Kenya seeking foreign investment to ramp up food production

Local agricultural production cannot cater for Kenya's food demand.

Local agricultural production cannot cater for Kenya’s food demand.

Kenya, like many African countries, is a net importer of food despite having vast areas of arable land and over 75% of the population involved in farming. The country often faces shortages of maize, rice and wheat, the top three consumed cereal crops in the country.

Every year Kenyans consume 540,000 tonnes of rice but the country only produces 130,000 tonnes, less than 25% of what is needed. It also grows a paltry 350,000 tonnes of wheat against an annual demand of 900,000 tonnes.

It is for these reasons the Kenya Investment Authority (KenInvest), an agency mandated with promoting foreign investment, is seeking investors to partner with local landowners to improve food production. Agribusiness is one of five key sectors the agency will be promoting at a global investment summit planned for Nairobi this November.

Besides investment in food production, Kenya is also seeking new technologies to ensure efficient storage of harvests, and to boost local value addition.

“We are a country that has a lot of opportunities in agribusiness,” says Moses Ikiara, managing director of KenInvest. “We produce a lot of food, fruits, vegetables, everything [but] we lose 40% or more through bad post-harvesting [techniques], poor storage [and] toxins. So we lose a lot of food, and that’s why we would like to show opportunities to investors so that they can bring technologies and bring enterprises that can store better, process this food better – and then we will be able to transform the welfare of the farmers and the people that are producing this food.”

Food processing opportunities

Ikiara notes there are various opportunities for food processing – from fruits to meats. For example, Kenya has been increasing production of fish with more people taking up small-scale commercial aquaculture. This follows a $54.3m campaign launched by the government in 2009 to promote fish farming as part of its economic stimulus programme. The initiative attracted about 150,000 new fish farmers. Fish production has soared from 1,035 tonnes in 2004 to 23,501 tonnes in 2013, according to Kenya’s fisheries department. However, farmers are struggling to access markets and good quality feeds and fingerlings.

“We are now doing a lot of fish farming [but] we have not thought: suppose there is too much production of fish? Do we have capacity to process it, store it, and export? It is the same case with fruits. During the high season for mangoes somebody can give you a mango for a shilling – they just want you to take it away. We want people who can process these fruits, potatoes and all that,” says Ikiara.

Taxing idle land

Kenya has proposed a law to start taxing big landowners who leave large chunks of their land idle. Ikiara says this presents an opportunity for investors to partner with such landowners to boost food production.

“Soon there will be an incentive for people to use land to avoid the tax. So you as investor can go there and tell somebody: ‘You have land, I have A,B,C,D, can we partner?’ We are now building a database of people who have a lot of land who don’t know what to do with it. And we are linking them with investors who can start even solar farms, wind farms – or simply produce a lot of food,” explains Ikiara.

But community land interests will also be considered as the country seeks to attract foreign investors. In neighbouring Ethiopia, where foreign companies have taken up thousands of hectares of land for commercial production, there have been concerns raised by local communities and human rights organisations.

In the Gambela region in western Ethiopia, for example, a large area of land has been leased to Indian food company Karuturi. Saudi-Ethiopian investor Sheikh Mohammed Al-Amoudi has also leased 10,000 hectares for rice farming in Gambela. In some areas there have been evictions to pave the way for foreign investors, leading to civil unrest, complaints of land grabbing and reports of starvation among the newly landless.

Ikiara says Kenya is developing a national investment policy to combat such scenarios of investors and communities fighting over land rights.

“You’ve seen this also in Kenya when an investor with the right permits and everything starts a project, then they find local communities are demonstrating. So we would like to be able to ensure that community interests are taken care of and dealt with as part of attaining investor readiness,” says Ikiara. “We are also promoting joint ventures because it is not sustainable for the locals to be spectators.

“You must have models where we can encourage joint ventures between local and foreign people. We need to also do a lot of community education so that communities can also be alert to what is happening and be receptive to ideas.”

Ikiara says there is already interest from investors to purchase certain produce once Kenya ramps up production.

“Recently a Japanese delegation came here and one company said: ‘Any amount of sesame oil you produce we will buy it’. And that was just one company. So there is a lot of opportunity, it is only that there is no proper connection between people who have the land, with the people who can buy produce.”

Israeli partnerships

Recently Israel committed Ksh.2.8bn (US$27m) to Kenya’s ambitious one-million-acre Galana-Kulalu irrigation scheme through technical support, scholarships and foreign exchange programmes for staff.

Launched in 2014, the Galana-Kulalu Food Security Project is one of the largest irrigation undertakings in East Africa. The public-private partnership aims at addressing food insecurity in the region by irrigating one million acres of land to produce maize, sugarcane and meat, alongside other crops, as well as livestock and fish. An Israeli firm Green Arava, won a Ksh.14bn ($138m) contract to develop a 10,000 acre model farm at the irrigation project. It planted the first 1,000 acres earlier this year and began procuring a milling plant from South Africa to process maize flour.

Last year, Kenya’s agriculture secretary said about 80 local and international investors had expressed interest to grow crops and set up food processing plants at the project.