Employment Creaon in Agriculture & Agro‐ Processing Sector in Kenya in the Context of Inclusive ...

94 Pages·2017·1.08 MB·English

Advancing research excellence for governance and public policy in Africa
PASGR Working Paper 020
Employment Crea(cid:415)on in Agriculture & Agro‐
Processing Sector in Kenya in the Context of
Inclusive Growth: Poli(cid:415)cal Economy &
Se(cid:425)lement Analysis
Mitullah, Winnie
University of Nairobi, Ins(cid:415)tute for Development Studies

Kamau, Paul
University of Nairobi, Ins(cid:415)tute for Development Studies

Kivuva, Joshua M
University of Nairobi, Ins(cid:415)tute for Development Studies

June, 2017
This report was produced in the context of a mul(cid:415)‐country study on the ‘Poli(cid:415)cal Economy and Se(cid:425)le‐
ments Analyses of Employment Crea(cid:415)on Schemes in Agriculture and Agro‐processing Sectors in the Con‐
text of Inclusive Growth in Africa ’, generously supported by the UK Department for Interna(cid:415)onal Develop‐
ment (DFID) through the Partnership for African Social and Governance Research (PASGR). The views
herein are those of the authors and do not necessarily represent those held by PASGR or DFID.
Author contact informa(cid:415)on:
Winnie Mitullah
Ins(cid:415)tute for Development Studies, University of Nairobi
[email protected]
Suggested cita(cid:415)on:
Mitullah, W., Kamau, P. and Kivuva, J. M. (2017). Employment Crea(cid:415)on in Agriculture & Agro‐Processing
Sector in Kenya in the Context of Inclusive Growth: Poli(cid:415)cal Economy & Se(cid:425)lement Analysis. Partnership
for African Social and Governance Research Working Paper No. 020, Nairobi, Kenya.

©Partnership for African Social & Governance Research, 2017
Nairobi, Kenya
[email protected]
www.pasgr.org

