Draft kenyan policy on clusters

Tuesday, April 18, 2023 KV2030 Manufacturing Sector Delivery Secretariat

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Draft Kenyan Policy On Clusters

presented atThe Conference on Cluster

initiatives for Enhanced CompetitivenessRedcourt Hotel, Nairobi

June 28th 2012Victor Mageto

Ministry of Industrialization


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Concept of Clusters

The concept of clusters has in recent years gained enormous popularity to the extent thatpolicy-makers, practitioners and academics alike are increasingly referring to it. However, many different cluster definitions exist and the economic impact of clusters on competitiveness and innovation is far from being clear. Clusters are becoming an increasingly popular concept which is reflected in a growing number of policies and initiatives in support of clusters.


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Concept of Clusters

Conceptually, industry clusters have driven the economic development policy in many parts of the world. It is now a universally accepted fact that successful regional economies are, to varying degrees, specialized.

Clusters can indeed therefore be viewed as key drivers of competitiveness and innovation and thus of growth and jobs. Evidence from around the world shows that clusters are significantly related to prosperity and that enterprises benefit from clusters.

Whereas clusters are a real economic phenomenon that can be economically measured, cluster policies are more an expression of political commitment to support existing clusters or the emergence of new clusters. Cluster initiatives are practical actions to strengthen cluster development, which can, but must not necessarily be, based on a formulated cluster policy.


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Definition: What is a cluster

Definitions as to what exactly constitutes a cluster vary. However, the concept of ‘cluster’ generally refers to a geographical concentration of vertically or horizontally linked firms engaged in related lines of business together with supporting organizations such as banks, suppliers, Business member organizations e.t.c.

Kalundborg eco-industrial park

Tuesday, April 18, 2023

KV2030 Manufacturing Sector Delivery Secretariat

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A cluster of friends on Facebook

Tuesday, April 18, 2023

KV2030 Manufacturing Sector Delivery Secretariat

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Cluster Policy?

Potential benefits from cluster initiatives do not in themselves suffice as rationale for policy intervention in clustering processes. Individual firms and organizations are the prime actors in cluster processes, and cluster policy is about consistently paving the way for conditions that are conducive to people’s engagement in joint efforts, and the realization of mutual benefits. Yet, government policy impacts on the preconditions for clustering under all circumstances, whether willingly or un-willingly.

The understanding and attitudes of policymakers thus matter greatly for what can be achieved through cluster initiatives and cluster actions. (Cluster Policies White book)


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Cluster policy?

The presence of potential benefits from cluster initiatives does not in itself suffice as rationale or justification for policymakers to interfere.

The key question is whether and how policymakers can add value through appropriate measures, beyond the outcomes that markets and market actors produce on their own. E.g. is their evidence that issues analyzed should be addressed by policy intervention that Without it the clusters will not develop.


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Objectives of the Cluster policy in Kenya

On the role of policy in cluster development, various notions abound in the literature. One commonly stated view is that public authorities should refrain from creating clusters. Attitudes are generally more favorable with regard to instruments for supporting existing or emerging clusters and, indeed, a number of governments around the world - irrespective of ideology - apply cluster policy with focus on the latter. Likewise, many clusters have gone through initial stages of mostly spontaneously generated clustering followed by a stronger element of conscious policy-support.


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Objectives of a Cluster Policy in

Kenya

1. Spur workforce development through creativity, innovations, Knowledge and skills

transfer

2. Facilitate increase of exports

3. Improve national and regional

productivity and competitiveness

4. Improve market driven research and

networking

5. Create comparative and competitive

advantage through collapetion and

cooptetion


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SITUATION ANALYSIS

There are four types of cluster and network programmes in the different regions and countries. These variations can be summarized into four main categories or types of programmes:• Regional economic development programmes• Programmes for the development of national

industries,• Research and development based cluster programmes• Network programmes that support the development

of new clusters


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SITUATION ANALYSIS

In Kenya, The National Economic and Social Council (NESC) in 2009 recommended the adoption of a cluster development strategy as part of regional and national competitiveness strategies.

KIPPRA was commissioned and conducted a study on clusters (Cluster Mapping) with technical backstopping of ECORYS Netherlands.

The overall objective of the study was to come up with practical solutions to the challenges Kenya faces with respect to productivity & competitiveness in the mapped clusters and then to draft Participatory Action Plans that provide blueprints for development.


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20 SELECTED PRIORITY CLUSTERS

• 1. Cotton - Makueni • 2. Cotton - Mombasa • 3. Dairy – Nakuru • 4. Dairy – Uasin-Gishu • 5. Energy – Olkaria • 6. Horticulture – Mombasa • 7. Horticulture – Naivasha • 8. ICT – Nairobi • 9. Livestock – Garissa • 10. Livestock – Kajiado• 11. Maize – Kitale • 12. Marine & fisheries – Kisumu • 13. Marine & fisheries – Malindi • 14. Transport & logistics - Mombasa• 15. Sugar – Nyando • 16. Sugar – Western• 17. Tea – Kericho • 18. Tea – Mombasa • 19. Tourism – Mombasa• 20. Tourism – Nairobi

SIX PARTICIPATORY ACTION PLANS DEVELOPED1. ICT Cluster: Participatory Action

Plan2. Kisumu Inland Fisheries Cluster

Participatory Action Plan3. Garissa Beef Cluster: Draft

Participatory Action Plan4. Cut-Flower Cluster Draft

Participatory Action Plan5. Coastal Beach Tourism Cluster

Draft Participatory Action Plan6. Transport and Logistics Cluster

Draft Participatory Action Plan


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Status of Implementation of the Cluster Participatory Action Plans in Kenya

