Tuesday, 14 January 2014

The Lake Basin Development Authority (LBDA) INVESTMENT OPPORTUNITIES THE LAKE BASIN




Lake Basin Development Authority



INVESTMENT OPPORTUNITIES
The Lake Basin Development Authority (LBDA) was established in 1979 by the Government of Kenya to spearhead development in the Lake Basin Catchment area in Western Kenya. The area covers 39,000km2, representing 6.8% of the total land area of Kenya's 580,000km2. It lies between latitudes 10 16'N and 10 54'S and longitudes 330 55' and 350 51'E. The equator passes across the region.

The Lake Basin region has a population of nearly 12 million people of diverse ethnic and cultural backgrounds. The major towns in the region with their approximate population in bracket are Kisumu (500,000), Eldoret (200,000) Migori (100,000), Kitale (90,000), Kakamega (80,000), Nandi Hills (80,000) Bungoma (75,000), Webuye (73,000), Kisii (70,000), Kericho (70,000), Homa Bay (60,000), Busia (60,000), Mbita (50,000) and Siaya (45,000).

The topography of the region is undulating and is characterized by high ridges and escarpments and a few mountain peaks, with elevations varying from 1134m a s l on the shores of the scenic inland Lake Victoria to 3,950m a s l in the highlands, the highest point being the Mt. Elgon on the Kenya-Uganda border.

The climate of the region is generally mild with minimal monthly variation in temperatures between 190C and 250C throughout the year. The rainfall is governed by a modified equatorial climate characterized by long rains (March to June) and short rains (September to November). The average annual rainfall varies from 700mm along the Lake Victoria shores to 2000mm in the highlands.

The region has fairly good road network for internal transportation as well as providing connections to other parts of the country and beyond. Railway transport exists between the Kenyan capital city of Nairobi and Kisumu and Nairobi and Eldoret through to the neighbouring Uganda. There is an international airport at Eldoret and a regional airport in Kisumu with airstrips serving all the major towns. The scenic Lake Victoria provides water transport facilities to the neighbouring countries of Uganda and Tanzania.

The region is connected to the national electricity grid. The net electric power generation for the country is estimated at 5,032MW against a demand of 4,234MW. The electric power supply in the region and the country is, therefore, sufficient for domestic, commercial and industrial consumption.

The region is endowed with abundant water available in the Lake Victoria and the several rivers in its catchment. This resource provides opportunities for investment in hydropower, irrigation and tourism development. The region also has rich arable land suitable for commercial agriculture especially in horticulture, sugar cane, rice, wheat, tea and coffee. The land is additionally suitable for livestock production. Investment in these activities provides opportunities for the establishment of agro and livestock based industries. The Lake Victoria provides immense opportunities for investment in the fisheries sub-sector. The Lake provides 90% of the country's fish catches, accounting for between 100,000metric tones and 200,000metric tones annually. Minerals in the region include gold deposits, Kisii soapstone for making ceramic tiles and sculptor and limestone for cement manufacture. The region's diverse ethnic, cultural and historical heritage provides abundant tourism attraction
latitudes

opportunities. At the same time the region is endowed with unique physical features and game parks which provide additional opportunities for investment in tourism.

The LBDA has prepared feasibility studies for the exploitation and utilization of these resources, which are available to interested investors. Apart from the studies undertaken the LBDA is willing to enter into partnerships with interested investors in setting up commercial ventures. In addition development partners interested in financing development projects and programmes for the socio-economic empowerment of the local people, are welcome.

This Strategic Plan (2005-2010) formulates the strategic objectives for the Authority and identifies projects and programmes required to meet the objectives. The capital investment required to implement the project and programmes is Kshs. 440 billion. From among the projects and programmes some have been identified for implementation through concept paper, pre-feasibility and feasibility studies are now require funding for detailed study and implementation. The funding requirement has been estimated at Kshs.177 billion which should largely come from donors and development partners. These projects and programmes are meant for the general development of the region and can be funded through the Authority or any other preferred institutions.

The Authority also has several institutional enterprises under its docket for income generation. The operations of these enterprises have been constrained by lack of funding. Business plans have been prepared, which if financed, can greatly enhance the operations of these enterprises and improve their income generating capacities and ensure the Authority's future sustainability as required by a current Government Policy for State Corporations. A total of Kshs.966.5 million is required as capital investment in these enterprises. The Authority is therefore looking for strategic investors to go into public private partnership arrangements in the management of these enterprises.


KEY INVESTMENT AREAS



LBDA Rice Mill
 
 
The Authority has established an ultra modern Rice Mill at Kibos in Kisumu City with a capacity to mill 24,000 tonnes of paddy per annum. The mill complex has a number of facilities including seed cleaning and drying unit, rice milling and packaging plant,17,000 tonnes bulk storage, a seed treatment and packaging plant, office, canteen, dispensary, changing rooms, weighbridge service roads, borehole water supply and security perimeter wall, enclosing an area measuring 8.23 ha.

