British court Goldenberg scandal corruption
In his inaugural address, President Barack Obama said: “To the people of poor
nations, we pledge to work alongside you to make your farms flourish and let
clean waters flow; to nourish starved bodies and feed hungry minds.”
To achieve this lofty goal, there will have to be reform in how the United
States addresses the issue of food security. Too often, we see this as charity
for those suffering from natural disaster, war or civil unrest. However,
climate change has entered out consciousness as a major cause of hunger. We now
better understand that what had been considered chronically poor rains is
actually a change in climate to which donors and recipients must adapt.
Lifestyles developed over millennia must change, as will the international
response to the issue of hunger. Furthermore, unless we want to provide food
aid indefinitely to the same people in the same areas of Africa, we need to look
at long-term strategies to enable Africans to meet their own food needs.
Capacity building for farmers and cooperatives, better access to international
markets and enhancing available financing are among some of the recommendations
to help Africans become food sufficient in
the long run.
Audit reveals taxpayers losing millions in anti- poverty projects
Updated 16 hr(s) 53 min(s) ago
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Kenyan workers are poorer today than they were in 2007
Rural areas to get Sh5 billion to fight poverty
By Robert NyasatoThe taxpayer could be losing millions of shillings in grants through the Njaa Marufuku Kenya (NMK) programme, an initiative of the Government to eradicate poverty.
An audit ordered by the Internal Auditor General says laxity in monitoring disbursement of funds and their use was to blame for the rot.
The report notes most groups fizzled out after they received grants contrary to their proposal, which facilitated the funding.
The report affirms that supervision from the ministries of Agriculture and Livestock was not adequate after facilitation allowance was exhausted.
This is why the diversion of funds has been rampant, notes the report. The affected groups include Morara Self Help Group, Nuru Integrated self-help group and Tusaidiane Youth Group, Kiabokire Youth Group.
"It is evident that supervision by the ministries of Agriculture and Livestock was insufficient after facilitation funds got depleted," the report adds.
The audit recommends that there is need to review the name grant and substitute it with one of transparency and accountability to public.
It further recommends steps to be taken to recover funds from groups that received the same and can’t account for it.
The Nuru Integrated self-help group that had embraced commercial poultry farming disintegrated after receiving Sh120,000 in December 2007. The group shared the grant among its members contrary to their proposal, the audit revealed. It is not clear why it deposited Sh40,000 with a jua kali savings and credit cooperative society embroiled in managerial problems, the report adds.
At Monfly SHG, which received Sh120,000 for tomato production in April 4, 2006, its members shared out the grant and disintegrated. Others groups on the audit list of fraudsters are Kiabokire Youth Group (Sh120,000), Egetonto Adventist Choir Women Group (Sh120,000), Mwananchi Banto Women Group(Sh120,000) among others.
When contacted, NMK Nyamira District Chairperson Constrata Rabera denied knowledge of any misappropriation of funds by the groups. "As far as I am concerned the fund has helped alleviate poverty to some level and improved food security," she said in an interview.
In Kisii District the story is the same. Local District Agriculture Officer John Katimbwa says some groups started loaning out money after they were given the grants contrary to their initial proposals.
He said the groups received in excess of Sh2.5 million and an audit of the same was on in the country.
From 1991 to 1993, Kenya had its worst economic performance since independence. Growth in GDP stagnated, and agricultural production shrank at an annual rate of 3.9%. Inflation reached a record 100% in August 1993, and the government's budget deficit was over 10% of GDP. As a result of these combined problems, bilateral and multilateral donors suspended program aid to Kenya in 1991.
After independence, Kenya promoted rapid economic growth through public investment, encouragement of smallholder agricultural production, and incentives for private (often foreign) industrial investment. Gross domestic product (GDP) grew at an annual average of 6.6% from 1963 to 1973. Agricultural production grew by 4.7% annually during the same period, stimulated by redistributing estates, diffusing new crop strains, and opening new areas to cultivation. Between 1974 and 1990, however, Kenya's economic performance declined. Inappropriate agricultural policies, inadequate credit, and poor international terms of trade contributed to the decline in agriculture. Kenya's inward-looking policy of import substitution and rising oil prices made Kenya's manufacturing sector uncompetitive. The government began a massive intrusion in the private sector. Lack of export incentives, tight import controls, and foreign exchange controls made the domestic environment for investment even less attractive.
