Laikipia’s Economy
Laikipia County is among the top fastest growing counties in Kenya with a GDP growth rate of 8.9% against the national average of 5.6%. This is due to revenue collection that has been on a 3 year sustained growth indicating 35% increase for the financial year 2018/2019.
According to Laikipia County Statistical Abstract 2020, the county indicates a steady growth with an estimate that Laikipia’s County Gross Product (GCP) was KES 89 billion in 2018 and KES 98 billion in 2019 at current prices. If Laikipia was one of the 217 countries or territories recognized by the United Nations, it would have ranked number 192 in GDP ranking globally in 2018, taking the slot occupied by Samoa, a global rugby powerhouse (World Bank GDP Ranking, 2019).
In its latest survey on overall county business environment for MSEs, the Kenya Institute for Public Policy and Research Analysis (Kippra) ranked Laikipia among the top five counties.
According to the figures in the statistical abstract, agriculture remains the main contributor to the Laikipia Gross County Product with an estimated input of Ksh. 35 billion, a 44 per cent of the total CDP share. Whole sale and retail business comes in second at Ksh. 7.132 million in 2017, up from Ksh. 4.3 billion in 2013.
Financial and Insurance activities and Transport and Storage come in second and fourth place with an estimated GCP of Ksh. 6.275 billion and Ksh 5.904 billion respectively in 2017, up from Ksh. 31.17 billion and Ksh. 3.17 billion respectively in 2013.
The main economic activity in the county include: ranching, crop farming, dairy farming, tourism and trade. Additionally, its location along the equator gives Laikipia County favorable climatic conditions for agriculture and pastoral farming. Laikipia has become a frontier for horticultural investment. County water expansion schemes such the Solio Water Project; a joint partnership between the County Government and the Water Sector Trust Fund – WSTF, has seen an influx of investor capitalizing on the new developments. According to the county’s 2020 statistical abstract, the land under irrigation has increased 15 times in a span of three years –- from 258 hectares in 2016 to 3,758 hectares in 2018 and 3,973 hectares in 2019.
The main crops grown include wheat, maize, beans, potatoes and vegetables. The main livestock types are cattle, goats, sheep and poultry. Nyahururu contributes to the county’s economic activity because it’s heavily involved in milk processing. Apart from agriculture, the various ranches are a major source of beef.
World Bank Data on Average growth of in counties relative to average national growth (2013-2017)
LAIKIPIA INVESTMENT INCENTIVES
- A one stop shop for all financial services
Laikipia county aims at improving the ease of doing business by eliminating barriers and reducing the procedures and cost of doing business within the county.
This has led to the establishment of Laikipia County Development Authority which offers investment projects services among which is the issuance of the required permits and licenses in a quick and centralized procedure.
- Broadening Access to Capital/Enterprise Fund
Established in 2014, the Laikipia County Enterprise Fund’s purpose is to: (a) facilitate access to credit for business capital; (b) promote enterprise development among youth, women, persons with disabilities and needy persons; (c) facilitate the development of conducive and appropriate business environment for enterprise development; (d) enhance access to employment; (e) enhance enterprise skills development; (f) promote local economic growth. The fund’s core mandate is to extend loans to enterprises in the county and create employment opportunities in the private sector. The fund also seeks to impart entrepreneurial skills through training in enterprise and business development, availing technical assistance in product development and promoting economic growth through supporting innovations and developing cottage industries. The board manages the fund.
Laikipia county government has partnered with several financial institutions with an aim of expanding financial services to the investors. Through this partnership, investors gain extensive infrastructure and systems, access to funds and opportunities for portfolio diversification, trainings and financial management services. In June 2020, the county signed an MoU with the KCB Group to provide funding of up to Ksh2 billion in form of interest cost subsidy and partial guarantee, targeting at least 5,000 businesses and 60,000 farmers. To be eligible, one must prove they are residents and own business or are farming in Laikipia County. The county government also unveiled a US$2.81M (Ksh 300 million) Enterprise Fund with the Cooperative Bank of Kenya to offer affordable financing to Saccos and business within the county.
The lending scheme will see cooperatives getting a subsidized interest rate of 5% down from the bank’s normal lending rate of 12% to 7 % per annum.
- Business Development Services
The county also has an innovation and development program whose aim is to augment innovations, boost job creation and foster economic growth in Laikipia. The program offers access to financial services, trainings, access to certification and licenses, marketing and information services, trade fairs and exhibitions among others.
