1. CONFIDENTIAL
An Overview of the Kenya
Vision 2030 Flagship Projects
Document
Date
A PRESENTATION
IN CHINA 4TH TO
11TH JULY 2012
This report is solely for the use of client personnel. No part of it may be
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organization without prior written approval from McKinsey & Company.
This material was used by McKinsey & Company during an oral
presentation; it is not a complete record of the discussion.

2. 6 KEY SECTORS IDENTIFIED AS HAVING THE GREATEST POTENTIAL
Current size of GDP
• Sizeable part of the economy (e.g., 30% of GDP and
50% of employment – formal and informal)
• Plays a critical enabling role in the economy • One of Kenya’s major
• Extremely fragmented and informal (e.g., 97% of
• Has experienced significant growth over past few years economic pillars,
(e.g., 50%+ p.a. growth of NSE) enjoying significant
employment, 70% of value is informal)
• Very inefficient supply chain
• Still ample room for further development across all areas – growth (13% p.a.)
Capital markets, Banking, Informal finance, and
• Significant opportunity to formalise the sector over past few years
International capital • Largest contributor to
700 foreign exchange
+ •
earnings (US$1 bn+)
However, far
3 6 1 underdeveloped
600 compared to other top
Wholesale Financial Tourism tourist destinations
and retail services (e.g., number of
tourists, yield,
diversity of
500
experience, etc)
5
2 Agriculture
BPO
400 • Stagnant at 10% of
Attractiveness
4 GDP over past 30
Manu- years
facturing • Sector currently
Petroleum* uncompetitive, e.g.,
300
• Small and nascent industry expensive energy,
today (e.g., <1 000 seats total) heavy regulation,
• Overall, cost competitive relative disjointed taxation
Bio-fuels* to other attractive destinations • Pillar of the Kenyan economy (25% of • Sizeable opportunity,
200 GDP) in particular in
• However, key areas for
improvement, e.g., telecom/ • Productivity significantly lower (e.g., domestic and
energy cost and reliability, 2-3 x lower) than international regional markets
training) benchmarks • Potential to develop
Mining*
100 • Significant niche opportunity for • Additional opportunities to unlock global niches (e.g.,
Kenya potential of Kenyan land agro-processed
• Strong need for institutional reform goods)
0
0 50 100 150 200 250 300
- Feasibility
+
* Although not a priority in the short term, these and other non-prioritised (sub)-sectors remain important for the Kenyan economy
Source: Team analysis

3. 46
1. THE TOURISM SECTOR
High Level Strategy
Flagship projects
• Vision
1.1.• Build two high-end, multi-attraction resort
– Be a top 10 long haul tourist destination
cities on coast, and one at Isiolo
offering a high-end, diverse, and
distinctive visitor experience 1.2.• Grow safari revenues by migrating
premium parks upmarket, and extending
• Goals 1.3. bed capacity at under-utilized parks
– Quadruple GDP contribution to ~KSh
80bn
– Raise international visitors from 1.8 to 3 1.4.• Grow nascent, high-end niche products
million, and raise average spend per (e.g. eco-, water-based-, cultural tourism)
visitor from ~KSh40,000 to ~KSh70,000 by attracting 3,000 beds of investment at
– Raise beds from ~40,000 to ~65,000 key sites in Western, North; North Rift and
Tana circuits
• Strategy
– Coast: Aggressively grow coast segment Economics and impact
through resort cities initiative
GDP CAGR
– Safari: Migrate premium safari parks KSh Billion*
upscale; Extend facilities at other under-
utilised parks 78 +32.0%
– Niche Products : Nurture nascent, high
value products e.g., cultural, eco-, and 46
water-based tourism
32
19
– Business: Revamp business visitor
+10.4%
offering by attracting high-end
international hotel chains and 2007** 2012 Additional 2012 with
investing in conference facilities baseline* GDP with Vision 2030
strategy
* Real GDP in 2001 prices
** Based on treasury projections before Vision 2030
Source: Economic survey; Team analysis