In 1993, the Government of Kenya began a major program of economic reform and liberalization. A new minister of finance and a new governor of the central bank undertook a series of economic measures with the assistance of the World Bank and the International Monetary Fund (IMF). As part of this program, the government eliminated price controls and import licensing, removed foreign exchange controls, privatized a range of publicly owned companies, reduced the number of civil servants, and introduced conservative fiscal and monetary policies. From 1994-96, Kenya's real GDP growth rate averaged just over 4% a year.
In 1997, however, the economy entered a period of slowing or stagnant growth, due in part to adverse weather conditions and reduced economic activity prior to general elections in December 1997. In July 1997, the Government of Kenya refused to meet commitments made earlier to the IMF on governance reforms. As a result, the IMF suspended lending for three years, and the World Bank also put a $90 million structural adjustment credit on hold. Although many economic reforms put in place in 1993-94 remained, Kenya needed further reforms, particularly in governance, in order to increase GDP growth and combat poverty among the majority of its population. Lack of progress in the Goldenberg scandal marked an unwillingness to deal with corruption.
The Government of Kenya took some positive steps on reform, including the 1999 establishment of the Kenyan Anti-Corruption Authority, and measures to improve the transparency of government procurements and reduce the government payroll. In July 2000, the IMF signed a $150 million Poverty Reduction and Growth Facility, and the World Bank followed suit shortly after with a $157 million Economic and Public Sector Reform credit. By early 2001, however, the pace of reform appeared to be slowing again, and the IMF and World Bank programs were in abeyance as the government failed to meet its commitments under the programs.
This is a chart of trend of gross domestic product of Kenya at market prices estimated by the International Monetary Fund with figures in millions of Kenyan Shillings.
Gross Domestic Product
US Dollar Exchange
Forestry and fishing
Resource degradation has reduced output from forestry. In 2004 roundwood removals came to 22,162,000 cubic meters. Fisheries are of local importance around Lake Victoria and have potential on Lake Turkana. Kenya’s total catch reported in 2004 was 128,000 metric tons. However, output from fishing has been declining because of ecological disruption. Pollution, overfishing, and the use of unauthorized fishing equipment have led to falling catches and have endangered local fish species.
All unextracted minerals are government property, according to the Mining Act. The Department of Mines and Geology, under the Ministry of Environment and Natural Resources, controls exploration and exploitation of such minerals.
Kenya’s inclusion among the beneficiaries of the U.S. Government’s African Growth and Opportunity Act (AGOA) has given a boost to manufacturing in recent years. Since AGOA took effect in 2000, Kenya’s clothing sales to the United States increased from US$44 million to US$270 million (2006). Other initiatives to strengthen manufacturing have been the new government’s favorable tax measures, including the removal of duty on capital equipment and other raw materials.
Kenya has yet to find hydrocarbon reserves on its territory, despite several decades of intermittent exploration. Although Australia continues the search off Kenya’s shore, Kenya currently imports all crude petroleum requirements. Petroleum accounts for 20 to 25 percent of the national import bill. Kenya Petroleum Refineries—a 50:50 joint venture between the government and several oil majors—operates the country’s sole oil refinery in Mombasa, which currently meets 60 percent of local demand for petroleum products. In 2004 oil consumption was estimated at 55,000 barrels a day. Most of the Mombasa refinery’s production is transported via Kenya’s Mombasa–Nairobi pipeline.
Tourists on a safari in Kenya
Kenya’s services sector, which contributes about 63 percent of GDP, is dominated by tourism. The tourism sector has exhibited steady growth in most years since independence and by the late 1980s had become the country’s principal source of foreign exchange. In the late 1990s, tourism relinquished this position to tea exports, because of a terrorism-related downturn. The downturn followed the 1998 bombing of the U.S Embassy in Nairobi and later negative travel advisories from Western governments. Tourists, the largest number from Germany and the United Kingdom, are attracted mainly to the coastal beaches and the game parks, notably, the expansive Tsavo National Park (20,808 square kilometers) in the southeast. The government and tourist industry organizations have taken steps to address the security problem and to reverse negative publicity. Such steps include establishing a tourist police and launching marketing campaigns in key tourist origin markets. Tourism has seen a substantial revival over the past several years and is the major contributor to the pick-up in the country’s economic growth.
