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INVESTMENT OPPORTUNITIES
The Lake Basin Development
Authority (LBDA) was established in 1979 by the Government of Kenya to
spearhead development in the Lake Basin Catchment area in Western Kenya. The area covers 39,000km2,
representing 6.8% of the total land area of Kenya's 580,000km2.
It lies between latitudes 10 16'N
and 10 54'S and
longitudes 330 55'
and 350 51'E. The
equator passes across the region.
The Lake Basin
region has a population of nearly 12 million people of diverse ethnic and
cultural backgrounds. The major towns in the region with their
approximate population in bracket are Kisumu (500,000), Eldoret (200,000) Migori
(100,000), Kitale (90,000), Kakamega
(80,000), Nandi Hills (80,000) Bungoma (75,000), Webuye
(73,000), Kisii (70,000), Kericho
(70,000), Homa Bay
(60,000), Busia (60,000), Mbita
(50,000) and Siaya (45,000).
The topography of the region is
undulating and is characterized by high ridges and escarpments and a few
mountain peaks, with elevations varying from 1134m a
s l on the shores of the scenic inland Lake Victoria to 3,950m a s l in
the highlands, the highest point being the Mt. Elgon on the
Kenya-Uganda border.
The climate of the region is generally
mild with minimal monthly variation in temperatures between 190C and 250C throughout the year. The
rainfall is governed by a modified equatorial climate characterized by
long rains (March to June) and short rains (September to November). The
average annual rainfall varies from 700mm along the Lake
Victoria shores to 2000mm in the highlands.
The region has fairly good road
network for internal transportation as well as providing connections to
other parts of the country and beyond. Railway transport exists between
the Kenyan capital city of Nairobi and
Kisumu and Nairobi and Eldoret
through to the neighbouring Uganda. There is an
international airport at Eldoret and a regional
airport in Kisumu with airstrips serving all the major towns. The scenic Lake
Victoria provides water transport facilities to the neighbouring
countries of Uganda
and Tanzania.
The region is connected to the
national electricity grid. The net electric power generation for the
country is estimated at 5,032MW against a demand of 4,234MW. The electric
power supply in the region and the country is, therefore, sufficient for
domestic, commercial and industrial consumption.
The region is endowed with
abundant water available in the Lake Victoria
and the several rivers in its catchment. This resource provides
opportunities for investment in hydropower, irrigation and tourism
development. The region also has rich arable land suitable for commercial
agriculture especially in horticulture, sugar cane, rice, wheat, tea and
coffee. The land is additionally suitable for livestock production.
Investment in these activities provides opportunities for the
establishment of agro and livestock based industries. The Lake Victoria provides immense opportunities for
investment in the fisheries sub-sector. The Lake
provides 90% of the country's fish catches, accounting for between
100,000metric tones and 200,000metric tones annually. Minerals in the
region include gold deposits, Kisii soapstone
for making ceramic tiles and sculptor and limestone for cement
manufacture. The region's diverse ethnic, cultural and historical
heritage provides abundant tourism attraction opportunities. At the same
time the region is endowed with unique physical features and game parks
which provide additional opportunities for investment in tourism.
The LBDA has prepared feasibility
studies for the exploitation and utilization of these resources, which
are available to interested investors. Apart from the studies undertaken
the LBDA is willing to enter into partnerships with interested investors
in setting up commercial ventures. In addition development partners
interested in financing development projects and programmes for the
socio-economic empowerment of the local people,
are welcome.
This Strategic Plan (2005-2010)
formulates the strategic objectives for the Authority and identifies
projects and programmes required to meet the objectives. The capital
investment required to implement the project and programmes is Kshs. 440 billion. From
among the projects and programmes some have been identified for
implementation through concept paper, pre-feasibility and feasibility
studies are now require funding for detailed study and implementation.
The funding requirement has been estimated at Kshs.177 billion which
should largely come from donors and development partners. These projects
and programmes are meant for the general development of the region and
can be funded through the Authority or any other preferred institutions.
The Authority also has several
institutional enterprises under its docket for income generation. The
operations of these enterprises have been constrained by lack of funding.
Business plans have been prepared, which if financed, can greatly enhance
the operations of these enterprises and improve their income generating
capacities and ensure the Authority's future sustainability as required
by a current Government Policy for State Corporations. A total of Kshs.966.5 million is
required as capital investment in these enterprises. The Authority is
therefore looking for strategic investors to go into public private
partnership arrangements in the management of these enterprises.
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KEY INVESTMENT AREAS
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LBDA
Rice Mill
The Authority has established an
ultra modern Rice Mill at Kibos in Kisumu City with a capacity to mill
24,000 tonnes of paddy per annum. The mill complex has a number of
facilities including seed cleaning and drying unit, rice milling and
packaging plant,17,000 tonnes bulk storage, a seed treatment and packaging
plant, office, canteen, dispensary, changing rooms, weighbridge service roads, borehole water supply
and security perimeter wall, enclosing an area measuring 8.23 ha.