The program is currently working with more than 200 startup companies and 22 partners. The start-ups bestride agriculture, manufacturing, ICT and Engineering sectors. The partners range from academic institutions like DeKUT and Laikipia University to Government agencies like Numerical Machining Complex, regulatory bodies like KIPI, KEBS to private institutions like AMSCO and Gearbox and even donor-funded organizations like Kenya Climate Innovation Centre, among others. The program offers training programs, marketing and exposures, product certifications, product design and development, mentorship, financial access, incubation arrangement, among others. The partners have been crucial to the program in offering different services to the entrepreneurs.
Key Partners
| Kenya Climate Innovation Center (KCIC) |
Muwuarak TTI |
KCB Foundation
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| Numerical Machining Complex (NMC) |
Standard Media Group |
Equity Foundation |
| Kenya Bureau of Standards (KEBS) |
Royal Media Services |
Ministry of ICT (Ajira Digital) |
| AMSCO |
ICPAK |
DeKUT |
| Kenya Institute of Management |
KIPI |
Laikipia University |
| Laikipia County Development Authority |
Laikipia Enterprise Fund |
ICDC |
| Chandaria Innovation Business
School
Cooperative Bank of Kenya
THE REAL ESTATE SECTOR
|
KIRDI |
KIE
KCB |
Laikipia County is home to a picturesque landscape, diverse with natural beauty, extensive natural resource, abundant wildlife including the sought after ‘big five’ and hundreds of bird species. Conservancies and ranches like the Ol pajeta, Lewa, Ol jogi, among others have made the county a focal point for tourists visiting game reserves in Laikipia and Samburu counties.
Lured by good weather that prevails all year round, game in those conservancies, Europeans particularly the British are either settling in the county or buying holiday homes around Nanyuki and Nyahururu towns.
Most of the white settlers buying up property are soldiers or tourists who loved the county’s climate, its people and natural beauty and want to experience it all over again.
The upgrading of the Great North Road to a dual carriageway between Kenol and Marua, and the revival of the old metre-gauge railway line from Nairobi to Nanyuki is expected to further boost growth.
The town’s proximity to Isiolo is also expected to spur further development as some investors opt to put up stores in Nanyuki and transport items to Isiolo for sale.
Land prices in the county’ urban centers such as Nanyuki town are highly dependent on proximity to roads and the central business district, and as a result of high demand from developers, have risen as much as 10-fold in the last seven years, with a quarter acre going for Sh25 million compared to seven years ago when the same size was being sold at about Sh2.5 million.
An acre within the town is at an average price of up to Sh100 million, while on the outskirts it costs approximately Sh1.6 million.
Cytonn Investments reported that Nanyuki real estate market recorded an average rental yield of 4.7 percent for the residential sector, 7.6 percent in the commercial sector and a capital appreciation of 4.7 percent in the land sector, compared to the Nyeri market average of 5.1 percent, 6.3 percent, and 19.1 percent, respectively.
Factors Driving Real Estate Investment in Laikipia County
Over the last 5-years, Laikipia has witnessed increased real estate activities in the town and its environs driven by:
The county hosts key tourist attractions such as the Ol Pejeta Conservancy and Mount Kenya National Park. The town thus acts as a major tourist circuit to Mt. Kenya and the Northern Region, enhancing demand for hospitality services which continues to promote the hospitality sector,
- Growth of Small and Medium Enterprises (SMEs)
The informal sector constitutes an estimated 98 percent of business in Kenya, contributing to 83.4 percent of jobs as per the 2018 KNBS Economic Survey.
There is an increase in the number of SME’S due to the county’s economic stimulus package for business and the ease of business registration as it now takes a maximum of 2 weeks. Laikipia hosts several of these companies such as Mawingu Networks that require office space and housing for the employees, hence drive the demand for real estate.
Decentralization has opened up major towns across the 47 counties attracting government institutions, private investors and entrepreneurs across all the county headquarters.
This has increased the urbanization rate hence attracting financial institutions such as Absa Bank, ECLOF Kenya and Faulu Kenya, to the county level to tap into the unbanked population.
The positive demographics, attributable to devolution have thus, created demand for office space, retail space and residential units to host investors and government officials.
- British Army Training Unit Knya
The British Army Training Unit Kenya (BATUK) is a training support unit of the British Army located in Nanyuki under long-standing cooperative agreements with the country. The presence of the same has resulted in a growing demand for housing by the army officers mainly hosting their families in the town.
Residential Sector (Put this info under the living Laikpia Home tab)
The key residential areas in the county are distributed within the urban centers of Nanyuki, Nyahururu, Rumuruti and Kinamba, and mainly comprise of owner-built and occupied stand-alone houses, as the market lacks institutional developers.