Tourism is now Kenya's largest foreign exchange earning sector, followed by flowers, tea, and coffee. In 2006 tourism generated US$803 million, up from US$699 million the previous year.
Other elements of Kenya’s services sector face challenges of downsizing, in particular, the financial system. The Kenya banking system is supervised by the Central Bank of Kenya (CBK). As of late July 2004, the system consisted of 43 commercial banks (down from 48 in 2001), several non-bank financial institutions, including mortgage companies, four savings and loan associations, and several score foreign-exchange bureaus. Two of the four largest banks, the Kenya Commercial Bank (KCB) and the National Bank of Kenya (NBK), are partially government-owned, and the other two are majority foreign-owned (Barclays Bank and Standard Chartered). Most of the many smaller banks are family-owned and -operated.
 Currency, exchange rate, and inflationThe value of the Kenyan shilling (KSh), Kenya’s unit of currency, declined during President Moi’s last term (1997–2002) from about KSh60 per US$1 in 1998 to KSh78.75 per US$1 in 2002. The exchange rate of the Kenya shilling between 2003 and 2005 averaged about KSh76 to US$1. As of June 1, 2007, the rate was KSh67=US$1.
In 2006 the inflation rate for consumer prices was estimated at 14.5 percent. This rate was a significant rise from the previous year’s 10.3 percent, reflecting higher food prices, which carry a 50 percent weighting in the consumer price index.
The budgets of the Moi era (1978–2002) carried increasingly worrisome deficits, and the Kibaki government’s first budget for fiscal year (FY) 2004 was similarly unbalanced. In 2006 Kenya’s revenues totaled US$4.448 billion, while its estimated expenditures totaled US$5.377 billion. Government budget balance as a percentage of gross domestic product⎯a low –5.5 percent in 2004⎯had improved to –2.1 percent in 2006.
Since independence, Kenya, a nonaligned but pro-Western country, has seen both substantial foreign investment and significant amounts of development aid, some from the communist bloc, most from the West. Between 60 and 70 percent of industry is still owned from abroad. Development assistance has come from increasingly diverse sources in recent years. The share provided by the United Kingdom has fallen, while that of multilateral agencies, particularly the World Bank and the European Development Fund, has increased. When President Moi left office in December 2002, one of the major concerns of international donors was removed, and they prepared to step up aid. The International Monetary Fund resumed aid after a three-year gap, and others followed suit with pledges of US$4.1 billion from 2004 to 2006 for development and budgetary support. By February 2005, however, relations with donors were again deteriorating, and some promised aid was suspended because of disappointing progress in tackling corruption and in instituting economic reforms, including privatization.
Aside from ties with advanced economies and donors, Kenya is active within regional trade blocs such as the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC), a partnership of Kenya, Uganda, and Tanzania. The EAC, dissolved in 1977 because of political tensions, was revived in 1997. The ultimate aim of the EAC is to create a common market of the three states modeled on the European Union. Among the early steps toward integration is the customs union of 2004, which eventually will eliminate duties on goods and non-tariff trade barriers among the members. The question of how the EAC will relate to other regional trade blocs, including COMESA and the Southern African Development Community (SADC), is in flux.
Kenyan exports in 2006Kenya’s chief exports are horticultural products and tea. In 2005 the combined value of these commodities was US$1,150 million, about 10 times the value of Kenya’s third most valuable export, coffee. Kenya’s other significant exports are petroleum products, sold to near neighbors, fish, cement, pyrethrum, and sisal. The leading imports are crude petroleum, chemicals, manufactured goods, machinery, and transportation equipment. Africa is Kenya's largest export market, followed by the European Union. The major destinations for exports are the United Kingdom (UK), Tanzania, Uganda, and the Netherlands. Major suppliers are the UK, United Arab Emirates, Japan, and India. Kenya’s main exports to the United States are garments traded under the terms of the African Growth and Opportunity Act (AGOA). Despite AGOA, Kenya’s apparel industry is struggling to hold its ground against Asian competition and runs a trade deficit with the United States.