The Rice Mill was constructed with the aim of encouraging small scale farmers in the region to produce paddy rice. The potential for paddy rice production is very high (over 21,000 tonnes), in the region and the Rice Mill provides a ready market for the paddy rice farmers. More paddy can be sourced from other parts of Kenya like Mwea and countries like Tanzania and Uganda. The market for milled rice is readily available within Kisumu City, the whole of Nyanza and Western Provinces and other parts of the country.


Water Bottling Plant (Rice Mill)


The Rice Mill has enough room to house a water purification plant, including a reliable source of water and storage facilities. There is a potential for purifying and bottling 4,000 litres of water per day. The bottled water currently retails at Kshs 60 per litre.

Kisumu City and its environs provide a ready market for the commodity. There is currently no such facility in the region, and such an investment would readily fill the gap.

 
Cement Production

 
The project can be initiated within a joint venture framework with a number of investors. There are adequate quantities of raw materials for the production of cement in the region, with the Koru area in Nyando District (Nyanza Province) having enormous limestone reserves estimated at approximately 65 million tonnes.

 
Tannery


Kenya still lacks adequate tanning capacity and is at the moment still exporting raw or undressed hides and skins. Western Kenya is known to account for 38% of the total hides and skins produced in the country. There is currently no operational tannery in the region (including Uganda and Tanzania). Based on the quantities of hides and skins currently being produced in the region, there is good scope for the establishment of a central tannery, preferably in Nandi District. This could be linked to smaller tanneries to be established in various districts in the region to process the large amount of hides and skins produced.􀳦 Leather from the proposed plant would open up possibilities for establishing a shoe and other related leather industries. The tannery would process hides to full chrome tanning and mainly produce leather and split leather from hides for the shoe industry. It would also be possible to manufacture almost any type of shoe leather except sole leather. The special types of leather to be produced would be of very high quality for the world market. Depending on the demand in the market for modern fashion leather goods, high quality leather in various colours would be added to the range of production. For the local market the factory would produce the popular types of leather currently being consumed

 Instant Coffee Factory

Kenya has no processing facilities for instant coffee because coffee growing is mainly concentrated in the former white highlands where Arabica variety, which is not suitable for instant coffee production, is grown by large estates for export.


The Robusta coffee, which is suitable for the production of instant coffee, does well only in the low lands around Lake Victoria. Its production, however, has not been promoted ostensibly due to lack of a foreign market. Robusta grows very well in the districts of Siaya and Southern Nyanza in Nyanza Province and Busia, lower parts of Kakamega and Bungoma in Western Province. About 2000 tons of Robusta Coffee are produced annually in this region and marketed through Kenya Planters Co-operative Union (KPCU)

On its own accord, the Authority has been actively involved in the promotion and expansion of Robusta coffee growing in the region by providing seedlings to farmers from its nurseries.

This intervention is expected to produce enough raw materials to support the establishment of an instant coffee processing plant for the local market.
The consumption of instant coffee in the country is popular with international hotels, tourist lodges, and resorts. It is also consumed in substantial quantities in offices and affluent households. Overall consumption rate of this commodity is estimated to rise at an average of 3% per annum.

The proposed project may be located in Busia district. The district is within the Robusta coffee growing triangle of Busia, Siaya and lower parts of Kakamega district. The district will serve as nucleus estate for the proposed plant. The proposed site, Matayos, in the district has adequate infrastructural facilities such as electricity water and road network to facilitate transportation of raw materials from the outlying coffee-growing districts.


Fruit Canning and Vegetable Dehydration Project


 
 
The development of fruit and vegetable processing industry in Kenya could become a third important outlet for horticultural produce in addition to the existing local and export markets. Horticultural farming is actively practised in the Lake Basin region. The proposed unit aims at utilizing the excess supply of various horticultural produce which otherwise gets spoilt or fetch very low prices in both export and local markets when in-season.

The processed products from the project will be for both export and local markets. It has been observed that production of certain horticultural produce with potential for processing has fallen due to an over saturated market supply. The growing of these crops will be revived by winning back the farmers confidence by providing them with an alternative outlet for the produce.

The project can be initiated within a joint venture framework with a number of investors. There are adequate quantities of raw materials for the production of cement in the region, with the Koru area in Nyando District (Nyanza Province) having enormous limestone reserves estimated at approximately 65 million tonnes.


Granite Stone Production


Granites are divided into two groups based on the coloration i.e, light coloured (leucocratic) and dark coloured (Melanocratic). The colouration is essentially due to the relative variation in mineral composition. A commercial subdivision of these two groups exists based on the construction industry’s market and names in use in Kenya are:-

 Black granite (essentially composed of dark /black minerals).

 Red Granite (essentially composed of minerals of brownish – reddish appearance)

 Green granite (essentially composed of dark minerals, largely greenish in colour)

 Green, multi coloured granite (composed of various minerals but predominantly the dark coloured varieties)

 Yellow granite (essentially composed of the light variety minerals predominantly yellowish in appearance)

 Vihiga granite (composed of a good mix of minerals dark and light coloured and showing a spotted/mottled appearance).