The residential housing development market in Nanyuki is still nascent with most of the estates, having existed for less than 3 years. The key drivers of the growth include; the British Army station, government decentralization, urbanization and growth of the middle class in the region.
The residential market in and around Nanyuki town is mainly rental, as most of the investors target foreigners on long term stay of approximately 2 years.
Commercial Sector (Put this info under the living Laikpia Home tab)
The commercial sector in Laikipia is yet to record entry of quality commercial space especially in the office sector where most of the offices are classified grade C and below.
The last 2-years have seen the establishment of new buildings such as the Bemwaki Towers and Ubii Plaza, but some lack modern facilities such as lifts.
The retail sector has two formal shopping malls, Nanyuki Mall and Cedar Mall with some of the key retailers being Tusky’s, Chandarana FoodPlus Supermarket and American fast food restaurant chain, Kentucky Fried Chicken (KFC).
Land Sector (Put this info under the living Laikpia Home tab)
Land prices in Laikipia is highly dependent on the proximity to the main roads and proximity to the CBD.
In Nanyuki’s CBD, the land price is relatively high and sells at an average price of up to 100 million shillings per acre.
An acre sells at an approximately 1.6 million shillings for an acre in the outskirts costs. Most of the land in the county is utilized as ranches that are privately owned and could be as large as over 100 acres each. Despite having several ranches, the market has continued to embrace the selling of plots mainly quarter acres and eighths of an acre with several property agents having entered the market.
The plots for sale recorded average annual sales of 45.8%, attributed to a growing demand for development land in the area fueled by speculations for higher property value boosted by the opening of the Northern Corridor.
Holiday Homes (Put this info under the living Laikpia Home tab)
Built on rustic, glamorous natural features such as mountains, wilderness and water bodies, holiday options in Laikipia have diversified and expanded; with some developers giving investors property with controlled access to wildlife as well as other amenities such as golf courses, luxurious resorts, cottages and spas among others.
Nanyuki hosts key tourist attractions such as the Ol Pejeta Conservancy and Mount Kenya National Park, making the town a major tourist circuit to Mt. Kenya and the Northern Region.
This has continued to create demand for hospitality services and facilities, thus the development of holiday homes such as Maiyan Homes and the Mt. Kenya Wildlife Estates.
Of the total land mass, arable land constitutes 1,984 square kilometres with non-arable land constituting 7,456 square kilometres. Water masses occupy 22 square kilometres and urban areas at 243.3 square kilometres. There are 7 distinct land use patterns heavily influenced by the climatic conditions and the ecological zones. These include pastoralism, mixed farming, irrigated cultivation, ranching, among others
Laikipia County Land Use Map
The Agriculture sector
The county is heavily dependent on rain fed agriculture. There is potential of 203,965 hectares for irrigation in the medium potential areas. There are 22 operational small-scale irrigation clusters mainly in the southern and western parts of the County at Jikaze, Mutaro, Munanda, Gatitu Muthaiga, Mutara, South Imenti, Thome, Mwiyogo, Nkando, Nturukuma, Nyambogichi, Mukima, Marura, Gakeu, Mia Moja, Melwa, Pesi, Ngarengiro, Ngarachi/Thigio and Wangwaci.
The main crops grown include maize, beans, wheat, potatoes and vegetables. Maize covers about
51 per cent of the total planted area. Crop farming is mainly undertaken in the western and south western parts of the county due to favourable weather conditions. Upscaling efforts are in place to promote other crops such as millet, sorghum, sunflower and black beans (dolichos). There is an emerging trend of increased horticulture and floriculture production both at large-scale and small-scale levels. This constitutes production of cut flowers, tomatoes; French beans, chillies, watermelons, cabbages and onions. There are efforts of up scaling fruit production such as avocado, orange, mango, bananas and pineapples. There are four small maize milling plants in Nanyuki and Nyahururu supporting value chain on maize and wheat.
Acreage under Food Crops and Cash Crops
The agriculture sector employs up to 60 per cent of the total labour force in the county.. Expansion of hectarage is constrained by high cost of farm inputs such as fertilizer, certified seed, weeding labour and demand for mechanization. There are county and national programmes that aim at reducing the burden on farmers through provision of subsidized fertilizer, certified seed and occasionally pesticides for the control of armyworms, quelea birds, millipedes, locusts and Maize Lethal Necrosis Disease (MLND).
There is high agricultural potential in the county supported by highly arable farming lands particularly in the southwestern parts of the county. Over 20 per cent of the county’s total land is arable. The total area under food crops was 80 per cent of total cultivated area totalling to 63,428 hectares in 2017.
