CONFIDENTIAL   An Overview of the Kenya Vision 2030 Flagship ProjectsDocumentDate     A PRESENTATION     IN CHINA 4TH TO  ...
6 KEY SECTORS IDENTIFIED AS HAVING THE GREATEST POTENTIAL                                                                 ...
46 1. THE TOURISM SECTOR     High Level Strategy                                                              Flagship pro...
506 2. THE AGRICULTURE SECTOR  High Level Strategy                                                                Flagship...
THE FERTILISER COST REDUCTION INITIATIVE HAS ALREADY    STARTED AND IS EXPECTED TO DELIVER KSH ~1.5 BN IN SAVINGS      Cos...
203 3. THE WHOLESALE AND RETAIL SECTOR  High Level Strategy                                                               ...
201  4.   THE MANUFACTURING SECTOR  High Level Strategy  • Vision                                                         ...
15 5. THE BPO SECTOR     High Level Strategy                                                                Flagship proje...
31.4  6. THE FINANCIAL SERVICES SECTOR       High Level Strategy   • Vision                                               ...
FLAGSHIP PROJECTS IN SOCIAL SECTOR • Education and Training  Build at least one boarding school in each     constituency ...
FLAGSHIP PROJECTS IN SOCIAL SECTORHealthRevitilise and integrate Community Health centres topromote preventive health car...
FLAGSHIP PROJECTS IN SOCIAL SECTORS CONT.•   Environment, Water and Sanitation.   Tana and lake Victoria catchment initia...
FLAGSHIP PROJECTS IN SOCIAL SECTOR cont• Gender, Vulnerable Groups and Youth. Provide Funds to Women Entrepreneurs. Incr...
PROJECTED PRODUCTION OF NEW URBAN HOUSING UNITS                                 140,000                                 12...
FLAGSHIP PROJECTS IN SOCIAL SECTOR cont• Population, Urbanization and Housing To develop an integrated growth and develop...
JOH-KYA001-20070204-JvW-P1FLAGSHIP PROJECTS IN SECURITY SECTOR Establishment of forensic laboratory. Installation of surve...
THANK YOU.             17
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Fourth South-South Cooperation Workshop on Rural Development and Poverty Reduction - Eliud Salano Mwavali

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Fourth South-South Cooperation Workshop on Rural Development and Poverty Reduction - Eliud Salano Mwavali

  1. 1. CONFIDENTIAL An Overview of the Kenya Vision 2030 Flagship ProjectsDocumentDate A PRESENTATION IN CHINA 4TH TO 11TH JULY 2012This report is solely for the use of client personnel. No part of it may becirculated, quoted, or reproduced for distribution outside the clientorganization without prior written approval from McKinsey & Company.This material was used by McKinsey & Company during an oralpresentation; it is not a complete record of the discussion.
  2. 2. 6 KEY SECTORS IDENTIFIED AS HAVING THE GREATEST POTENTIAL Current size of GDP • Sizeable part of the economy (e.g., 30% of GDP and 50% of employment – formal and informal) • Plays a critical enabling role in the economy • One of Kenya’s major • Extremely fragmented and informal (e.g., 97% of • Has experienced significant growth over past few years economic pillars, (e.g., 50%+ p.a. growth of NSE) enjoying significant employment, 70% of value is informal) • Very inefficient supply chain • Still ample room for further development across all areas – growth (13% p.a.) Capital markets, Banking, Informal finance, and • Significant opportunity to formalise the sector over past few years International capital • Largest contributor to 700 foreign exchange + • earnings (US$1 bn+) However, far 3 6 1 underdeveloped 600 compared to other top Wholesale Financial Tourism tourist destinations and retail services (e.g., number of tourists, yield, diversity of 500 experience, etc) 5 2 Agriculture BPO 400 • Stagnant at 10% of Attractiveness 4 GDP over past 30 Manu- years facturing • Sector currently Petroleum* uncompetitive, e.g., 300 • Small and nascent industry expensive energy, today (e.g., <1 000 seats total) heavy regulation, • Overall, cost competitive relative disjointed taxation Bio-fuels* to other attractive destinations • Pillar of the Kenyan economy (25% of • Sizeable opportunity, 200 GDP) in particular in • However, key areas for improvement, e.g., telecom/ • Productivity significantly lower (e.g., domestic and energy cost and reliability, 2-3 x lower) than international regional markets training) benchmarks • Potential to develop Mining* 100 • Significant niche opportunity for • Additional opportunities to unlock global niches (e.g., Kenya potential of Kenyan land agro-processed • Strong need for institutional reform goods) 0 0 50 100 150 200 250 300 - Feasibility + * Although not a priority in the short term, these and other non-prioritised (sub)-sectors remain important for the Kenyan economy Source: Team analysis