Cluster study tour of Rotterdam port cluster, food valley, Venlo logistics clusters undertaken in the Netherlands June 2010• National study tours – one to Nyanza, Western and North

Rift; the other to Coastal Kenya December 2009 • 3 Clusters mainstreamed and budget provided by

government 2010/2011, 2011/2013 and continuing• Other clusters taken up by NESC and supported for

mainstreaming in relevant Ministries• Cluster development Google group formed• Cluster Online Newsletter developed• Cluster policy as work in progress


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Status of Implementation of the Cluster Participatory Action Plans in Kenya

The Ministry of Industrialization has spearheaded the development of;Inland Fisheries Cluster in Kisumu

30 Cluster Facilitators trainedCluster Officials Elected

Garissa Beef Cluster in Garissa30 Cluster Facilitators trainedCluster Officials Elected

Cashew Nut Agro-processing Cluster in MombasaWork in Progress


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Garissa Beef Cluster Cluster Workshop


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From left to right: Mr. Gerald Snel CEO, Port of Rotterdam with participants from Kenya

Rotterdam Port Cluster


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Food Valley Netherlands


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Food Valley Cluster Netherland/ www.freshparkVenlo.nl


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Clusters in the Vision 2030

Excerpts From: Kenya Vision 2030 Book pg. 74 Development of industrial and manufacturing zones:

Different regions of the country are suitable for different types of industrial and manufacturing activities. In order to harness the resources available in different parts of the country, region-specific industrial and manufacturing clusters will be promoted.

Necessary infrastructure and services will be provided to stimulate the development of these clusters (Figure 3.5.5).


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Vision 2030 Clusters

• Special Economic Cluster for agro-processing• Special Economic Cluster for agricultural input

production with research park• New horticulture Cluster • Special Economic Cluster for packaging this cluster will

include packaging tea and coffee for global markets• Fruit juice Cluster• Vegetables Cluster• Fish processing Cluster


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Cluster Infrastructure in Kenya

NESC directed that the Ministries of Trade and Industrialization to spearhead the development of a cluster policy.

Since clusters are cross-cutting among different ministries, an inter-ministerial committee comprising of Ministry of Trade, Ministry of Industrialization, NESC, KEPSA and KIPPRA was constituted. The Ministry of Trade in collaboration with various stakeholders therefore is set to develop cluster policy.

The overarching goal of the cluster policy is to enhance productivity and competitiveness of various sectors of the economy.


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JUSTIFICATION FOR A CLUSTER POLICY

Clusters are seen as important drivers of competitiveness and innovation. Kenya recognizes that competitiveness and productivity improvements are the twin drivers of rapid economic growth and transformation. However, Kenya still ranks low in global competitiveness.

For example, the Global Competitiveness Report 2010-2011 ranked 106th Kenya as behind important emerging economies such as Egypt (ranked 81), India (ranked 49) , South Africa (ranked 45) and Thailand (ranked 36). Thus, relative to these countries Kenya has weak institutions, infrastructure, and market efficiencies, among other problems.


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JUSTIFICATION FOR A CLUSTER POLICYGiven the presence of multiple imperfections in

markets and prevailing institutions with multiple actor in a cluster, there is a potential for policymaking to generate benefits, both by accelerating the growth of existing clusters and by creating conditions that are favorable for the formation of new clusters as well as the recognizing and re-engineering of forgotten clusters. (Daily cluster in North Rift, Meat cluster in Dagoreti and Egg Cluster in Thika)

One of the strongest arguments for focusing on clusters is that it helps governments better understand how their economies really work.


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JUSTIFICATION FOR A CLUSTER POLICYBy looking at an economy through the lens of various

regional(County) production and innovation systems, regions can more accurately identify market imperfections, find pressure points, and detect systemic failures. Only then can they determine which interventions are likely to have the greatest impacts. Most challenges and opportunities are based on circumstances that vary from market to market and product to product (Rosenfield, 2002).

Cluster policy also provides a framework for dialogue and cooperation between firms, the public sector and non governmental organizations.


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JUSTIFICATION FOR A CLUSTER POLICYToday, with the Internet and a click of the mouse

button, companies can source for goods, capital and technology globally. Technology has set a new frontier to the conventional wisdom about how companies and nations compete. With more open global market, easy access to information and faster transportation, the role of location in competition might be said to have diminished!

But if location does not matter, why is today’s economic map of the world is still being dominated by growing clusters of economic activities?


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Peaks in the Delta

In Netherlands, Regional Authorities have been established to lead National Coordination in clusters. There are six different regions and each focuses on region specific potentials.Important Instruments in the success of the authorities1. Campus development2. Business sites3. Quality of life4. Accessibility issues

Financial• Subsidy schemes• Investment fundsValorization• Commercial exploitation of

knowledge• Market introduction on short

termOrganizing capacity• Regional network synergies• CollocationPhysical preconditions


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CHALLENGES

• Capacity building (training of cluster facilitators and promoters) • Inadequate funding• Private sector participation in the whole implementation program is still poor• The Secretariat? is not fully facilitated.• Carry out in-depth cluster studies• Encourage backstopping support particularly from institutions of higher learning • Mainstream clusters in relevant Ministries work plans and performance contracts• Engage development partners to provide funding for the cluster activities• Create inter-ministerial committee to continue implementing and monitoring

pilot cluster Participatory Action Plans.• PACF – Kenya Chapter• Carry out a registration and launching exercise for readily formed clusters• Address emerging issues (Environmental, social and climate changes)