Average Farm Sizes
Majority of the farming households are small-scale holders whose average farmland size is 0.81 hectares mainly used for food production. The average farm size for large-scale holder is 8.09 hectares and which are mainly used for wheat and maize production.
Main Storage Facilities
Granaries are a common storage facility at household levels. The government through the National Cereals and Produce Board run stores at Doldol, Nyahururu and Nanyuki. At institutional levels, food stores are common particularly in schools on the school feeding programmes. At the household level, especially in the rural areas about 20% of harvested cereals are lost through pests.
Apiculture
Bee keeping is one of enterprise undertaken by pastoralists and farmers practicing mixed farming. It is practiced in farm woodlots, perimeter fences and in forests for pollination. Honey as a main product is harvested using traditional log hives and only a few farmers use the modern hives such as Langstroth and Kenya Top Bar Hive (KTBH). In harvesting, most use traditional gears (fire for smoking) which are destructive to the bees occasionally killing the queen. Towards value addition, there are 5 co-operative societies that are at basic levels of packaging honey and related byproducts.
Aquaculture (Fish farming) and Blue Economy
Fish farming is practiced mainly in Laikipia West and Laikipia East sub-counties. The predominant species is tilapia and a small component of clarias (catfish) culture. Production infrastructure comprises of approximately 1,401 fish pods with an average of 1,000 fish stock capacity. There are 125 water reservoirs viable for capture aquaculture.
Main Livestock Types and Facilities (Put this info under the beef production tab)
Livestock production is dominant in most parts of the county with 45.8 percent of households owning livestock. The main livestock types are cattle, goats, sheep, poultry, camels, donkeys, pigs and rabbits. The estimated livestock population is 72,860 dairy cattle, 221,760 beef cattle 350,888 sheep and 397,610 goats. Others include poultry, camels, donkeys, rabbits and bees. Livestock infrastructure comprises of 50 holding grounds, stock routes, out spans, two public and two private slaughterhouses, 7 auction yards and 35 slaughter slabs. Milk processing is done at Nyahururu KCC and Countryside processing plant. There are seven milk-cooling plants run by dairy co-operative and individual groups.
Ranching
Ranches in the County produce high quality beef stock. They also undertake Boran breed embryo transfer for the national and regional market. There are 32 private ranches, one government ranch and 13 group ranches. The ranchers and the neighborhood cluster-grazing committees have a functional model allowing vulnerable households to graze in the ranch during drought on agreed monthly fees.
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INVESTING IN FEEDLOTS. (Put this info under the beef production tab)
Many policy analysts and farm experts are concerned about the impact of increased population in Kenya which has more than doubled the demand for food. According to the Food and Agricultural Organization for the United Nations (FAO), the demand for beef alone has increased by 300% over the last decade.
Agriculture supports up to 80% of Kenya’s population and generates almost all the country’s food requirements, which in turn depends on rainfall (UNDP annual global report 2017). However only about 12% of Kenya’s landmass is of medium to high agricultural potential. Most of Kenya (80%) is classified as arid and semi-arid making these areas only suitable for marginal crop production and livestock farming.
Regions such as Laikipia provide the bulk of meat consumed in the country which is produced via two main streams: large scale dairy-meat commercial ranching and small scale dairy-meat production. In both systems, production is pasture based. Droughts are the major constraints to rain-fed agricultural production in in such ASALs. FAO estimates that rain-fed crop farming in the semi-arid areas of the country have a 25-75% risk of crop failure while the arid regions have a 75-100% risk of crop failure. Therefore, pastoralists and marginal agriculturalist in the ASALs are considered to be the most vulnerable to the effects of droughts because their livelihoods rely heavily on climate performance with a very weak economic base. The most adversely affected by drought is the agricultural sector, which has obvious implications on food security
To solve this potential food crisis, there is a safer food production alternative-raising animals in feedlots. Feed lot beef production is a technical word for confining animals, in a relatively small space and feeding them on the best food ratios to be ready for the market in the shortest time possible. This can vary from 60 – 120 days. But it has to begin with already grown animals that only need to optimally gain weight so that they are ready for slaughter in a short time. This is majorly high carbohydrate diets, sufficient proteins and optimum mineral salts. During this period, these animals depending on age and nutrition can gain between 50 – 200 kilos.
Benefits of lot feeding
The main benefits of lot feeding are greater control and flexibility in the production and marketing of livestock.
Specific benefits include the:
- Ability to finish animals when pasture feed is deficient in quality and/or quantity.
- Ability to meet a wider range of markets.
- Reduction of stocking pressure on-farm during dry conditions without having to sell animals in poor condition.
- Option to increase breeder numbers on-farm in proportion to the number of turnoff animals placed in a feedlot.