The Rice Mill was constructed with the aim
of encouraging small scale farmers in the region to produce paddy
rice. The potential for paddy rice
production is very high (over 21,000 tonnes), in the region and the Rice
Mill provides a ready market for the paddy rice farmers. More paddy can
be sourced from other parts of Kenya
like Mwea and countries like Tanzania and Uganda. The market for milled rice is readily available within Kisumu
City, the whole of Nyanza and Western Provinces and other parts of the country.
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Water
Bottling Plant (Rice Mill)
The Rice Mill has enough room to house a water
purification plant, including a reliable source of water and storage
facilities. There is a potential
for purifying and bottling 4,000 litres of
water per day. The bottled water currently retails at Kshs 60 per litre.
Kisumu City and its environs provide a ready market for the
commodity. There is currently no
such facility in the region, and such an investment would readily fill
the gap.
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Cement Production
The project can be initiated within a joint
venture framework with a number of investors. There are adequate
quantities of raw materials for the production of cement in the region,
with the Koru area in Nyando District (Nyanza Province) having enormous
limestone reserves estimated at approximately 65 million tonnes.
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Tannery
Kenya still lacks adequate
tanning capacity and is at the moment still exporting raw or undressed
hides and skins. Western Kenya is known
to account for 38% of the total hides and skins produced in the country.
There is currently no operational tannery in the region (including Uganda and Tanzania). Based on the
quantities of hides and skins currently being produced in the region,
there is good scope for the establishment of a central tannery,
preferably in Nandi District. This could be
linked to smaller tanneries to be established in various districts in the
region to process the large amount of hides and skins produced. Leather from the proposed plant would
open up possibilities for establishing a shoe and other related leather
industries.
The tannery would process hides to full chrome tanning and mainly
produce leather and split leather from hides for the shoe industry. It
would also be possible to manufacture almost any type of shoe leather
except sole leather. The special types of leather to be produced would be
of very high quality for the world market. Depending on the demand in the
market for modern fashion leather goods, high quality leather in various colours would be added to the range of production.
For the local market the factory would produce the popular types of
leather currently being consumed
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Instant Coffee Factory
Kenya has no processing
facilities for instant coffee because coffee growing is mainly
concentrated in the former white highlands where Arabica variety, which
is not suitable for instant coffee production, is grown by large estates
for export.
 The Robusta coffee, which
is suitable for the production of instant coffee, does well only in the
low lands around Lake Victoria. Its
production, however, has not been promoted ostensibly due to lack of a
foreign market. Robusta grows very well in the districts of Siaya and Southern Nyanza in Nyanza
Province and Busia,
lower parts of Kakamega and Bungoma
in Western Province. About 2000 tons of
Robusta Coffee are produced annually in this region and marketed through
Kenya Planters Co-operative Union (KPCU)
On its own accord, the
Authority has been actively involved in the promotion and expansion of
Robusta coffee growing in the region by providing seedlings to farmers
from its nurseries.
This intervention is
expected to produce enough raw materials to support the establishment of
an instant coffee processing plant for the local market.
The consumption of
instant coffee in the country is popular with international hotels,
tourist lodges, and resorts. It is also consumed in substantial
quantities in offices and affluent households. Overall consumption rate
of this commodity is estimated to rise at an average of 3% per annum.
The proposed project may be located in Busia district. The district is within the Robusta
coffee growing triangle of Busia, Siaya and lower parts of Kakamega
district. The district will serve as nucleus estate for the proposed
plant. The proposed site, Matayos, in the district has adequate infrastructural
facilities such as electricity water and road network to facilitate
transportation of raw materials from the outlying coffee-growing
districts.
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Fruit Canning and Vegetable
Dehydration Project
The development of fruit and vegetable processing
industry in Kenya
could become a third important outlet for horticultural produce in
addition to the existing local and export markets. Horticultural farming
is actively practised in the Lake
Basin region. The
proposed unit aims at utilizing the excess supply of various
horticultural produce which otherwise gets spoilt or fetch very low
prices in both export and local markets when in-season.
The processed products from the project will be
for both export and local markets. It has been observed that production
of certain horticultural produce with potential for processing has fallen
due to an over saturated market supply. The growing of these crops will
be revived by winning back the farmers confidence by providing them with
an alternative outlet for the produce.
The
project can be initiated within a joint venture framework with a number
of investors. There are adequate quantities of raw materials for the
production of cement in the region, with the Koru area in Nyando District (Nyanza Province)
having enormous limestone reserves estimated at approximately 65 million tonnes.
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Granite Stone Production
Granites
are divided into two groups based on the coloration i.e,
light coloured (leucocratic) and dark coloured (Melanocratic).
The colouration is essentially due to the relative variation in mineral
composition. A commercial subdivision of these two groups exists based on
the construction industry’s market and names in use in Kenya
are:-
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Black granite (essentially composed of dark /black minerals).
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Red Granite (essentially composed of minerals of brownish –
reddish appearance)
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Green granite (essentially composed of dark minerals, largely
greenish in colour)
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Green, multi coloured granite (composed
of various minerals but predominantly the dark coloured
varieties)
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Yellow granite (essentially composed of the light variety
minerals predominantly yellowish in appearance)
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Vihiga granite (composed of
a good mix of minerals dark and light coloured
and showing a spotted/mottled appearance).
