This blog is about value chain relationships and value chain development and their relative importance in spurring competitiveness and collaboration of any commodity value chain.
First, it is important to kickstart this conversation by defining value chain development as economic systems that organise the interactions of enterprises and connects them with markets. As a perspective for development, the definition of scope, becomes integral in the development of value chains.
Value chain development on the other hand, involves the sequence of activities emanating from upstream actors (production) to downstream actors (markets). Value chain operators and operational service providers are situated at the micro level with specific private/public actors who offer regular support services at the meso level.
I bring this up to paint a picture of the vertical and horizontal linkages that exist therein that we need to be cognizant of, for value chains to function effectively & efficiently.
Additionally, the relatedness/ synergy that characterise value chains imply that discussions at different functions must be sequenced & synchronised for better outcomes.
A lot of effort has been put in Kenya’s traditional/conventional agriculture export trade value chains e.g., tea & coffee.
However, previously non export “seeking” value chains e.g., fish remain(ed) largely disorganised at the small holder farmer level through to the market.
A quick scan at Kenya’s fish industry reveals abundant informal linkages among various actors. This simply means, lack of jobs, stagnated or dismal revenues for smallholders and Micro and Small Enterprises (MSEs), high prices of commodities for consumers, less taxable income for the smallholders – and additively across the value chain and inadequate integration of marginal communities into markets, directly or indirectly.
Consequently, this results in low and/or delayed economic development among the fisherfolk communities, by extension the country and importantly, forfeited social benefits for marginalised communities that include women’s economic empowerment.
In fact, in Kenya, investment within the blue economy sub-sector (the aquaculture value chain) geared towards micro trade facilitation (involving small holder farmers and smaller firms) is just starting to unravel.
Previously, this has been a burdensome and non-transparent exercise for smaller firms due to rather opaque regulations . This and of course, the general organisation or lack thereof, of relevant stakeholders within this value chain and especially so, with the overall objective of accruing additive benefits for the smallholders and women who play a key role in its development.
According to Chatham House, The Royal Institute of International Affairs, 2020, the trade flows from Kenya to the world market associated with fish and aquatic resources has been on the decline.
The total value of fish (and aquatic resources) exported from the country in the year 2000 averaged $59.4m, peaking in 2008 ($111m). A substantial decline was witnessed thereafter, with total export sales averaging $ 39.6m in 2020 (Figure 1). Compare this to tea for instance, whose total trade value is $1.3bn in 2020.
Of course, I understand that the analysis above in some ways, is akin to comparing apples and oranges. Both tea and aquaculture value chains have a multiplicity of intervening factors encompassing social, economic/regional assumptions and considerations that do not mirror the other.
Hear me out though, this discussion isn’t about micro and macroeconomic undertones that characterise these graphs, but the investment in value chain development as a conduit to access to markets & full-scale commercialisation.
Models of productions aside, the relative importance of value chains concept in improved income, employment & economic- wide growth which has been the cornerstone of the tea industry for instance, cannot be overlooked.
As Prof. Scott Galloway observes – contradictory things can exist concurrently and this, sometimes is, hard for us to understand, which partly makes markets so challenging – so we cling to binaries and cause/effect reactions, wherever possible. But binaries are black and white, and markets are in colour.
An important discourse is currently ongoing to accelerate economic and decent employment opportunities through bilateral trade and investments between the European Union and Kenya.
The ongoing EU and Kenya talks on interim economic partnership agreement with sustainability provisions is indication enough of new markets frontiers.
This is what Financial Sector Deepening Kenya with funding from the Swedish International Development Cooperation Agency (SIDA) is doing, in partnership with the Lake Region Economic Bloc (LREB).
This partnership has been instrumentalised as an aquaculture pilot, within 5 counties, targeting 300 cage and artisanal pond farmers with a local fish MSE as the anchor. This partnership has since revived hitherto dormant MSEs within the region and is geared towards achieving commercial sustainability of the MSEs & smallholders within the region.
Important to note that some conversations within value chains take place earlier than others. This is due to several factors including institutional sensitivities that, in one way or the other, largely determine how different institutions work. Regular alignment meetings are, therefore, vital, to bring everyone at par. Should you wish to learn more about this project, please get in touch with FSD Kenya’s communications lead at email@example.com.