Major factors influencing the profitability of lot feeding are:
Feeder livestock must be produced with the feedlot’s or intensive finishers goals and strategies in mind. Producers considering supplying to feedlots or intensive finishing systems can significantly improve the performance of their livestock when on feed by following any necessary preparation requirements of the feedlot they wish to supply.
Examples of pre-feedlot program activities include yard weaning and pre-feedlot vaccination (such as vaccinating against respiratory diseases).
Pre-feedlot programs vary between feedlots so it is important that producers check with the intended feedlot to understand their pre-feedlot program requirements.
CONTRACT FARMING (Put this info under the Agriculture sector thumbnail under invest in Laikipia tab)
Contract farming generally involves a pre-agreed price between the investor or company and the farmer. The agreement is defined by the commitment of the farmer to provide an agricultural commodity of a certain type at a time and a price and in the quantity required by a committed buyer, mostly a large company.
Because farms with limited means to improve or expand often seek off-farm income, contract production could be considered an emerging contributor to individual farm economic sustainability in Laikipia.
The main crops the county targets are cereals, pulses, vegetables, fodder, herbs, trees, cattle, goats, rabbits and poultry production.
Advantages for Investors
- Contract farming with small farmers is more politically acceptable than, for example, production on estates
- Working with small farmers overcomes land constraints
- Production is more reliable than open-market purchases and the investing company faces less risk by not being responsible for production
More consistent quality can be obtained than if purchases were made on the open market
FINANCIAL SERVICES
In terms of total assets, the Cooperatives sector continues to dominate the financial system with 132 SACCOs followed by 34 insurance companies, 25 banks, and 8 microfinance institutions respectively with most financial services concentrated within the main urban centers Nanyuki Nyahururu, Rumuruti and Kinamba townships. There are with 3 FOSAs in the county and 3 main mobile money service providers. Agricultural Finance Corporation runs two branches in Nanyuki and Nyahururu. The county established two funds namely Laikipia Enterprise Fund and Laikipia Cooperative Revolving Fund whose aim is to grow businesses and the economy by expanding allocation of at least KES 300 million per year to ensure people have access to capital resources for investment.
THE SMART TOWN INITIATIVE
Smart Cities harness the benefits of innovation and information technology by improving the lives of their inhabitants and by becoming more streamlined, efficient and sustainable. Some of the example focus areas include intelligent urban transport management systems and infrastructure, digitization and electrification of transport infrastructure, move to sustainable energy systems, efficient buildings, better air quality, and use of technology to improve and make more affordable health services and social care.
What is a ‘Smart Town?
A smart town can be defined as having the following attributes and facilities;
- To be well planned to cater for public facilities now and in future (schools, churches, stadium, cemetery, public toilets, reliable water supply, industrial park, land bank for future expansion, sewage lagoons, landfill areas, bus parks etc.).
- Paved Roads and a well-planned and working Drainage system.
- Using new technologies to transact business and the use of renewable energy.
The best Strategy for Smart Towns would be;
- Planning where development should or should not go can help a rural community encourage growth in town, where businesses can thrive on a walkable main street and families can live close to their daily destinations.
- Policies that protect the rural landscape, help preserve open space, protect air and water quality, provide places for recreation, and create tourist attractions that bring investments into the local economy.
- Policies that support walking, biking, and public transit help reduce air pollution from vehicles while saving people money.
The focus on smart growth strategies to meet three main goals:
- Support the rural landscape by keeping working lands viable and conserving natural lands
- Help existing places thrive by taking care of investments and assets
- Create great new places by building lively and enduring neighborhoods where people want to live.
To turn any town from current situation to ‘Smart Town’ takes a lot of time, effort and money. Towns in Europe and other developed countries that are hundreds of years old are still trying to achieve 100% compliance with the Smart Town tag.
Why should investors bank on smart towns?
- Getting ahead of the curve on innovative business strategies
With the rise of smart towns, more companies will have the opportunity to develop game-changing strategies. Retailers, restaurants and other service providers can use real-time data to analyze likely consumer choices and adjust pricing accordingly.
- Drawing top talent and driving competition.
The workers who will add the most value over the longer term want to live and work in places that offer them affordable, sustainable housing, timely and safe transportation and a clean and pleasant atmosphere. The more we invest in smart cities, the more likely businesses will be able to draw the people they need to succeed. It also spurs competition: smart cities will allow for reduced spending on operations, transportation and communications to refocus on developing and marketing services or products. Smart cities are best positioned to accommodate growing populations, cut down on traffic, provide water and energy efficiency improvements, reduce infrastructure expenses, modernize public transportation, and provide everyone a greater standard of living
