Executive Summary

The Urban Economic Plan (UEP) is an advisory document that builds on existing work and priorities identified under the County Investment Development Plan (CIDP), the Integrated Strategic Urban Development Plan (ISUDP), the Capital Investment Plan (CIP), as well as aligning and complementing work done by other donors and organisations. In doing so, it will provide a focused urban and economic development strategy for the Municipal Board and Departments to deliver balanced and sustainable growth for Kitui. The purpose of the plan is therefore to: › provide an inclusive urban and economic growth strategy that can guide future development towards increasing prosperity in Kitui; › prioritise economic activities and climate resilient infrastructure that can maximise benefits and support the development of a sustainable economic future of Kitui; › bring together stakeholders on deciding the economic future and growth trajectory of Kitui and implementing it; and

› identify and prepare value chain projects that can be considered further in terms of their feasibility and bankability before

SUED seed financing is committed. Stakeholders’ interests and insights have been considered throughout the development of the Kitui UEP. Section 2 of this document sets out the Diagnostic Assessment of Kitui, where the social, economic, infrastructure and environmental baseline has provided an understanding of the barriers and drivers to sustainable economic growth. Kitui has a high reliance on agriculture, though this is a low productivity sector with limited value addition and sectoral linkages. There is a general lack of skill availability and transfer of knowledge between people, businesses and sectors. It will be important to develop sectoral linkages and supply chains across the economic sectors and enable better market access, information and expertise. The Social Inclusion Study was a key part of the diagnostic, providing recommendations for meeting the aims of the SUED programme - to advance inclusion of PWDs, women and youth - as well as other identified groups who are currently excluded. The prioritised projects will embed recommendations for overcoming communication, physical, attitudinal and organisational barriers to inclusion. The diagnostic identified three Key Sectors that Kitui should prioritise for infrastructure development and Value Chain opportunities, as: › Agriculture including Apiculture › Industry including Construction

Materials

› Trade and Commerce Critical for the development of the economy, through these key sectors, will be the improvement of the infrastructure particularly in areas affecting production such as irrigation for agriculture, energy for industry and transport access between suppliers and markets. There is unreliable water supply to support both population growth and production, whilst irrigated land is limited and not always used for high value crops. There is poor waste management and drainage around the town. The cost of electricity is high and unreliable, where the use of more sustainable and efficient energy sources, including solar and bio fuels, can drive industrial opportunities and support population growth. Environmental and climate change threats exist, which will increase pressure on ecosystems, potentially worsen water scarcity and raise environmental degradation risks for soil, rivers, water supply, air quality and forested land. Furthermore, increased drought and flooding frequency may greatly impact agricultural yields and town production processes. Addressing these challenges can enable the town to establish itself as an effective multifunctioning centre, and lay foundations for sustainable economic growth. Section 3 presents the Urban Economic Development Plan. This is driven by the economic vision that has been developed for Kitui:

“Kitui will develop into a business innovation hub for the County as well as a supplier of premium honey and other quality products to the World”.

This vision is underlined with objectives to: › Ensure resilient and resource efficient urban and economic growth › Create an attractive and vibrant business environment

› Develop an enabling and responsive

Municipal organisation › Promote opportunities for all members of the community › Optimise and protect the use of Kitui’s abundant agricultural natural resources Action Plans have been developed for each of the key sectors, across: › Skills, training and technology provision › Marketing information and access › Supply chain linkages › Product quality certification › Finance and support for small business

› Infrastructure developments › Natural resource protection › Effective land use management › Collaborations and partnerships These Sector Action Plans will complement and provide an enabling environment for the shortlisted Value Chain (VC) opportunities. Six potential VC projects were identified in the assessment and in consultation with local stakeholders, by performing most strongly against the project’s evaluation criteria and Kitui’s established priority criteria - job creation, revenue generation and inclusion. All of these opportunities would be suitable for development in Kitui, however, two particular VC opportunities have been selected to maximise benefits and provide potential ‘quick wins’ for the programme: › An ecosystem (or cluster) of food processing activities starting with honey processing expanding into other products such as tamarind, mango and others in later stages. › Building construction materials - with a focus on brick making, roofing and affordable housing materials These VC opportunities are presented in the Appendix with detail on: their key activities and supply chain, the capacity and competitiveness factors, the investment requirements and financials, potential partners, the infrastructure and land requirements, and overall impacts. In summary, the two VCs offer the following benefits for Kitui: Food processing, starting with honey

Improved returns for bee keepers and stable prices for honey and related products

Direct employment of 50 FTE in the first phase with high potential for employing SIGs, PWDs and other target groups

By 2025 KSh 570 million of honey, wax, equipment could be purchased locally

Wider value chain benefits with the supply of packaging materials, equipment and related premium price products. Estimated investment of KSh 230 - 280 million

Building construction materials

Supplying low-cost building materials to support the construction of affordable homes

Reducing construction’s carbon footprint and subsequent impact on local resources, place and production

Direct employment of 72 FTE in the first phase with good provision especially for youth employment

Training for a new generation of builders and establishing a low-skill construction system suppliers and routes. Estimated investment of KSh 90 - 120 million Section 3 also presents the Development Framework, organised around three key focus areas -town centre, blue-green corridor and industrial cluster. A set of projects have been identified across urban design, power, transport, waste management and water management. The proposed projects have been assessed against climate vulnerability and a number of adaptation measures have been identified to ensure resilience.

The three areas have been identified to create focused and concentrated infrastructure development investment and economic growth opportunities which are founded on the key economic sectors and infrastructure needs that have been identified through the diagnostic process. This will optimise climate resilient infrastructure investment and utilisation, enhance social cohesion and job opportunities, and unlock potential privately funded investments. Furthermore, a range of wider area infrastructure projects and investments have been proposed which respond to the climate risks and environmental management required to support Kitui’s extensive agricultural base. The report then provides a programming and sequencing of the various projects along with high level cost estimations and suggestions on the sources of funding to finance them.

Section 4 sets out further considerations for implementation across: partners and institutional structures; funding; capacity building; social inclusion; and climate change resilience. Following the completion of the UEP, during the next phase of the SUED programme, the identified value chain and climate resilient infrastructure projects will be developed further by: › Capacity building specialists to enhance municipal and local capacity to implement the projects and ensure revenue generation › Investment climate and attraction firms and experts to address policy and regulatory constraints; and to develop feasibility studies, business cases and investment promotion strategies for the projects

Figure 1 - Overall Development Framework plan showing the three focus areas and individual sector proposals