Granites find their
use essentially in the building industry, either as dimension or facing
stones. They can also be used as roadstones for
road construction.
Cutting of granite is
an expensive undertaking as it involves the use of powerful and big
diamond cutter blades and grinders/polishers. This exercise is currently
only being done in Nairobi. As such, quite often large boulders are
ferried from Western Kenya to Nairobi.
It is, therefore, a cost cutting and very viable venture to set up a
granite cutting plant in Western Kenya.
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Clay Drainage Pipes, Pottery
and Roofing Tiles
Clay Drainage Pipes
The
principal raw material for the drainage pipes is basically
the clays. These are available in many locations of the
region, such as the Kano Plains (Nyando &
Muhoroni), Kodera
Forest (Rachuonyo),
Sironga (Nyamira), Kapsabet
(North Nandi)
and several other wetland areas.
Pottery
Western Kenya is endowed with suitable
clays for the manufacture of pottery items of high quality
that can appeal to the tastes of tourists and catering establishments.
These pottery units can be established in various locations
in the region to produce individual specialized items.
The raw material requirements are,
clay (Kaolin), broken glass, glaze, firewood and sundries.
Clay Roofing Tiles
The provision of adequate and decent housing
is a major objective of the Clay Roofing Tiles Project.
The Kenya Government has taken measures to aim at finding
solutions to this problem. Various studies have revealed
that Kenya
has not been able to provide more than 10% of the estimated
housing requirements in any one given plan period since
independence. In striving to provide decent housing, building
materials should be made available and at reasonable prices.
This can only be possible if the much extensive clay resource
can be exploited towards this end. The raw materials for clay roofing tile
production include clay, water, firewood
and used oil.
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Hydro Electric Power Generation
& Irrigation Development
The Government of
Kenya has liberalized the power sector by allowing Independent Power
Producers (IPPs) into the energy sector in
order to increase power production through private sector
involvement. The Lake Basin
region has six major rivers flowing into Lake
Victoria from the highlands in the Rift Valley; viz, Sio, Nzoia, Yala, Nyando, Sondu-Miriu and Kuja. These rivers drain some 40,000 Km² of
Western Kenya. The rivers have
immense potential for hydropower and irrigation development as indicated
in the table below:-
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Project
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Hydro
Power Potential (MW)
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Irrigation
Dev. Potential (ha)
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Sondu-Miriu
Multi
Purpose Development Project (Sondu/ Miriu
River)
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The
hydro power potential has been identified at 94.6. MW with the Magwagwa dam.
A component based on the run-of river, currently under
implementation, will produce 60MW and a further 21 MW at the point
where the tail race waters rejoin the Sondu/Miriu
river
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The
project has a potential to irrigate 11,000 ha of the Kano plains
and 4,000 ha of land in Nyakach and Rachuonyo, a total of 15,000 ha from tail race
discharge waters of the hydro-power component.
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Kuja River Multi-purpose Projects (Kuja
River)
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The
project has a hydro-electric power generation potential of between 10
to 18 MW
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There
is a potential of irrigating 15,000-20,000 ha of land from the
hydropower component
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Nandi Forest Multipurpose Project (Yala
River)
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This
will generate 50 MW of hydro electric power
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This
project has a potential of irrigating 17,000 ha of land in the Nyanza
Sugar Belt.
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Moi’s(Hemsted) Bridge Multipurpose
Project. (Nzoia River)
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This
will generate 60MW of hydro-electric power
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The
irrigation potential in this project is 6,900 ha in the Kerio Valley and 11,430 ha in the Nzoia Basin.
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Total
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224.4
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70,330
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Establishment of a Cruise Ship
on Lake Victoria
The rebirth of the
East African Community has greatly increased the potential for growth of
the Western Tourism Circuit. The Lake Victoria,
the second largest freshwater lake in the world, naturally fits into the
Western Tourism Circuit and has high potential for water sports, lake
cruises, floating luxury steamers, bird watching and beach hotels. Kakamega forest hosts a unique species of trees,
insects, birds and reptiles co-existing in this lovely ecological
attraction. Mt.
Elgon
provides an added opportunity for mountain climbers to the extreme
North-West
The LBDA is proposing
going into a joint venture investment with any interested investor, to
establish a luxury cruise ship in the Lake that will cover the Western
Tourism Circuit of Kenya, stopping at various picturesque spots on the
beaches of Lake Victoria, to enable the
visitors make excursions into the hinterland. The cruise ship would
provide luxury accommodation for tourists interested in enjoying the
cultural East African hospitality and water sports and even fishing for
the more adventurous.
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Establishment of Sugarcane
Production and Processing Industries
Kenya produces between
450,000 tones to 490,000 tones of sugar, while consumption is estimated
to be 600,000 tones annually and still growing
Kenya as a country,
therefore, still imports between 110,000 to 150,000 tones of sugar to
meet its domestic demand for the country.
The potential for sugarcane growing is, however, vast in the
region and has not been fully exploited.
Potential areas with between 10,000 ha to 15,000 ha of land
suitable for cane development and establishment of sugar processing
factories have been identified in Homa-Bay and Busia districts.
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