KENYAN CIVIL SOCIETY STRENGTHENING PROGRAM

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KENYAN CIVIL SOCIETY STRENGTHENING PROGRAM

• OVERVIEW
• OF
• NRM BUSINESS SECTOR STUDY
• AND
• NBE BUSINESS MODELS

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Presentation Outline

• Overview of the Natural Resource Sector in Kenya
• Background on KCSSP
• Objectives of the NRM Business Sector Study
• Study Methodology
• Key findings of the Study
• NR Sub-Sector Mapping - Examples
• NRM Business Sector Models

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Natural Resource Sub-Sectors An Overview

• Forestry
• Wildlife
• Wetlands
• Water
• Fisheries
• Mining Quarrying
• Refuse Management

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Natural Resource Sub-Sectors An Overview

• Socio - Economic Importance
• a) Forestry
• 2 of GDP - ¾ accounted for by commercial
  forest-based activities.
• 3 million people (10 ) - adjacent to indigenous
  forest boundaries derive cash income and meet
  their subsistence needs from this resource.
• Important Habitat - 50 of Kenyas plant species,
  40 of mammal species, 35 of butterfly species
  and 30 of bird species
• However, only constitutes 2 of the land mass.
• b) Wetlands
• Approximately 3 of the countrys surface area.
• Widely distributed within the country and are
  diverse in typology, including fresh water,
  coastal, temporary and seasonal as well as
  man-made wetland resources.
• Key Contribution - environmental sustainability
  and socio-economic support.

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Natural Resource Sub-Sectors An Overview

• c) Wildlife
• Accounted for 25 of the Gross Domestic Product
  (GDP) in 2006/07 financial year
• Tourism accounted for 70 of the gross earnings,
  and more than 10 of total formal sector
  employment.
• Estimated that 60 70 of wildlife in Kenya is
  found outside protected areas -conservation of
  wildlife in communal and private land, is hence
  vital to the sustainability of Kenyas wildlife
  resource base.
• d) Fisheries
• Main sources inland fresh-water, coastal marine
  and aquaculture.
• Kenyan coastline is 880 kilometres - including
  bays and inlets
• However, marine fisheries account for just about
  4 of total national fish catch.
• Marine fisheries represents unique and very
  diverse fisheries resources with potential for
  growth
• NB Policy, legal and Institutional reforms in
  the NRM sector focus devolution and community
  integration in management and decision making
  structures

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Background on KCSSP

• KCSSP is a 3-year program implemented by Pact
  Inc. and Pact Kenya to strengthen Kenyan civil
  society organizations (CSOs) through grant-making
  and capacity building.
• KCSSP is funded by USAID at US 9.4 million over
  3 years.
• KCSSP focuses on building capacity of NGOs and
  other civil society organizations with the
  greatest potential to build large constituencies
  for critical reforms needed in the democratic
  governance and natural resources management
  sectors.

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Background on KCSSP

• Through KCSSP, Pact implements a range of grant
• making and institutional and technical capacity
  building
• activities focused on achieving the following
  intermediate
• results
• Improved leadership and governance of Kenyan CSOs
  - Better staying power.
• Enhanced ability of CSOs to build and work within
  coalitions and speak with a shared voice.
• Improved quality and quantity of services
  delivered to CSO constituents.
• Improved long-term viability of CSOs.

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Current Portfolio

• 23 Democracy and Governance
• 2 Conflict mediation
• 5 Natural Resources Management
• (Advocacy)
• 1 Natural Resources Management
• (Community Management)
• 5 Natural Resources Management
• (Nature-based Enterprises)

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NRM Program Component

• Overall, the KCSSP NRM Program has two distinct
  approaches
• NRM Advocacy
• This aims to facilitate advocacy initiatives
  targeted at creating a more enabling environment
  for sustainable NRM
• co-management
• equitable benefit sharing and
• environmental justice
• Market-led approaches to biodiversity
  conservation and NRM
• This aims to promote the creation of
  nature-based enterprises (NBEs) as a means of
• increasing economic and social benefits to
  communities (from natural resources) and
• building incentives for the communities to
  participate in biodiversity conservation and NRM

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Working Definition of Nature-based Enterprise

• Nature-based enterprises (NBEs) are defined as
  service-
• based or product-based businesses which rely on
  natural
• Resource (s) as an integral factor of
  production and
• involves/benefits significant numbers of
  communities within
• the sphere of influence of the natural resource.
• Qualification
• Without the natural resources input, the NBE
  cannot exist.
• Sustainable biodiversity conservation is an
  explicit objective of NBEs.
• Benefits from NBEs should at minimum compensate
  the opportunity cost.

