit from across KC and the wider region, producing flour for both domestic and export markets. The facility would process both green and ripe bananas, supporting the production of a range of different flours. Once flour production is established there is potential to expand into other products (starch, chips, CMC43, flakes, etc.).

The key outcomes of this VC include:

> Adding value to a key crop in KC; > Providing a stable offtake and prices for farmers; > Reducing post-harvest losses (with potential to use ripe fruit as well as green); > Scope for other banana products from fruit (starch), peel and stems (starch and flour); > A good link to other banana (and fruit) processing for joint collection and composting of waste material; > Providing waste peel suitable for animal feed and stems good for composting; > Creating direct employment for around 122 full-time employees, with high potential for employing SIGs, including PWD.

43. Carboxymethyl cellulose (CMC). Widely used in food processing and oil drilling. Base Assessment

KC is one of the leading producers of banana in Kenya. The annual harvest in the County is estimated at around 200,000 tonnes, and production in the neighbouring counties is also substantial: Meru, Embu, Tharaka Nithi and Muranga have combined banana production of over 600,000 tonnes per year, and these four counties together with Kirinyaga account for nearly 60% of Kenya’s total production. Supplies from these neighbouring counties could also feed into this VC opportunity.

As with all fresh produce, banana prices, both on the export and local markets, can be volatile, and post-harvest losses during periods of glut are considerable. For bananas, local sales fall during the mango season. While there are a number of processing options for bananas that could provide some measure of price stability and offer a stable offtake throughout the year, almost all bananas produced in Kenya are eaten as fruit. There is no commercial-scale banana processing in KC and very little across the region.

Bananas can be processed into flakes and chips (crisps), they can be dried whole or sliced, and used to produce banana flour and starch.

Given the substantial volumes produced in KC there is potential for the commercial-scale production of flour. Green fruit is generally used for banana flour production, but there are processing options for ripe or overripe fruit, which could target short term gluts. Flour from green bananas has a higher starch and protein content than ripe or yellow banana flour, which is higher in dietary fibre.

The waste banana peel and stems from flour production can be used for animal feed, and works well in formulated mixes for both chicken and dairy cattle. There is also potential to produce flour from banana peel (both green and yellow). Flours from banana peel have a lower starch content than flour from the fruit, but are higher in dietary fibre and protein. Banana peel flour is a relatively new product, but is being used increasingly in bakery products, in combination with traditional grain flours.