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Draft kenyan policy on clusters
1. Draft Kenyan Policy On Clusters
presented at
The Conference on Cluster initiatives
for Enhanced Competitiveness
Redcourt Hotel, Nairobi
June 28th 2012
Victor Mageto
Ministry of Industrialization
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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2. Concept of Clusters
The concept of clusters has in recent years gained
enormous popularity to the extent that
policy-makers, practitioners and academics alike are
increasingly referring to it. However, many different
cluster definitions exist and the economic impact of
clusters on competitiveness and innovation is far
from being clear. Clusters are becoming an
increasingly popular concept which is reflected in a
growing number of policies and initiatives in
support of clusters.
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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3. Concept of Clusters
Conceptually, industry clusters have driven the economic
development policy in many parts of the world. It is now a
universally accepted fact that successful regional economies are,
to varying degrees, specialized.
Clusters can indeed therefore be viewed as key drivers of
competitiveness and innovation and thus of growth and jobs.
Evidence from around the world shows that clusters are
significantly related to prosperity and that enterprises benefit
from clusters.
Whereas clusters are a real economic phenomenon that can be
economically measured, cluster policies are more an expression of
political commitment to support existing clusters or the
emergence of new clusters. Cluster initiatives are practical actions
to strengthen cluster development, which can, but must not
necessarily be, based on a formulated cluster policy.
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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4. Definition: What is a cluster
Definitions as to what
exactly constitutes a cluster
vary. However, the concept
of ‘cluster’ generally refers
to a geographical
concentration of vertically
or horizontally linked firms
engaged in related lines of
business together with
supporting organizations
such as banks, suppliers,
Business member
organizations e.t.c.
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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6. A cluster of friends on Facebook
Wednesday,
July 9, 2014
KV2030 Manufacturing
Sector Delivery Secretariat
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7. Cluster Policy?
Potential benefits from cluster initiatives do not in
themselves suffice as rationale for policy intervention
in clustering processes. Individual firms and
organizations are the prime actors in cluster processes,
and cluster policy is about consistently paving the way
for conditions that are conducive to people’s
engagement in joint efforts, and the realization of
mutual benefits. Yet, government policy impacts on the
preconditions for clustering under all circumstances,
whether willingly or un-willingly.
The understanding and attitudes of policymakers thus
matter greatly for what can be achieved through
cluster initiatives and cluster actions. (Cluster Policies White book)
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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8. Cluster policy?
The presence of potential benefits from cluster
initiatives does not in itself suffice as rationale or
justification for policymakers to interfere.
The key question is whether and how policymakers
can add value through appropriate measures,
beyond the outcomes that markets and market
actors produce on their own. E.g. is their evidence
that issues analyzed should be addressed by policy
intervention that Without it the clusters will not
develop.
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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9. Objectives of the Cluster policy in Kenya
On the role of policy in cluster development, various
notions abound in the literature. One commonly stated
view is that public authorities should refrain from
creating clusters. Attitudes are generally more favorable
with regard to instruments for supporting existing or
emerging clusters and, indeed, a number of governments
around the world - irrespective of ideology - apply cluster
policy with focus on the latter. Likewise, many clusters
have gone through initial stages of mostly spontaneously
generated clustering followed by a stronger element of
conscious policy-support.
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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10. Objectives of a
Cluster Policy in
Kenya
1. Spur workforce
development through
creativity, innovations,
Knowledge and skills
transfer
2. Facilitate increase of
exports
3. Improve national
and regional
productivity and
competitiveness
4. Improve market
driven research and
networking
5. Create comparative
and competitive
advantage through
collapetion and
cooptetionWednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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11. SITUATION ANALYSIS
There are four types of cluster and network
programmes in the different regions and countries.
These variations can be summarized into four main
categories or types of programmes:
• Regional economic development programmes
• Programmes for the development of national
industries,
• Research and development based cluster
programmes
• Network programmes that support the
development of new clusters
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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12. SITUATION ANALYSIS
In Kenya, The National Economic and Social Council
(NESC) in 2009 recommended the adoption of a cluster
development strategy as part of regional and national
competitiveness strategies.
KIPPRA was commissioned and conducted a study on
clusters (Cluster Mapping) with technical backstopping
of ECORYS Netherlands.
The overall objective of the study was to come up with
practical solutions to the challenges Kenya faces with
respect to productivity & competitiveness in the
mapped clusters and then to draft Participatory Action
Plans that provide blueprints for development.
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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14. Status of Implementation of the Cluster
Participatory Action Plans in Kenya
Cluster study tour of Rotterdam port cluster, food valley, Venlo
logistics clusters undertaken in the Netherlands June 2010
• National study tours – one to Nyanza, Western and North
Rift; the other to Coastal Kenya December 2009
• 3 Clusters mainstreamed and budget provided by
government 2010/2011, 2011/2013 and continuing
• Other clusters taken up by NESC and supported for
mainstreaming in relevant Ministries
• Cluster development Google group formed
• Cluster Online Newsletter developed
• Cluster policy as work in progress
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KV2030 Manufacturing Sector Delivery
Secretariat
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15. Status of Implementation of the Cluster
Participatory Action Plans in Kenya
The Ministry of Industrialization has spearheaded
the development of;
Inland Fisheries Cluster in Kisumu
30 Cluster Facilitators trained
Cluster Officials Elected
Garissa Beef Cluster in Garissa
30 Cluster Facilitators trained
Cluster Officials Elected
Cashew Nut Agro-processing Cluster in Mombasa
Work in Progress
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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17. From left to right: Mr. Gerald Snel CEO, Port of
Rotterdam with participants from Kenya
Rotterdam Port Cluster
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KV2030 Manufacturing Sector Delivery
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19. Food Valley Cluster Netherland/ www.freshparkVenlo.nl
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KV2030 Manufacturing Sector Delivery
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20. Clusters in the Vision 2030
Excerpts From: Kenya Vision 2030 Book pg. 74
Development of industrial and manufacturing
zones: Different regions of the country are
suitable for different types of industrial and
manufacturing activities. In order to harness the
resources available in different parts of the
country, region-specific industrial and
manufacturing clusters will be promoted.