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Market-led Approach Who we work with and how?

• Our vision is that critical ecosystems and
  natural resource
• bases in Kenya shall extensively come under
  sustainable
• biodiversity conservation and NRM, through
  co-management
• regimes chiefly involving communities within the
  jurisdiction of
• these resource bases and the government.
• We believe that sustainable conservation and/or
  NRM can only occur when
• there exists
• Significant incentives for communities to
  co-exist with natural resources
• A mechanism for moderating NBEs utilization of
  natural resources and
• A mechanism for enabling NBEs to finance NRM and
  conservation initiatives

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Pact/KCSSP NRM Business Sector Study Objectives

• Assess and prioritize Natural Resource
  sub-sectors
• Establish the status and profile of the NRM
  business sector in Kenya
• Develop a clearer understanding of the needs and
  potential of NBEs in key natural resource
  sub-sectors.

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NRM Business Sector Study Methodology

• Key Steps
• Induction of Pact team in VCA/SSA
• Identification of key criteria for sub-sector
  selection
• Literature review
• Selection of sub-sectors
• Forestry, Water, Fisheries, Wildlife, Wetlands,
  Mining Quarrying, Refuse management
• Field data collection Nairobi, Coast,
  Amboseli/Kajiado, Mt. Kenya
• Data analysis and report preparation
• External review workshop (May 2nd 2007)
• Key Selection Criteria for sectors
• Socio-economic importance - livelihood/employment,
  income, number of MSMEs
• Degree/Potential Threat to Biodiversity rate of
  depletion, threat
• Potential to impact on other sub-sectors
  backward forward linkages

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Selection of Nature-Based Sectors
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Study Findings - Summary

• Natural Resource Sub-sector maps (see samples)
• Policy, Regulatory and Institutional Issues
• Challenges and viability of community-based NBEs
• BDS issues
• Private Sector role
• Other issues
• Balance between Enterprise and conservation
• Market opportunities
• Sector specific issues
• Time frame for intervention
• Business Models

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Study Findings - Summary

• Natural Resource Sub-sector maps (see samples)
• Policy, Regulatory and Institutional Issues
• Challenges and viability of community-based NBEs
• BDS issues
• Private Sector role
• Other issues
• Balance between Enterprise and conservation
• Market opportunities
• Sector specific issues
• Time frame for intervention
• Business Models

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Business Models Definition

• Business model design is defining the
• business logic of a company at the strategic
• level.

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Business Models Definition

• A business model is a conceptual tool that
• contains a big set of elements
• relationships between big set of elements and
• allows expressing the business logic of a
  specific firm.
• It is a description of
• the value a company offers to one or several
  segments of customers and
• the architecture of the firm and
• its network of partners
• All the above being for the purpose of
• creating, marketing, and delivering this value
  and relationship capital and
• generating profitable and sustainable revenue
  streams.
• Osterwalder, Pigneur and Tucci (2005)

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Business Models defining

• A Business Model mainly has nine building
• elements (BE), categorized along four core
• blocks (CB), namely
• Infrastructure
• Offering
• Customers
• Finances

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Study Findings Business Model I

• Direct conservation financing - involves
• direct levy of fees from enterprises to meet
  costs of conservation, through mutual agreement.
  (KENVO, ASF)
• enterprises operate as clusters
• enterprises have specific interest in
  conservation of given natural resource.
• cluster management structure coordinates levy
  collection utilization.
• Mostly, enterprises obligation stem from
  commitment or investment made by the cluster into
  the enterprises.
• enterprises may or may not be nature based
  enterprises.
• Advantage
• Successful in availing resources for financing
  conservation
• Shortcoming
• Participants not legally bound to finance
  conservation i.e. absence of structures and
  mechanisms to guarantee sustained contribution
  from members for the conservation financing.