  3. 3. 46 1. THE TOURISM SECTOR High Level Strategy Flagship projects • Vision 1.1.• Build two high-end, multi-attraction resort – Be a top 10 long haul tourist destination cities on coast, and one at Isiolo offering a high-end, diverse, and distinctive visitor experience 1.2.• Grow safari revenues by migrating premium parks upmarket, and extending • Goals 1.3. bed capacity at under-utilized parks – Quadruple GDP contribution to ~KSh 80bn – Raise international visitors from 1.8 to 3 1.4.• Grow nascent, high-end niche products million, and raise average spend per (e.g. eco-, water-based-, cultural tourism) visitor from ~KSh40,000 to ~KSh70,000 by attracting 3,000 beds of investment at – Raise beds from ~40,000 to ~65,000 key sites in Western, North; North Rift and Tana circuits • Strategy – Coast: Aggressively grow coast segment Economics and impact through resort cities initiative GDP CAGR – Safari: Migrate premium safari parks KSh Billion* upscale; Extend facilities at other under- utilised parks 78 +32.0% – Niche Products : Nurture nascent, high value products e.g., cultural, eco-, and 46 water-based tourism 32 19 – Business: Revamp business visitor +10.4% offering by attracting high-end international hotel chains and 2007** 2012 Additional 2012 with investing in conference facilities baseline* GDP with Vision 2030 strategy * Real GDP in 2001 prices ** Based on treasury projections before Vision 2030 Source: Economic survey; Team analysis
  4. 4. 506 2. THE AGRICULTURE SECTOR High Level Strategy Flagship projects • Vision – Innovative, commercially oriented and 2.1.• Prepare and ensure passage of consolidated modern agriculture sector agricultural reform legislation 2.2.• Develop and begin implementation of 3-tiered • Goals fertilizer cost reduction programme– purchasing – Stimulate additional Ksh 80-90bn increase in and supply chain improvements; blending; GDP by manufacturing • Achieving benchmark yields in key crops 2.3. • Plan and implement 4-5 Disease Free Zones and • Increased smallholder specialisation (2-3 livestock processing facilities crops per plot) 2.4. • Utilising 1 million hectares of idle lands • Create publicly accessible land registry • Cultivating up to 1.2m hectares of new 2.5. • Using land registry, develop agriculture land use lands master plan (e.g., crop specialisation plan) 2.6. • Tana River Basin development scheme • Strategy – Institutional reform: Transform key institutions into complementary and high- performing entities that enable private sector Economics and impact agricultural growth – Increase productivity: Increase productivity GDP CAGR of crops and livestock KSh Billion* – Transform land use structure: Better utilisation of High and Medium Potential 506 Lands 420 86 – Prepare new lands for cultivation: 324 +9.3% Strategically develop irrigable areas of Arid and Semi-Arid Lands (ASAL) for both crops +5.3% and intensified livestock – Increase access to markets: Improve market access to small holders by establishment of aggregators (addressed in 2007** 2012 Additional 2012 with retail sector) baseline* GDP with Vision 2030 strategy * Real GDP in 2001 prices ** Based on treasury projections before Vision 2030
  5. 5. THE FERTILISER COST REDUCTION INITIATIVE HAS ALREADY STARTED AND IS EXPECTED TO DELIVER KSH ~1.5 BN IN SAVINGS Cost to farmer of 50kg bag of DAP fertilizer 1 721 +31% 1 314 Procurement and supply 1 180 +11% chain improvements following KTDA model can decrease 945 945 cost to small holder by 30%, 875 representing a potential quick win cost savings to Kenya of KSh 1.4-1.7 billion US Gulf Morocco Baltic US Organised Unorganised port Port Farmer Kenyan Kenyan farmer* farmer* This is from the Kenya Tea Development Agency (KTDA), although KTDA imports are NPK, purchase cost is nearly identical to that of DAP Source: Kenya Tea Development Agency; MEA; NASS