In 2006 Kenya had a current account deficit of US$1.5 billion. This figure was a significant increase over 2005, when the current account had a deficit of US$495 million. In 2006 the current account balance as a percentage of gross domestic product was –4.2.
In 2006 Kenya’s external debt totaled US$6.7 billion. The debt is forecast to be a manageable 30 percent of gross domestic product in 2007.
Agriculture and industry have traditionally been viewed as two separate sectors both in terms of their characteristics and their role in economic growth. Agriculture has been considered the hallmark of the first stage of development, while the degree of industrialization has been taken to be the most relevant indicator of a country’s progress along the development path. Moreover, the proper strategy for growth has often been conceived as one of a more or less gradual shift from agriculture to industry, with the onus on agriculture to finance the shift in the first stage.
This view, however, no longer appears to be appropriate. On the one hand, the role of agriculture in the process of development has been reappraised and revalued from the point of view of its contribution to industrialization and its importance for harmonious development and political and economic stability. On the other hand, agriculture itself has become a form of industry, as technology, vertical integration, marketing and consumer preferences have evolved along lines that closely follow the profile of comparable industrial sectors, often of notable complexity and richness of variety and scope. This has meant that the deployment of resources in agriculture has become increasingly responsive to market forces and increasingly integrated in the network of industrial interdependencies. Agricultural products are shaped by technologies of growing complexity, and they incorporate the results of major research and development efforts as well as increasingly sophisticated individual and collective preferences regarding nutrition, health and the environment. While one can still distinguish the phase of production of raw materials from the processing and transformation phase, often this distinction is blurred by the complexity of technology and the extent of vertical integration: the industrialization of agriculture and development of agroprocessing industries is thus a joint process which is generating an entirely new type of industrial sector.
statistical evidence of its economic importance worldwide
before reviewing how conditions for agro-industrial development are currently changing worldwide as a result of changing trade policies and regimes and the evolution of both technology and food consumption patterns.
the growing internationalization of agroprocessing activities, in particular through the increasing importance of international capital activities, and the role played by multinational corporations in this process.
Agroprocessing industry thus means transforming products originating from agriculture, forestry and fisheries.
Indeed, a very large part of agricultural production undergoes some degree of transformation between harvesting and final use. The industries that use agricultural, fishery and forest products as raw materials comprise a very varied group.
A further specification is related to the nature of the production process which, in many cases, can range from craft to industrial organization.
This implies that agro-industry today continues to process simple agricultural goods while also transforming highly sophisticated industrial inputs that are often the result of considerable investments in research, technology and innovation. Corresponding to this growing complexity of inputs is an increasing range of transformation processes, characterized by physical and chemical alteration and aimed at improving the marketability of raw materials according to the final end use.
The potential for agro-industrial development in the developing countries is largely linked to the relative abundance of agricultural raw materials and low-cost labour in most of them. The most suitable industries in such conditions are indeed those that make relatively intensive use of these abundant raw materials and unskilled labour and relatively less intensive use of presumably scarce capital and skilled labour.
Many of the industries using agricultural raw materials have in fact those characteristics that make them particularly suitable for the circumstances of many developing countries. Where the raw material represents a large proportion of total costs, its ready availability at a reasonable cost can often offset such disadvantages as a lack of infrastructure or skilled labour. Furthermore, for many agro-industries, a small plant may be economically efficient, which is another important factor in developing countries where the domestic market is limited by low purchasing power and sometimes by the small size of the market itself.
As for the cost structure, raw materials and utilities (water and power) account for well over half the total cost of production in food processing (column 3). In most countries the cost of these inputs represents between 60 and 90 percent of the gross value of production. The proportion tends to fall as productivity rises.
It is important that policies applied at all levels of the food production and processing system are compatible and work towards the achievement of the same goal. Whether in the form of a tax, subsidy, support or tariff, policy interventions must generate net benefits for society. In other words, the loss in fiscal revenue from a reduction in taxes must be more than offset by the increase in jobs and benefits associated with the industry; the cost of a subsidy must be more than offset by gains for the direct and indirect recipients of such a subsidy; relatively high prices must ensure the required increase in production and expansion of the industry concerned, with benefits in terms of employment and income; and the subsidy to final consumers must have net benefits in terms of nutrition and productivity.