4. 506
2. THE AGRICULTURE SECTOR
High Level Strategy
Flagship projects
• Vision
– Innovative, commercially oriented and 2.1.• Prepare and ensure passage of consolidated
modern agriculture sector agricultural reform legislation
2.2.• Develop and begin implementation of 3-tiered
• Goals fertilizer cost reduction programme– purchasing
– Stimulate additional Ksh 80-90bn increase in and supply chain improvements; blending;
GDP by manufacturing
• Achieving benchmark yields in key crops
2.3. • Plan and implement 4-5 Disease Free Zones and
• Increased smallholder specialisation (2-3
livestock processing facilities
crops per plot) 2.4.
• Utilising 1 million hectares of idle lands • Create publicly accessible land registry
• Cultivating up to 1.2m hectares of new 2.5. • Using land registry, develop agriculture land use
lands master plan (e.g., crop specialisation plan)
2.6. • Tana River Basin development scheme
• Strategy
– Institutional reform: Transform key
institutions into complementary and high-
performing entities that enable private sector Economics and impact
agricultural growth
– Increase productivity: Increase productivity GDP CAGR
of crops and livestock KSh Billion*
– Transform land use structure: Better
utilisation of High and Medium Potential 506
Lands 420 86
– Prepare new lands for cultivation: 324 +9.3%
Strategically develop irrigable areas of Arid
and Semi-Arid Lands (ASAL) for both crops +5.3%
and intensified livestock
– Increase access to markets: Improve
market access to small holders by
establishment of aggregators (addressed in 2007** 2012 Additional 2012 with
retail sector) baseline* GDP with Vision 2030
strategy
* Real GDP in 2001 prices
** Based on treasury projections before Vision 2030

5. THE FERTILISER COST REDUCTION INITIATIVE HAS ALREADY
STARTED AND IS EXPECTED TO DELIVER KSH ~1.5 BN IN SAVINGS
Cost to farmer of 50kg bag of DAP fertilizer
1 721
+31%
1 314 Procurement and supply
1 180 +11% chain improvements following
KTDA model can decrease
945 945 cost to small holder by 30%,
875 representing a potential quick
win cost savings to Kenya
of KSh 1.4-1.7
billion
US Gulf Morocco Baltic US Organised Unorganised
port Port Farmer Kenyan Kenyan
farmer* farmer
* This is from the Kenya Tea Development Agency (KTDA), although KTDA imports are NPK, purchase cost is nearly identical to that of DAP
Source: Kenya Tea Development Agency; MEA; NASS

6. 203
3. THE WHOLESALE AND RETAIL SECTOR
High Level Strategy
Flagship projects
• Vision
– Move towards greater efficiency and at 3.1. • Build 'tier 1' retail markets
least a 30% formal market share (from 5%) starting with pilot in Nairobi
• Goals (e.g., potentially Athi River)
– Stimulate additional Ksh ~50bn increase in
GDP by 3.2. • Create large formal wholesale
• Creating ~10 district based wholesale hubs and connect them to
hubs producer business groups
• Establishing 1,000-1,500 producer
business groups (PBGs) 3.3. • Develop Free Trade Port in
• Building at least 10 formal ‘Tier 1’ district Mombasa for Regional market
based retail market places
• Increasing formal share from 5 to 10%
• Attracting at least 3 new retailers with
Economics and impact
10+ stores each
• Creating 1 free trade port in Mombasa
GDP
• Strategy
KSh Billion* CAGR
– Supply chain: Drive efficiencies through
development of producer business groups +11.1%
and large wholesale hubs
203
154 41
– Semi-formal retail: Create “Tier 1” retail 120
markets to locate informal players and help
them grow +5.1%
– Formal retail: Attract and develop large 2005
formal retails through JVs and standalone
ventures (domestic and foreign) 2007* 2012 Additional 2012 with
baseline GDP with Vision 2030
strategy
* Real GDP in 2001 prices
** Based on treasury projections before Vision 2030

