Global Development Solutions has extensive experience in Kenya having performed numerous value chains (e.g. several agriculture products, floriculture, manufacturing, the music industry and sanitation) and engaged in programs to support micro, small and medium enterprise development. We have also applied our IVCA to Kenya’s tourism industry.

We adapted the integrated value chain analysis to be applied to tourism and have implemented the model in several countries. This powerful tool breaks down the traveler’s expenses and categorizes them by significant cost drivers in a uniform manner so that data can be benchmarked against other countries. Addressed by the tourism IVCA are critical industry-specific considerations. Two such examples are:

1. Does the local population enjoy the economic benefits of a strong tourism sector? and
2. Particularly critical in developing countries with unique resources, can the delicate ecological balance support increased tourism?

Kenya’s tourism IVCA encompassed ten different product profiles within the three major tourism categories: business and conference, wildlife safari, and coastal. Field work was conducted both before and after the political strife of 2008. Although the turmoil had a severe impact on tourist arrivals, the critical underlying challenges in Kenya tourism development remained the same, those being:

1. An independent legal framework to protect and sustainably manage both marine and terrestrial habitats and to facilitate benefits from these resources flowing to custodial communities which is leading to a degraded, overexploited and neglected asset base; and
2. High public sector charges that do not get channeled back into the sector and undermine the opportunity for reinvestment or for more socially and environmentally responsible and sustainable business models to emerge.

Global Development Solutions concurrently analyzed the value chains of these strategically important sectors with the objective to design potential public-private partnerships (PPPs) to strengthen each sector.  In the case of maize, for example, given the global food crisis, the sector was analyzed in relation to Tanzanian food security.  The value chain analysis showed that smallholder farmers are producing significantly below potential yield as compared to other sub-Saharan farmers and also as compared with medium and large scale farmers in Tanzania.  Although the trend is to increase area under harvest, several VCA-based scenarios proved that by using improved seeds developed for local conditions in conjunction with proper use of fertilizers (i.e. increasing yield rather than increasing planting area), farmers’ profitability can increase by approximately 160%.  Based on this knowledge, public-private partnerships targeting seed production, inputs distribution and the nation’s strategic grain storage were recommended to increase yields and to improve the food distribution network to alleviate localized maize deficits.  

Global Development Solutions maintains a long-term presence in Ethiopia and has engaged in numerous consulting projects in the country.  Integrated value chain analyses include: honey and beeswax, floriculture, cotton-to-garment, skins and leather, road construction, housing construction and tourism.  Additionally, GDS established a strategic intervention plan for mango and highland fruits to support local business organizations with access to markets.  Further, a regional value chain for strategic agricultural commodities encompassing nearby countries was also designed by GDS as the key component for a significant United Nations initiative.    

Demand cyclicality, fierce competition, underdeveloped local support industries, strict breeder’s rights, environmental standards, and increased importance of supermarkets and direct sales are creating challenges for the nascent floriculture sector.  Twenty-seven small and medium size farms are involved in cut flower production in Ethiopia with the majority growing only roses.

Using rose farming as a proxy for the floriculture industry, the integrated value chain analysis revealed that, for example, due to a lack of locally available propagation materials, plant material and related royalty payments constitute over a third of all farming costs.  Further, 20% of farm costs go to greenhouse maintenance with plastic film representing 79.8% of these costs.  While analysis showed that support of investments in nurseries would provide considerable cost-savings to rose growers in Ethiopia, it was also determined that given the limited number of growers in the country and in light of the necessary start-up costs, a domestic base of manufacturers of greenhouse plastic film is not cost effective and importation is the best option in the short to medium term.

The integrated value chain analysis (IVCA) showed that government programs in South Africa were initially effective as a catalyst for growth by attracting foreign investments and increasing local value added production. However, prolonged reliance on government incentive schemes has contributed to the creation of overprotected industries where economic activity of an entire sector is driven by, and is dependent on, these incentive schemes that threaten to undermine the long-term competitiveness of strategic sectors in South Africa. The analyses examined the long-term competitiveness and sustainability of Black Economic Empowerment programs in light of these incentive schemes. In addition, the IVCA quantified the impact of the:

• High cost of input material;
• Poor human resource base;
• Lack of investments in the indigenization of technology and know-how; and
• Absence of coordination between provincial and national policies and how this undermines the competitiveness of these strategic sectors in South Africa.