ISBN 978‐9966‐087‐17‐1
EMPLOYMENT CREATION IN AGRICULTURE AND AGRO-
PROCESSING SECTOR IN KENYA IN THE CONTEXT OF INCLUSIVE
GROWTH: POLITICAL ECONOMY AND SETTLEMENT ANALYSIS
By
Institute for Development Studies
University of Nairobi
Team Members
Prof. Winnie Mitullah
Dr. Paul Kamau
Dr. Joshua M. Kivuva
FINALReport submitted tothePartnership for African Social and Governance Research
(PASGR), Nairobi, Kenya.
June 16, 2017
ACKNOWLEDGEMENTS
This study was undertaken with the financial support from the Partnership for African Social
and Governance Research (PASGR), for which the research team is greatly indebted for all the
logistical support and input. We specifically wish to appreciate the guidance and leadership
offered by the Principal Investigator Prof. Raufu Mustapha. We are also very grateful to the
reference group members, Dr. David Booth and Dr. Hazel Gray for their invaluable input and
constructive comments given all along as we carried out this work, which ultimately enriched
the report. The input provided by Dr. Kate Meagher at the project inception and Dr. Maureen
Miruka on the draft report is very much appreciated. We worked very closely with PASGR staff
– Prof. Tade Akin Aina, Dr. Nicholas Awortwi, Dr. Darlison Kaija and Ms. Pamellah Lidaywa,
whose contribution into this work is greatly appreciated.
We are indeed grateful to the senior officials of the cut-flower and sugar industries who
provided quality time for interviews in addition to availing required data, and access to their
employees. We thank farmers and employees of various companies that responded to our
survey questionnaire during the fieldwork of this project. This group of people provided
information that enabled us to write this report. We thank you for your time and participation.
We thank IDS and University of Nairobi for allowing us time off to carry out this study. However,
we remainresponsibleforthe entire report and anyinherenterror.
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TABLE OF CONTENTS
ACKNOWLEDGEMENTS......................................................................................................................ii
TABLE OF CONTENTS.........................................................................................................................iii
LIST OF TABLES..................................................................................................................................v
LIST OF FIGURES................................................................................................................................vi
LIST OF ABBREVIATIONS...................................................................................................................vii
EXECUTIVE SUMMARY....................................................................................................................viii
SECTION ONE.....................................................................................................................................1
INTRODUCTION.................................................................................................................................1
1.1 Background to the Study................................................................................................................1
1.2 Problem Statement........................................................................................................................5
1.3 Research Questions.......................................................................................................................7
1.4 Research Objectives.......................................................................................................................7
1.5 Justification for the Case Studies Selected......................................................................................8
1.6 Selection of the two case studies...................................................................................................8
1.7 Methodology...............................................................................................................................10
SECTION TWO..................................................................................................................................14
MACROECONOMIC, POLITICAL AND POLICY CONTEXT OF KENYA......................................................14
2.1 Introduction.................................................................................................................................14
2.2 General Macroeconomic Context.................................................................................................14
2.3 Political and Policy Context of Kenya............................................................................................16
2.4 Impact of Politics on Kenya’s Economy.........................................................................................18
SECTION THREE................................................................................................................................22
CUT FLOWER VALUE CHAIN..............................................................................................................22
3.1 Introduction.................................................................................................................................22
3.2 Cut-Flower Farming in Kenya.......................................................................................................22
3.3 Processing and Export of Cut-Flowers in Kenya............................................................................23
3.4 Marketing and Export of Cut-Flowers in Kenya.............................................................................24
3.5 Employment Issues in the Cut-Flower Industry in Kenya..............................................................28
3.6 Challenges of Employment Creation in the Flower Industry in Kenya...........................................34
SECTION FOUR.................................................................................................................................39
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THE SUGAR VALUE CHAIN................................................................................................................39
4.1 Introduction.................................................................................................................................39
4.2 Sugar Cane Farming in Kenya.......................................................................................................41
4.3 Industrial Sugar Milling and Trade in Kenya..................................................................................45
4.4 Employment Issues in the Kenyan Sugar Industry.........................................................................54
4.5 Challenges facing Sugar Industry in Employment Creation...........................................................58
SECTION FIVE...................................................................................................................................60
POLITICAL SETTLEMENT AND EMPLOYMENT CREATION IN THE CONTEXT OF CUTFLOWER AND SUGAR
INDUSTRIES.....................................................................................................................................60
