Kenya@60: Driving Agribusiness As A Core Imperative In The East African Country

Agriculture represents one of Kenya’s largest industries. Over the decades, the mega-sector has shaped and formed to include some of the continent’s highest export volumes, with major crops making a name for the country in the global market. FORBES AFRICA takes a closer look as the country celebrates its 60^th birthday.

Agriculture in Kenya is big business. According to the latest Central Bank data, this national industry is responsible for at least 20% of the country’s Gross Domestic Product (GDP). It’s also a top income earner, accounting for 65% of national export earnings, and employs over 40% of the working population; a majority of which (approximately 70%) lives outside the cities. Additionally, the industry is directly and indirectly responsible for the livelihoods of an estimated 80% of the Kenyan population.

The productivity of this industry is expected to have a major impact on the economic growth of the country. Hence, it has become a cornerstone pillar in President William Ruto’s strategic economic plan known as the Bottom-Up Economic Transformation Agenda (BETA).

Among six pillars, Agriculture cuts across several objectives intended to boost resilience and recovery in the country’s national economy. Among the key directives is a paradigm shift, challenging previous policy approaches in force within the industry.

A focus on entrepreneurship, across the value chain, including at farm-level as well as a move towards unit productivity rather than production marks the shift. Adding to this, agricultural resources, such as land and livestock, are now treated as national assets, elevating these factors of production to crucial levers in prevailing food security and export mandates. Overall, BETA seeks to address major economic challenges including poverty reduction through the creation of employment opportunities, particularly for the country’s large youth population, as well as boosting foreign exchange earnings, among others.

Organizations, in both the public and private sectors as well as civil society, have stepped in to shore up targets. Among them is the Centre for African Bio-Entrepreneurship (CABE), which supports stakeholders across the agricultural value chain in Kenya including farmers and Micro, Small and Medium Enterprises (MSMEs).

“We do market linkages. We gather market information, share the current state of market, in terms of agricultural produce [and] what is trending [in the marketplace]. This is to create value so that they have a targeted market and whenever they engage in business, it is demand-driven,” explains Lucy Adoyo, who leads Research at CABE’s Nairobi headquarters, to FORBES AFRICA.

MSMEs represent an important layer of the sectoral value chain and within the BETA framework. One of the pillars of the economic agenda, these enterprises are poised to drive job creation and stimulate trade and market activities across the national economy. Within agriculture, they provide a crucial pipeline for the youth population to enter the industry while employing the majority of Kenyans who depend on subsistence farming for both food and finance.

“These are the enterprises that produce the food which we consume in the country. They are the people you’d find in the domestic market and those are the people who even drive the local economy beyond the export [market]. The current discussions we’re having right now are around sustainable food systems coupled with climate action,” adds Adoyo.

These agribusinesses range from specialization to size and focus on direct food production to value addition such as agro-processing. The development of these businesses is a core national objective and a target of the BETA plan.

Last year, Strathmore University Business School, one of the most respected tertiary institutions in the country, in collaboration with the Ministry of Agriculture, Livestock and Fisheries and the Kenya Small Business Development Centers (SBDC) announced a program to support MSMEs within the industry. The partnership is intended to commercialize sectoral value chains across the country’s major counties; each of them home to a bulk of the farming population in Kenya.

While these businesses form a crucible within Kenyan agriculture, MSMEs in the country remain arrested in development. Barriers to growth such as lack of access to financing and markets are consistent stumbling blocks for entrepreneurs across all sectors as well as inflexible policy environments. The hopes for the BETA interventions frame this context with its promises for improved trading conditions, greater access to funding, and much needed business development support.

The Strathmore Business School program for agricultural MSMEs sharpens its focus on addressing gaps in the industrial value chain; beyond direct business support. Data, for improved policy-making and for tracking sectoral growth and impact, is lacking at both local and international levels. The program launched with an intention to address these challenges.

“There is a need to map out the value chains and integrate them under one platform to inform decision-making and areas of intervention,’’ noted Dr. George Njenga, Programs Manager at the Kenya Small Business Development Centers, during the announcement.

In Kenya, these enterprises currently employ close to 15 million people and hold the key for further job creation within the agricultural industry, particularly for the growing youth population.

“Youth are mobile, youth transition very fast, [they] are also innovative in nature and if we understand those aspects about youth, [then] creating sustainability [in] the businesses they establish and also tracking them to ensure that they are creating employment opportunities for themselves and others; looking at the multiplier effect of the initial seed [investment] is most important to us,” says Adoyo of CABE.

Kenyan youth are becoming prolific players within agriculture than in previous decades thanks to recent policy efforts, namely the national Kenya Youth Agribusiness Strategy that ran from 2018 to 2022. However, like other entrepreneurs in the MSME space, young agri-preneurs face similar challenges to scale such as limited market information, lack of credit, and competition from imported agricultural produce, which is often cheaper and floods the market during peak seasons.

Nevertheless, they remain a crucial demographic for BETA’s interventions, across the board. The country’s young people not only represent major human capital potential at the national level, they are also potential food producers for Kenya’s local and export markets. However, to keep them in the industry, relevant support systems need to be put in place, explains Adoyo.

“They are looking for livelihoods. If they are unable to sustain themselves, they might even sell their infrastructure and move on to the next thing. Sustainability of initial efforts is what is key in making sure that youth are able to earn meaningful employment or income.”