Food distribution systems, in particular, have relied on forced procurement and import subsidies, thus lowering simultaneously the supply of local produce and prices of processed food products. Incentives to develop local manufactures for a variety of food products have thus been artificially depressed, especially in sectors such as dairy products, packed meat and wheat derivatives. On the other hand, in several developing countries the rise of a domestic fruit and vegetable processing industry has been indirectly encouraged by the punitive policies adopted against the production of basic food items.
The transition process has changed the economic environment by removing or substantially reducing food subsidies, by privatizing agriculture and industry and by deregulating local markets. In the absence of a comprehensive liberalization programme, however, new disequilibria have been created. Higher retail prices for food are often not transmitted to farmers because the processing industry is free to use market power to appropriate monopolistic rents. At the same time local producers are faced with strong competition from imports of higher-quality, Western processed food.
BENEFITS OF FOREIGN DIRECT INVESTMENT
a question which has been the object of strong debate between supporters and critics of this type of investment.
Although technological means of improving the environmental performance of many industrial activities already exist, their mere existence does not guarantee that they will be adopted, especially by small firms. One effective way to influence small firms is through extension and advisory services for industries. For example, the Pollution Control Cell of the National Productivity Council in India’s Ministry of Labour works to devise solutions that both reduce pollution and improve profits.
Generally, building pollution prevention into new agrifood investments is cheaper than adding it on later. Hence the importance of undertaking environmental impact assessments for proposed new large-scale investments. Developing countries with open markets will be able to gain from importing clean technologies already in use in industrial countries.
Protecting the consumer
Deepening public-private collaboration to accelerate growth in sustainable agriculture
The IssueIn the past year, food security and economic crises have highlighted both the urgent need and the potential for developing sustainable agri-food systems. Over one billion people, or one out of six globally, do not have access to adequate food and nutrition today. By 2050, the global population will grow to a projected 9.2 billion people, and demand for agricultural products is expected to double. In the intervening years, the agri-food system will face increasing constraints and volatility driven by resource scarcity and climate change, raising the risk of production shortfalls. While substantial gains can be realized through improved technologies, policies, infrastructure and investment, it will require an exceptional level of collaboration among stakeholders in the agricultural value chain including, individual farmers, consumers and entrepreneurs; governments and companies; civil society and multilateral organizations. And while many initiatives and processes are underway, few effectively tap both public and private-sector insights and capacities. Alignment around shared priorities and large-scale initiatives is therefore key to success on both global and regional levels.
A New Vision for Agriculture The World Economic Forum’s Consumer Industries Community is championing an initiative through multi-stakeholder engagement in developing a shared agenda for action to meet food security, economic development and environmental sustainability goals through agriculture. The New Vision for Agriculture initiative engages high-level leaders of industry, government and international institutions and civil society– with support from leading experts – to define joint priorities, recommendations and opportunities for collaboration. Issues to be addressed will vary according to the region and forum, but may include:
Leveraging public and private-sector investment for agricultural growth Boosting good stewardship practices of natural resources and preservation of biodiversity Developing agricultural markets through improved infrastructure and policies Driving economic growth through agriculture, including opportunities for small-scale farmers
Through a series of structured dialogues, engaging key public and private-sector actors, the initiative will provide opportunities to develop shared insights and priorities; provide advisory input and recommendations for focus and action by key stakeholders; and identify and support existing initiatives which offer promising opportunities for collaboration and scaling.
Who Is Involved?This project creates a neutral platform for engagement of a broad array of stakeholders including industry, governments, multilateral organizations, and civil society. The initiative is led by a Project Board comprised of select Consumer Industry Partners of the World Economic Forum. The Project Board provides strategic leadership and oversight to the project, as well as direct championship of its activities.
The New Vision for Agriculture Initiative also receives advisory support from the World Economic Forum’s Global Agenda Council on Food Security. As a multi-stakeholder group of high-level leaders in the food security arena, the Council works to identify and leverage support for priority actions to improve global food security. The Council will play a key role in the New Vision for Agriculture Initiative through advising and leveraging support for the project’s recommendations.