7. 201
4. THE MANUFACTURING SECTOR
High Level Strategy
• Vision
Flagship projects
– To improve competitiveness in
manufacturing in order to revolutionise 4.1. • Develop concept, pilot, and launch
the sector 1-2 Special Economic Clusters,
• Goals focusing on select industries (e.g.
– Stimulate additional Ksh ~30bn agro-processing, building
increase in GDP by materials), target players, and
• Reducing imports in key local incentive packages
industries by 25% 4.2.. • Develop concept, pilot, and create
• Growing market share in regional
at least 5 Small & Medium
market from 7 % to 15%
• Attracting at least 10 large strategic
Enterprise (SME) Industrial
investors in key agro-processing Parks
industries Economics and impact
• Strategy
GDP
– Local Production: Defend and CAGR
KSh Billion*
restructure key industries that have
local raw material availability, but no
competitive edge (e.g. sugar, paper) 201 +8.8%
174 27
– Regional Domination: Exploit 132
opportunities to further process imports
and capture the “last step” of value 5.7%
addition (e.g. metals, plastics)
– Global Niche: Strategically drive
increased level of value addition in
2007** 2012 Additional 2012 with
niche exports (e.g. agro-processing) Baseline GDP with Vision 2030
strategy
* Real GDP in 2001 prices
** Based on treasury projections before Vision 2030
Source: Economic survey; Team analysis

8. 15
5. THE BPO SECTOR
High Level Strategy
Flagship projects
• Vision
– Quickly become one of the top 3 BPO
5.1. • Design and develop 1 major
destinations in Africa BPO park in Nairobi that has
• Goals world class infrastructure
– Create at least 7,500 direct BPO jobs with developed by top international IT
an additional GDP contribution of Ksh suppliers, offers competitive
~10bn by
• Attracting at least 5 major leading IT
incentive packages to locate in
suppliers park, provides a one stop shop
• Attracting at least 10 large MNC for administration and talent and
captives and/or global BPO players serves as a ‘showcase’ park to
(creating at least 5,000 jobs)
• Targeting at least 5 large local players attract top foreign companies
to develop as local champions through
standalone operations or JVs Economics and impact
• Strategy
CAGR
– International IT supplier base: Attract GDP
top international suppli-ers for scale and KSh Billion* ~12-18
credibility
– MNC captives and foreign BPOs: Attract ~7-11
leading brands to establish at least 300
~5-7 +71.9%
seat operations +43.1% ~1
– Local champions: Develop local
champions through standalone operations 2007** 2012 Additional 2012 with
and JVs Baseline GDP with Vision 2030
– Integrated value proposition: Use BPO strategy
park to concentrate marketing, training, Number of
incentives and infrastructure
jobs (000s) 1 5 7.5 12.5
* Real GDP in 2001 prices ** Based on treasury projections before Vision 2030
Source: Economic survey; Team analysis

9. 31.4
6. THE FINANCIAL SERVICES SECTOR
High Level Strategy
• Vision
Flagship projects
• A vibrant and globally competitive financial
sector driving high-levels of savings and
6.1. • Facilitate transformation towards
financing Kenya’s investment needs
• Goals stronger, larger scale banks
– Raise savings and investment rates from ~17%
to ~30% of GDP through 6.2. • Develop and execute comprehensive
• Increase bank deposits from ~44% to ~ 80% model for pension reform
of GDP and reduce cost of capital
• Reduce share of population without access to
finance from 85% to 70% 6.3. • Pursue comprehensive remittances
• Raise stock market capitalization from ~50% strategy
to ~ 90% of GDP
• Raise ~ 5% of GDP for investment from 6.4. • Issue sovereign benchmark bond
remittances and ~ 5% of GDP from other
external sources e.g. FDI, sovereign bond
Economics and impact
• Strategy
– Banking: Facilitate transformation to larger, Savings (% of GDP)
stronger banks, and extend credit referencing 32
– Informal finance: Formalize informal finance 5
(e.g. pass SACCO bill) and extend access to 17 10
microfinance
– Capital markets: Deepen capital markets by
raising institutional capital through pension
reform and expanding bond and equity markets
2007 Increase in International Total savings/
– International capital: Tap international
Baseline Domestic Capital** investments in
sources of capital
Savings Savings* 2012 with
Vision 2030
* Composed of 4.8% from comprehensive pension reform to raise NSSF coverage and include an addition 0.6 million adults in contributory pensions,
1.3% from banking an additional 2 million customers, 1.3% from extending informal finance to an additional 2 million, 1.5% from efficiency gains in banking
sector
** Composed of 2.5% each from additional FDI and remittances, and 0.8% from a sovereign benchmark bond.
Source: Economic survey; Team analysis