Granites find their use essentially in the building industry, either as dimension or facing stones. They can also be used as roadstones for road construction.

Cutting of granite is an expensive undertaking as it involves the use of powerful and big diamond cutter blades and grinders/polishers. This exercise is currently only being done in Nairobi. As such, quite often large boulders are ferried from Western Kenya to Nairobi. It is, therefore, a cost cutting and very viable venture to set up a granite cutting plant in Western Kenya.

 
Clay Drainage Pipes, Pottery and Roofing Tiles

i. Clay Drainage Pipes
 



The principal raw material for the drainage pipes is basically the clays. These are available in many locations of the region, such as the Kano Plains (Nyando & Muhoroni), Kodera Forest (Rachuonyo), Sironga (Nyamira), Kapsabet (North Nandi) and several other wetland areas.

Pottery

Western Kenya is endowed with suitable clays for the manufacture of pottery items of high quality that can appeal to the tastes of tourists and catering establishments. These pottery units can be established in various locations in the region to produce individual specialized items. The raw material requirements are, clay (Kaolin), broken glass, glaze, firewood and sundries.


 
ii. Clay Roofing Tiles
 



The provision of adequate and decent housing is a major objective of the Clay Roofing Tiles Project. The Kenya Government has taken measures to aim at finding solutions to this problem. Various studies have revealed that Kenya has not been able to provide more than 10% of the estimated housing requirements in any one given plan period since independence. In striving to provide decent housing, building materials should be made available and at reasonable prices. This can only be possible if the much extensive clay resource can be exploited towards this end. The raw materials for clay roofing tile production include clay, water, firewood and used oil.
 
Hydro Electric Power Generation & Irrigation Development
 
 


The Government of Kenya has liberalized the power sector by allowing Independent Power Producers (IPPs) into the energy sector in order to increase power production through private sector involvement. The Lake Basin region has six major rivers flowing into Lake Victoria from the highlands in the Rift Valley; viz, Sio, Nzoia, Yala, Nyando, Sondu-Miriu and Kuja. These rivers drain some 40,000 Km of Western Kenya. The rivers have immense potential for hydropower and irrigation development as indicated in the table below:- Project Hydro Power Potential (MW) Irrigation Dev. Potential (ha)
Sondu-Miriu
Multi Purpose Development Project (Sondu/ Miriu River)
The hydro power potential has been identified at 94.6. MW with the Magwagwa dam.􀳦 A component based on the run-of river, currently under implementation, will produce 60MW and a further 21 MW at the point where the tail race waters rejoin the Sondu/Miriu river The project has a potential to irrigate 11,000 ha of the Kano plains and 4,000 ha of land in Nyakach and Rachuonyo, a total of 15,000 ha from tail race discharge waters of the hydro-power component.
Kuja River Multi-purpose Projects (Kuja River) The project has a hydro-electric power generation potential of between 10 to 18 MW There is a potential of irrigating 15,000-20,000 ha of land from the hydropower component
Nandi Forest Multipurpose Project (Yala River) This will generate 50 MW of hydro electric power This project has a potential of irrigating 17,000 ha of land in the Nyanza Sugar Belt.
Moi’s(Hemsted) Bridge Multipurpose Project. (Nzoia River) This will generate 60MW of hydro-electric power The irrigation potential in this project is 6,900 ha in the Kerio Valley and 11,430 ha in the Nzoia Basin.



Total 224.4 70,330

Establishment of a Cruise Ship on Lake Victoria


 
The rebirth of the East African Community has greatly increased the potential for growth of the Western Tourism Circuit. The Lake Victoria, the second largest freshwater lake in the world, naturally fits into the Western Tourism Circuit and has high potential for water sports, lake cruises, floating luxury steamers, bird watching and beach hotels. Kakamega forest hosts a unique species of trees, insects, birds and reptiles co-existing in this lovely ecological attraction. Mt. Elgon provides an added opportunity for mountain climbers to the extreme North-West

The LBDA is proposing going into a joint venture investment with any interested investor, to establish a luxury cruise ship in the Lake that will cover the Western Tourism Circuit of Kenya, stopping at various picturesque spots on the beaches of Lake Victoria, to enable the visitors make excursions into the hinterland. The cruise ship would provide luxury accommodation for tourists interested in enjoying the cultural East African hospitality and water sports and even fishing for the more adventurous.

Establishment of Sugarcane Production and Processing Industries

Keny produces between 450,000 tones to 490,000 tons of sugar, while consumption is estimated to be 600,000 tons annually and still growing

Kenya as a country, therefore, still imports between 110,000 to 150,000 tones of sugar to meet its domestic demand for the country. The potential for sugarcane growing is, however, vast in the region and has not been fully exploited. Potential areas with between 10,000 ha to 15,000 ha of land suitable for cane development and establishment of sugar processing factories have been identified in Homa-Bay and Busia districts. 

   
 also see - Artist impression pictures of The Lake Basin Devel...  ..olopment Authority shopping mall in Kisumu