Necessary infrastructure and services will be
provided to stimulate the development of these
clusters (Figure 3.5.5).
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KV2030 Manufacturing Sector Delivery
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22. Vision 2030 Clusters
• Special Economic Cluster for agro-processing
• Special Economic Cluster for agricultural input
production with research park
• New horticulture Cluster
• Special Economic Cluster for packaging this
cluster will include packaging tea and coffee for
global markets
• Fruit juice Cluster
• Vegetables Cluster
• Fish processing Cluster
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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23. Cluster Infrastructure in Kenya
NESC directed that the Ministries of Trade and
Industrialization to spearhead the development of a
cluster policy.
Since clusters are cross-cutting among different
ministries, an inter-ministerial committee comprising
of Ministry of Trade, Ministry of Industrialization, NESC,
KEPSA and KIPPRA was constituted. The Ministry of
Trade in collaboration with various stakeholders
therefore is set to develop cluster policy.
The overarching goal of the cluster policy is to enhance
productivity and competitiveness of various sectors of
the economy.
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KV2030 Manufacturing Sector Delivery
Secretariat
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24. JUSTIFICATION FOR A CLUSTER POLICY
Clusters are seen as important drivers of
competitiveness and innovation. Kenya recognizes that
competitiveness and productivity improvements are
the twin drivers of rapid economic growth and
transformation. However, Kenya still ranks low in global
competitiveness.
For example, the Global Competitiveness Report 2010-
2011 ranked 106th Kenya as behind important
emerging economies such as Egypt (ranked 81), India
(ranked 49) , South Africa (ranked 45) and Thailand
(ranked 36). Thus, relative to these countries Kenya has
weak institutions, infrastructure, and market
efficiencies, among other problems.
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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25. JUSTIFICATION FOR A CLUSTER POLICY
Given the presence of multiple imperfections in
markets and prevailing institutions with multiple
actor in a cluster, there is a potential for
policymaking to generate benefits, both by
accelerating the growth of existing clusters and by
creating conditions that are favorable for the
formation of new clusters as well as the recognizing
and re-engineering of forgotten clusters. (Daily cluster in
North Rift, Meat cluster in Dagoreti and Egg Cluster in Thika)
One of the strongest arguments for focusing on
clusters is that it helps governments better
understand how their economies really work.
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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26. JUSTIFICATION FOR A CLUSTER POLICY
By looking at an economy through the lens of various
regional(County) production and innovation systems,
regions can more accurately identify market
imperfections, find pressure points, and detect systemic
failures. Only then can they determine which
interventions are likely to have the greatest impacts.
Most challenges and opportunities are based on
circumstances that vary from market to market and
product to product (Rosenfield, 2002).
Cluster policy also provides a framework for dialogue and
cooperation between firms, the public sector and non
governmental organizations.
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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27. JUSTIFICATION FOR A CLUSTER POLICY
Today, with the Internet and a click of the mouse
button, companies can source for goods, capital
and technology globally. Technology has set a
new frontier to the conventional wisdom about
how companies and nations compete. With more
open global market, easy access to information
and faster transportation, the role of location in
competition might be said to have diminished!
But if location does not matter, why is today’s
economic map of the world is still being
dominated by growing clusters of economic
activities?
Wednesday, July 9, 2014
KV2030 Manufacturing Sector Delivery
Secretariat
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28. Peaks in the Delta
In Netherlands, Regional
Authorities have been
established to lead National
Coordination in clusters. There
are six different regions and each
focuses on region specific
potentials.
Important Instruments in the
success of the authorities
1. Campus development
2. Business sites
3. Quality of life
4. Accessibility issues
Financial
• Subsidy schemes
• Investment funds
Valorization
• Commercial exploitation of
knowledge
• Market introduction on
short term
Organizing capacity
• Regional network synergies
• Collocation
Physical preconditions
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KV2030 Manufacturing Sector Delivery
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29. CHALLENGES
• Capacity building (training of cluster facilitators and promoters)
• Inadequate funding
• Private sector participation in the whole implementation program is still
poor
• The Secretariat? is not fully facilitated.
• Carry out in-depth cluster studies
• Encourage backstopping support particularly from institutions of higher
learning
• Mainstream clusters in relevant Ministries work plans and performance
contracts
• Engage development partners to provide funding for the cluster activities
• Create inter-ministerial committee to continue implementing and
monitoring pilot cluster Participatory Action Plans.
• PACF – Kenya Chapter
• Carry out a registration and launching exercise for readily formed clusters
• Address emerging issues (Environmental, social and climate changes)
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KV2030 Manufacturing Sector Delivery
Secretariat
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