Project description

Title: Private Sector Development in Agriculture (PSDA)
Client: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Kenya
Lead executing agency: Ministry of Agriculture
Overall term: January 2003 to December 2013

Context

Agriculture is the most important sector of the Kenyan economy. It is characterised by small- and medium-sized farming and processing operations. About three-quarters of the population live in rural regions, and such operations are the major employer. Taken all together, the farms and farm product processors of the agro-industry generate about half of Kenya's gross national product, a major portion of which is derived from exports. The most important products exported are tea, vegetables, cut flowers and coffee.

Growth in the agricultural sector has now risen from 2.0 percent to 6.7 percent annually. The proportion of the rural population living below the absolute poverty line is 49 percent, which is 5 percent less than in 2003. Despite this positive development the overall circumstances of the population remain alarming. Growth in the agricultural sector could be much higher, but farmers are not sufficiently well informed about the potential inherent in regional and international markets and how these markets function. An additional factor is the high rate of population growth, which is putting added pressure on natural resources. This leads to soil degradation, continuing deforestation as more and more fuelwood is needed, and increasing erosion. The uses of resource-friendly technologies for agriculture are for the most part unknown, and the potential of existing renewable energies has been little exploited to date. 

Objective

Production in small and medium-sized farms increases, and smallholders have improved access to regional and international markets. Additional jobs are available in agriculture.

Approach

Acting jointly with the KfW Entwicklungsbank and the German Development Service (DED), the programme is implementing the Kenyan-German priority area strategy paper 'Private Sector Development in Agriculture'. The programme provides policy advisory services and supports private sector actors in playing a larger part in policy-making and in implementation by public institutions. The programme’s activities are designed in accord with the value-added chain approach: market-oriented holistic development takes into consideration all actors and all goods and services flows in a given value-added chain. This approach brings to light weak points at which promotion strategies could intervene. Service providers and advocacy groups, as well as the government and other institutions, are continually integrated into an ongoing dialogue.

The programme also promotes development partnerships with the private sector (public-private partnerships – PPP) that contribute to strengthening actors within given value-added chains.

• Since 2006, the programme has worked with Kevian K Ltd., a private fruit processing company, to reduce high losses suffered during the mango harvest.
• A development partnership with Unilever Tea Kenya Ltd. combats HIV/AIDS in neighbouring operations, among tea pickers (also from other companies) and tea-growers in the immediate vicinity of Unilever tea production.

Additional public-private partnerships with the programme:

• Bayer East Africa Ltd.: promotion of quality and safety in regard to pesticides
• Genetics Technologies International Ltd. and International Potato Research Institute: seed potato propagation
• Fresh Produce Exporters Association of Kenya: improvement of vegetable quality standards

The programme for private sector development in agriculture aims to step up cooperation between public and private agricultural extension services and improve the range of services offered by associations representing producers and processors.

In order to increase the use of environmentally friendly technologies, the programme supports the use of biogas and fuel-efficient woodstoves.

Results achieved so far

The PSDA advisory services were a notable factor in the decision of the Kenyan Government and the other donors to add their support to implementation of the agricultural sector strategy. The Kenyan Government and the private sector are being supported in this with projects. The Government has come to fully support reform of the agricultural sector, and donor coordination has also improved, which has increased the efficiency of the measures.

Potatoes, mangos, passion fruit, sweet potatoes, dairy goats, beef, poultry and fish are the products that were selected for promotion through value-added chains. Advisory services and market improvements have led to considerable increases in productivity concomitantly with reduction of costs for production and transport. The accompanying promotion of rural service providers and private sector associations has made the farming and processing enterprises more efficient and more competitive. For example, larger yields and better prices have made it possible for potato farmers to increase their incomes by as much as 400 percent.

A development partnership with the fruit processing company Kevian K Ltd. has improved the marketing position of 450 small-scale mango growers. In the past, they were able to sell only 25 percent to 40 percent of their fruit during the height of the season: today they can sell 60 percent. Cooperation with Bayer East Africa Ltd. has meant that tradespersons handle pesticides with greater safety and has put more environmentally friendly products on the shelves. Tradespeople have also received training in business management. A joint PPP project with Unilever Tea Kenya is devoted to combating HIV/AIDS. Twenty businesses have already made HIV/AIDS information and prevention measures for employees a standard part of their operations.

The use of more energy-efficient stoves has led to a decline in logging and thus to a reduction of deforestation and soil erosion. Since the new stoves generate considerably less smoke, respiratory illness among the rural population has declined by 40 percent. Within a span of only two years 80,000 fuelwood-efficient stoves for households and 200 for institutions and companies were produced and sold. This means a saving of around 112,000 tonnes of fuelwood or a good 6000 hectares of forest every year. The lively demand for the stoves has brought income increases of as much of 500 percent to the 1000 producers and installers of the stoves. Finally, today, wastes such as animal excrement and slaughterhouse residues and waste water are converted in biogas plants into gas and quality manure instead of landing as in the past in refuse heaps or being dumped untreated into nearby waterways. The 120 plants installed so far mean savings of another 252 tonnes of fuelwood a year.