5.1 Political Settlement Analysis........................................................................................................60
5.2 Political Settlement and Employment in Kenya’s Cut-flower Industry...........................................63
5.3 Political Settlement and Employment in Kenya’s Sugar Industry...................................................67
SECTION SIX.....................................................................................................................................70
CONCLUSION AND POLICY ISSUES.....................................................................................................70
6.1 Summary of the Findings.............................................................................................................70
6.2 Policy Recommendations.............................................................................................................71
REFERENCES....................................................................................................................................73
iv
LIST OF TABLES
Table 1. 1: Unemployment Rates (%) by Age and Sex 1978-2005............................................................2
Table 1. 2: Employment in Kenya 2000–2015 (‘000)...............................................................................4
Table 1. 3: Employment in Kenya by Gender and Sector (in ‘000).............................................................5
Table 2. 1: Sectoral Contribution to GDP (as % of GDP)..........................................................................16
Table 4. 1: Sugar Cane Millers/Factories in Kenya 2015..........................................................................46
Table 4. 2: Proportion of Sugar in Cane Crushed (%2008-2014).............................................................51
v
LIST OF FIGURES
Figure 2.1: Real Gross Domestic Product Growth 1990–2015 (Annual, %)............................................15
Figure 2.2: Trends in agricultural and economicgrowth (1988–2014)....................................................21
Figure 3 1: Percentage Changes in Volumes and Values of Export of Flowers 1994-2014.......................28
Figure 4.1: Sugar Industry Value Chain...................................................................................................40
Figure 4. 2: Area under Sugar cane Farming by Out-growers in HA 1979-2014......................................43
Figure 4. 3: Area under Sugar Cane Farming in HA 2003-2014...............................................................44
Figure 4. 7: Import and Export of Sugar 1975-2014...............................................................................53
Figure 4. 7: Employment in the Sugar Industry 1975-2014...................................................................55
Figure 4. 8: Employment in Selected Sugar Factories 1999-2014............................................................56
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LIST OF ABBREVIATIONS
AfDB African Development Bank
AFFA Agriculture, Fisheries and Food Authority
ASDS Agricultural Sector Development Strategy
COMESA Common Marketfor East and Southern Africa
ERC Estimated Recoverable Crystals in Sugar
ERS Economic Recovery Strategy for Wealth and Employment Creation
FGD Focus Group Discussion
FDI Foreign Direct Investment
GDP Gross Domestic Product
GoK Government of Kenya
HCDA Horticultural Crops Development Authority
ICT Information and Communication Technology
IDS Institute for Development Studies
ILFS Integrated Labour Force Survey
ILO International Labour Organization
KFC Kenya Flower Council
KHRC Kenya Human Rights Commission
KIHBS Kenya Integrated Household Budget Survey
KNBS Kenya National Bureau of Statistics
KSD Kenya Sugar Directorate (formerly Kenya Sugar Board)
MDGs Millennium Development Goals
MNC Multinational Corporations
NGO Non–Governmental Organization
PASGR Partnership for African Social and Governance Research
SME Small and Medium Enterprises
UK United Kingdom
UNDP United Nations Development Programme
UNECA United Nations Economic Commission for Africa
USA United States of America
USAID United States Agency for International Development
VAT Value Added Tax
WDI World Development Indicators
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EXECUTIVE SUMMARY
Kenya, like most African countries has experienced an impressive economic growth in the last
decade, evidenced by a 5% annual GDP growth rate, yet unemployment, poverty and gender
disparities remain high. Despiteemployment creation being on top of the development agenda
since independence, policies adopted to address this do not seem to be working, raising
questions of the sustainability of the growth being experienced. From the Sessional Paper No.
10 of 1965 to the Vision 2030 of 2008, agriculture has been flagged as central in job creation
but experience show contrary trends. The big question to policy analysts is whether agriculture
has the potential to create the much needed jobs for inclusive growth in Kenya.
This study sought to understand employment and employment creation in the agricultural
sector. Specifically, why, despite impressive growth in Kenya, poverty and unemployment
persist. Why, despite several policy interventions, not much has changed in terms of
employment creation? Why the benefits of growthhavenotbeentrickling down to the masses,
leading to growing calls for more inclusive models of growth to avert social instability. Finally,
why increasingeconomicgrowth has not been shared or inclusive?
To answer the above questions, this study used two case studies, sugar and cut-flower
industries. These two industries were identified because of their diversity in employment
creation by gender, government involvement and embedded political issues. The study used
political settlements analysis lens. Mixed method approach to collect data included key
informants, FGDs and employee surveys to study the two value chains both of which involved
agriculture and agro-processing elements.
Based on the two case studies, it was established that; while political settlements in the
agriculture sector have remained fairly constant, with a general agreement on how the sector is
to be developed and the general policies, elite interests in specific sub-sectors combined with
national (and to a great extent local) politics have varied, with certain sub-sectors and regions
experiencing more interests and benefits than others. The implications for employment have
also varied greatly in these two value chains. Second, sector specific settlements are more
important in influencing employment creation than regime-based settlements. We found that
political settlements in a public sector do not necessarily advance job creation and/or private
sector settlements, and liberalism in general are not necessarily antithetical to job creation.
Thoughinclusive settlements were neither the most stable nor the most productive in terms of
economic and agricultural growth or employment creation, whenever a political settlement
collapsed, both agriculture and employment suffered. This seems to explain why changes or a
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