For more information on this project, please contact:• Helena Leurent, Director, Agriculture, Food & Beverage Community, at http://email@example.com • Lisa Dreier, Director, Food Security and Development Initiatives at http://firstname.lastname@example.org • Jennifer Baarn, Project Manager, New Vision for Agriculture Project, at http://email@example.com
Boosting agricultural productionVarious policy responses have been proposed to reverse the slide in agriculture and help boost production and enhance food security. One of the major responses is the Comprehensive Africa Agriculture Development Programme (CAADP), which was endorsed by African governments in late 2002 in the context of the New Partnership for Africa’s Development (NEPAD). The CAADP has three immediate "pillars" and one long-term pillar which together can help tackle Africa’s agricultural crisis. The mutually reinforcing pillars on which to base the immediate improvement of agriculture, food security and trade balance are:
Extending the area under sustainable land management and reliable water control systems. Building up soil fertility and the moisture-holding capacity of agricultural soils, and rapidly increasing the area under irrigation, especially small-scale irrigation, will not only provide farmers with opportunities to raise output on a sustainable basis, but will also contribute to the reliability of food supplies.
Improving rural infrastructure and trade-related capacities for market access. Roads, storage, markets, packaging and handling systems, and input supply networks should be improved to raise the competitiveness of local production vis-à-vis imports and export markets.
Increasing food supply and reducing hunger. Several factors including the limited use of irrigation and other inputs undercut crop and livestock yields. There is a need to improve access to technology by small farmers. These can play a major role in increasing food availability close to where it is most needed, raising rural incomes, and expanding employment opportunities and contributing to growth in exports. Food storage and its protection from mildew and pests are of critical importance. It is also important to respond to the growing frequency and severity of disasters and emergencies which impact on food security. In addition, conflict and war also disrupt food production. As a result, more aid is being diverted to emergency relief than to necessary long-term development.
Agricultural research, technology dissemination and adoption is the long-term pillar to achieve accelerated gains in productivity and requires:
Irrigation. Large-scale farming in south-western Burkina Faso.(Source: D. Tiveau/CIFOR)
Smallholder farming using furrow irrigation, Burkina Faso.(Source: Y. Katerere)
enhanced rate of adoption of the most promising available technologies by linking, more efficiently, research and extension systems to producers;
technology delivery systems that quickly bring innovations to farmers and agribusinesses through appropriate use of new information and communication technologies;
renewing the ability of agricultural research systems to efficiently and effectively generate and adapt to Africa’s new knowledge and technologies, including biotechnology; and
mechanisms that reduce the costs and risks of adopting new technologies.
It was estimated that a budget of US$251,000 million for the period 2002-2015 was needed to successfully implement these four pillars. If Africa were to invest in agriculture the total of about US$22,000 million it spends annually on food imports and food aid, it would take the region less than a decade to implement the four proposed agricultural pillars highlighted in the CAADP. The CAADP budget is slightly less than Africa’s total debt of over US$292,000 million for the period 2000-2002. Africa’s debt burden has been described as a major obstacle to the region’s economic growth and poverty reduction, threatening efforts to meet the Millennium Development Goals (MDGs), particularly that of halving poverty by 2015.
ECA, 2004c. Land Tenure Systems and their Impacts on Food Security and Sustainable Development in Africa. Economic Commission for Africa, Addis Ababa.
FAO, 2002a. Besieged mountain ecosystems start to turn off the tap: reduced water flow threatens agriculture and food security around the globe. Food and Agriculture Organization of the United Nations.
FAO, 2002c. World Agriculture: Towards 2015/2030 - Summary Report. Food and Agriculture Organization of the United Nations, Rome.
FAOSTAT, 2004. FAOSTAT – FAO Statistical Databases. Food and Agriculture Organization of the United Nations.
ILRI, 2004. Raising Livestock Production in Africa: summary note. Proceedings of the Assuring Food and Nutrition Security in Africa by 2020: Prioritizing Action, Strengthening Actors, and Facilitating Partnerships Conference. Kampala, Uganda. 1-3 April. International Livestock Research Institute.
NEPAD, 2003. Action Plan for the Environment Initiative. New Partnership for Africa’s Development, Midrand.
UNCTAD, 2004. Economic Development in Africa - Debt Sustainability: Oasis or Mirage? United Nations, New York and Geneva.
UNEP, 2006. Africa Environment Outlook 2
UNEP, 2006. Africa Environment Outlook 2, Annexes
World Bank (undated). AIDS Regional Update: Africa. World Bank, Washington, D.C.