10. FLAGSHIP PROJECTS IN SOCIAL SECTOR
• Education and Training
 Build at least one boarding school in each
constituency in the pastoral regions.
 Build and fully equip 560 new secondary schools.
 Implement a computer supply programme.
 Roll out a voucher system in five poorest
districts.
 Create centres of Excellence for key Vision 2030
sectors.
 Undertake a teachers recruitment programme.
10

11. FLAGSHIP PROJECTS IN SOCIAL SECTOR
Health
Revitilise and integrate Community Health centres to
promote preventive health care.
De-link the ministry of Heath from service delivery to
allow independent operation of tiers 4, 5 and 6
(District, Provincial and National hospitals).
Create a mandatory National Health Insurance
Scheme (with contribution from employers and
employees).
Channel Health funds directly to health care centres (
i.e. to hospitals and CHCs).
Scale up Output Based Approach (OBA) system.
11

12. FLAGSHIP PROJECTS IN SOCIAL SECTORS CONT.
• Environment, Water and Sanitation.
 Tana and lake Victoria catchment initiatives.
 Rehabilitate 600 hydro meteorological stations.
 Develop two multi purpose water conservation
structures along Nzoia and Nyando rivers.
 Develop 22 medium sized multi-purpose dams.
 Rehabilitate and augment Mzima pipeline.
 Implement Tana Delta initiatives.
 Expedite rehabilitation of the Bura irrigation
scheme.
 Implement sewage initiative.
 Water catchment management.
 Secure wildlife corridors and migratory routes.
 Relocating of Dandora dumping site.
 Land cover and land use mapping
12

13. FLAGSHIP PROJECTS IN SOCIAL SECTOR cont
• Gender, Vulnerable Groups and Youth.
 Provide Funds to Women Entrepreneurs.
 Increase women representation at executive level
in all branches of the government and the private
sector.
 Sports: International Academy for Sports and
Sports Lottery.
 Music: Establish International Centre for Arts and
Culture and Programme to Identify, nature and
Develop Music.
 Expand the Youth Enterprise Development Fund.
 Establish social protection fund for cash transfer
to Orphans and Vulnerable Children (OVC),
Persons With Disabilities (PWD) and elderly.
 Full implementation of Disability Fund.
13

14. PROJECTED PRODUCTION OF NEW URBAN HOUSING UNITS
140,000
120,000
s es
ou
New Urban House Units Per Year
100,000 H
e
m
co
In
ow
-L
80,000
L ow
s High Income Houses
60,000 se
H ou
e
om
I nc
h
Hig ous
es
40,000
Houses m eH
In come nc o
Middle Lo w I
e r-
Upp
20,000
0
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
YEARS
Source: Min of Housing
14

15. FLAGSHIP PROJECTS IN SOCIAL SECTOR cont
• Population, Urbanization and Housing
 To develop an integrated growth and development strategy
for six metropolitan regions, Nairobi, Mombasa,Kisumu,
Kakamega,Eldoret,Wajir,Garissa,Mandera,Kitui,Mwingi,Me
ru.
 To develop a National Land Use Plan.
 Enact the Housing Bill 2006.
 Establish secondary mortgage finance corporation.
 Produce 200,000 housing units annually.
 Install physical and social infrastructure in slums in 20
urban areas.
 Position the city of Nairobi as a 24 hour and all round
globally competitive city in business and tourism.
 Establish housing technology centres in each constituency
to increase access to decent housing
15

16. JOH-KYA001-20070204-JvW-P1
FLAGSHIP PROJECTS IN SECURITY SECTOR
Establishment of forensic laboratory.
Installation of surveillance cameras in Nairobi,
Mombasa, Nakuru and Kisumu.
Construction of six new prisons in Mwingi, Nyamira,
Kwale, Rachuonyo, Vihiga and Kaloleni.
Establishment of a National Security Database.

17. THANK YOU.
17