  6. 6. 203 3. THE WHOLESALE AND RETAIL SECTOR High Level Strategy Flagship projects • Vision – Move towards greater efficiency and at 3.1. • Build tier 1 retail markets least a 30% formal market share (from 5%) starting with pilot in Nairobi • Goals (e.g., potentially Athi River) – Stimulate additional Ksh ~50bn increase in GDP by 3.2. • Create large formal wholesale • Creating ~10 district based wholesale hubs and connect them to hubs producer business groups • Establishing 1,000-1,500 producer business groups (PBGs) 3.3. • Develop Free Trade Port in • Building at least 10 formal ‘Tier 1’ district Mombasa for Regional market based retail market places • Increasing formal share from 5 to 10% • Attracting at least 3 new retailers with Economics and impact 10+ stores each • Creating 1 free trade port in Mombasa GDP • Strategy KSh Billion* CAGR – Supply chain: Drive efficiencies through development of producer business groups +11.1% and large wholesale hubs 203 154 41 – Semi-formal retail: Create “Tier 1” retail 120 markets to locate informal players and help them grow +5.1% – Formal retail: Attract and develop large 2005 formal retails through JVs and standalone ventures (domestic and foreign) 2007* 2012 Additional 2012 with baseline GDP with Vision 2030 strategy * Real GDP in 2001 prices ** Based on treasury projections before Vision 2030
  7. 7. 201 4. THE MANUFACTURING SECTOR High Level Strategy • Vision Flagship projects – To improve competitiveness in manufacturing in order to revolutionise 4.1. • Develop concept, pilot, and launch the sector 1-2 Special Economic Clusters, • Goals focusing on select industries (e.g. – Stimulate additional Ksh ~30bn agro-processing, building increase in GDP by materials), target players, and • Reducing imports in key local incentive packages industries by 25% 4.2.. • Develop concept, pilot, and create • Growing market share in regional at least 5 Small & Medium market from 7 % to 15% • Attracting at least 10 large strategic Enterprise (SME) Industrial investors in key agro-processing Parks industries Economics and impact • Strategy GDP – Local Production: Defend and CAGR KSh Billion* restructure key industries that have local raw material availability, but no competitive edge (e.g. sugar, paper) 201 +8.8% 174 27 – Regional Domination: Exploit 132 opportunities to further process imports and capture the “last step” of value 5.7% addition (e.g. metals, plastics) – Global Niche: Strategically drive increased level of value addition in 2007** 2012 Additional 2012 with niche exports (e.g. agro-processing) Baseline GDP with Vision 2030 strategy * Real GDP in 2001 prices ** Based on treasury projections before Vision 2030 Source: Economic survey; Team analysis
  8. 8. 15 5. THE BPO SECTOR High Level Strategy Flagship projects • Vision – Quickly become one of the top 3 BPO 5.1. • Design and develop 1 major destinations in Africa BPO park in Nairobi that has • Goals world class infrastructure – Create at least 7,500 direct BPO jobs with developed by top international IT an additional GDP contribution of Ksh suppliers, offers competitive ~10bn by • Attracting at least 5 major leading IT incentive packages to locate in suppliers park, provides a one stop shop • Attracting at least 10 large MNC for administration and talent and captives and/or global BPO players serves as a ‘showcase’ park to (creating at least 5,000 jobs) • Targeting at least 5 large local players attract top foreign companies to develop as local champions through standalone operations or JVs Economics and impact • Strategy CAGR – International IT supplier base: Attract GDP top international suppli-ers for scale and KSh Billion* ~12-18 credibility – MNC captives and foreign BPOs: Attract ~7-11 leading brands to establish at least 300 ~5-7 +71.9% seat operations +43.1% ~1 – Local champions: Develop local champions through standalone operations 2007** 2012 Additional 2012 with and JVs Baseline GDP with Vision 2030 – Integrated value proposition: Use BPO strategy park to concentrate marketing, training, Number of incentives and infrastructure jobs (000s) 1 5 7.5 12.5 * Real GDP in 2001 prices ** Based on treasury projections before Vision 2030 Source: Economic survey; Team analysis
  9. 9. 31.4 6. THE FINANCIAL SERVICES SECTOR High Level Strategy • Vision Flagship projects • A vibrant and globally competitive financial sector driving high-levels of savings and 6.1. • Facilitate transformation towards financing Kenya’s investment needs • Goals stronger, larger scale banks – Raise savings and investment rates from ~17% to ~30% of GDP through 6.2. • Develop and execute comprehensive • Increase bank deposits from ~44% to ~ 80% model for pension reform of GDP and reduce cost of capital • Reduce share of population without access to finance from 85% to 70% 6.3. • Pursue comprehensive remittances • Raise stock market capitalization from ~50% strategy to ~ 90% of GDP • Raise ~ 5% of GDP for investment from 6.4. • Issue sovereign benchmark bond remittances and ~ 5% of GDP from other external sources e.g. FDI, sovereign bond Economics and impact • Strategy – Banking: Facilitate transformation to larger, Savings (% of GDP) stronger banks, and extend credit referencing 32 – Informal finance: Formalize informal finance 5 (e.g. pass SACCO bill) and extend access to 17 10 microfinance – Capital markets: Deepen capital markets by raising institutional capital through pension reform and expanding bond and equity markets 2007 Increase in International Total savings/ – International capital: Tap international Baseline Domestic Capital** investments in sources of capital Savings Savings* 2012 with Vision 2030 * Composed of 4.8% from comprehensive pension reform to raise NSSF coverage and include an addition 0.6 million adults in contributory pensions, 1.3% from banking an additional 2 million customers, 1.3% from extending informal finance to an additional 2 million, 1.5% from efficiency gains in banking sector ** Composed of 2.5% each from additional FDI and remittances, and 0.8% from a sovereign benchmark bond. Source: Economic survey; Team analysis
  10. 10. FLAGSHIP PROJECTS IN SOCIAL SECTOR • Education and Training  Build at least one boarding school in each constituency in the pastoral regions.  Build and fully equip 560 new secondary schools.  Implement a computer supply programme.  Roll out a voucher system in five poorest districts.  Create centres of Excellence for key Vision 2030 sectors.  Undertake a teachers recruitment programme. 10
  11. 11. FLAGSHIP PROJECTS IN SOCIAL SECTORHealthRevitilise and integrate Community Health centres topromote preventive health care.De-link the ministry of Heath from service delivery toallow independent operation of tiers 4, 5 and 6(District, Provincial and National hospitals).Create a mandatory National Health InsuranceScheme (with contribution from employers andemployees).Channel Health funds directly to health care centres (i.e. to hospitals and CHCs).Scale up Output Based Approach (OBA) system. 11
  12. 12. FLAGSHIP PROJECTS IN SOCIAL SECTORS CONT.• Environment, Water and Sanitation. Tana and lake Victoria catchment initiatives. Rehabilitate 600 hydro meteorological stations. Develop two multi purpose water conservation structures along Nzoia and Nyando rivers. Develop 22 medium sized multi-purpose dams. Rehabilitate and augment Mzima pipeline. Implement Tana Delta initiatives. Expedite rehabilitation of the Bura irrigation scheme. Implement sewage initiative. Water catchment management. Secure wildlife corridors and migratory routes. Relocating of Dandora dumping site. Land cover and land use mapping 12
  13. 13. FLAGSHIP PROJECTS IN SOCIAL SECTOR cont• Gender, Vulnerable Groups and Youth. Provide Funds to Women Entrepreneurs. Increase women representation at executive level in all branches of the government and the private sector. Sports: International Academy for Sports and Sports Lottery. Music: Establish International Centre for Arts and Culture and Programme to Identify, nature and Develop Music. Expand the Youth Enterprise Development Fund. Establish social protection fund for cash transfer to Orphans and Vulnerable Children (OVC), Persons With Disabilities (PWD) and elderly. Full implementation of Disability Fund. 13
  14. 14. PROJECTED PRODUCTION OF NEW URBAN HOUSING UNITS 140,000 120,000 s es ouNew Urban House Units Per Year 100,000 H e m co In ow -L 80,000 L ow s High Income Houses 60,000 se H ou e om I nc h Hig ous es 40,000 Houses m eH In come nc o Middle Lo w I e r- Upp 20,000 0 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 YEARSSource: Min of Housing 14
  15. 15. FLAGSHIP PROJECTS IN SOCIAL SECTOR cont• Population, Urbanization and Housing To develop an integrated growth and development strategy for six metropolitan regions, Nairobi, Mombasa,Kisumu, Kakamega,Eldoret,Wajir,Garissa,Mandera,Kitui,Mwingi,Me ru. To develop a National Land Use Plan. Enact the Housing Bill 2006. Establish secondary mortgage finance corporation. Produce 200,000 housing units annually. Install physical and social infrastructure in slums in 20 urban areas. Position the city of Nairobi as a 24 hour and all round globally competitive city in business and tourism. Establish housing technology centres in each constituency to increase access to decent housing 15
  16. 16. JOH-KYA001-20070204-JvW-P1FLAGSHIP PROJECTS IN SECURITY SECTOR Establishment of forensic laboratory. Installation of surveillance cameras in Nairobi, Mombasa, Nakuru and Kisumu. Construction of six new prisons in Mwingi, Nyamira, Kwale, Rachuonyo, Vihiga and Kaloleni. Establishment of a National Security Database.
  17. 17. THANK YOU. 17

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