Kenya has a range of value chains in floriculture, textiles, leather, automotive production, intermediate and final manufacturing, music industry and tourism. I is evident that the country is generally at the low end of value chain, given that a large component of Kenya´s exports is in raw materials (e.g. coffee, tea, animal products) which have low foreign value added content.
The range of barriers to GVCs in Kenya include are domestic, regional and international. Local barrieres to GVC prospects include policy gaps, corruption, poor transport infrastructure, crime and insecurity, high cost of energy (esp. electricity), land ternure issues, high cost of finance, lack of economies of scale for small firms and poor financial intermediation, among others.
Regional and international barriers include tariffs and quotas, technological barriers, currency fluctuations, political risks and market failures, am long others. Though Kenya has surplus and fairly well trained manpower, some industries have not been able to find ready and appropriately skilled personnel due to mismatches between the training provided by Kenyan institutions and labour market requirements. However, as part of Kenya´s long-term plans contained in the Kenya Vision 2030 and occasional curriculum updating, a number of policy reviews are being made to ensure schools equip graduates with market demanded skills.
Now, let´s move on to Uganda…
Global value chain (GVC) development is receiving increasing attention in Uganda. The National Development Plan (NDP) 2010/11-2014/15, for instance, includes as a key intervention “supporting and strengthening key product value chains to access high value markets and penetrate global value chains through Public Private Partnerships and inter-government sectoral collaboration”. The NDP document goes further and identifies key products that should be the focus of these efforts. These include: dairy products and poultry, beef, fish products, coffee, floricultural and horticultural products, maize, beans, cassava, processed bananas and processed mineral products.
The lack of adequate data for GVC analysis makes it difficult to assess the extent to which Ugandan producers are integrated in global value chains. The most recent available input-output table for Uganda dates back to 1991 and it is reasonable to assume that the structure of the Ugandan economy has changed significantly since then. Moreover, these are not international input-output tables, capturing elements of global production, and are therefore not suitable for GVC analysis. Still, the various case studies that have been undertaken for value chains do provide useful insights into value chain development in Uganda.
The apparel industry has traditionally been chosen by many developing countries to accelerate to accelerate the process of industrialization and structural transformation.
However, weak government support, high production costs, including high energy and air freight costs, and the competition from other East African countries have also played an important role in undercutting Ugandan flower producers market share in the EU and other advanced economies.