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Study Findings Business Model II

• Individual NBEs using market brokerage services
  with indirect
• conservation financing - involves
• indirect levy of fees from NBEs to support
  conservation.
• core unit of model is agency with direct
  interests in natural resource conservation
  (Kipepeo CBO)
• Partnership with core unit mostly represents key
  strategic value for the NBEs esp. market access
• core unit leverages partnership for two key
  reasons (i) to levy conservation fees (ii) to
  build constituencies for NRM
• conservation fees may not necessarily be
  explicitly stated ordinarily they are embedded.

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Study Findings Business Models II

• Advantages
• Increased income generation at individual level
  model supportive of creating entrepreneurial
  spirit
• Commission paid in return for services provided
• Opportunity for provision of embedded business
  services
• Provides reliable market outlets for products
• Product development in response to market
  requirement
• Provides good mechanism for financing
  conservation
• Shortcomings
• Over dependence on single market outlet
• Producers disadvantaged due to limited
  information regarding entire product market
  chains

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Study Findings Business Models III

• Individual NBEs using market brokerage services
• with no conservation financing
• enterprises are loosely organized and operate
  largely in isolation
• enterprises may have minimal appreciation of the
  need for natural resource conservation and even
  where they do, they lack the structures through
  which to support conservation
• enterprises are nature-based and therefore will
  utilize natural resource products and services
  but not necessarily support conservation.
• Advantages
• Provides reliable market outlets
• Shortcomings
• Absence of mechanism for enterprises to
  contribute to conservation

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Study Findings Business Models IV

• Community-Private Sector Partnership
• partnership between community-based organization
  and a private sector firm.
• community may enter the partnership through
  structures that govern the capital resource owned
  by the community e.g. group ranch committees,
  community owned companies, trusts and
  cooperatives or simply community elected
  committees.
• Advantage
• Enhances possibility for business success through
  the private sector partner contributing capital,
  requisite management skills and playing role of
  market promotion and linkages.
• Shortcomings
• Selection of private investor often not
  competitively done hence the possibility of
  exploitation
• General governance and decision-making processes
  cumbersome due to large memberships
• Revenue sharing at individual level challenging
  due to high number of members

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Study Findings Business Models V

• Community owned and managed business
• - community fully owns business and manages it
  independently
• Advantages
• Potentially good community reach (numbers)
• Shortcomings
• Extremely weak governance and business management
  capacity
• Governance tends to be overwhelmed by group
  politics
• Under capitalized in event of no external support

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Proposed Business Model I

• Community-private sector partnership in tourism
  ventures
• Source of Investment Capital Community land
  contribution Private sector - venture capital
• Ownership of Assets Land owned by the community
  Facility owned by community OR joint ownership
• Type of Community Organization - An Incorporated
  Trust A Limited Company or other
• Core business ownership, management and marketing
  - private sector partner
• Type of Private Sector Entrepreneur - A
  legitimate firm specializing in tourism-related
  ventures and with proven commitment to natural
  resource conservation and community development.
• Revenue streams for community partner
• Lease fees for land and physical assets
• Revenue appropriation/Benefit allocation at
  community level
• Conservation levy from business patrons and
  percentage of bed night fees
• Multi-sector development within community
  jurisdiction
• Revolving loan fund for enterprise creation and
  support
• Paying for use of natural resources

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Proposed Business Model II

• Community-private sector partnerships in
  commodity-based ventures
• Source of Investment Capital
• Community members - shares
• Private sector shares
• Ownership of Assets- options
• Natural resource - community owns/access rights
• Group owns physical assets or co-owns with
  private sector partner
• Type of Community Organization - company limited
  by shares or cooperative
• Core business ownership, management and marketing
  - company or cooperative.
• Type of Private Sector Partner - established
  intermediary or product end user organization- to
  play the role of a buyer or a marketing agent
• Revenue sources and expenditure
• Sales revenue from product sales
• Costs of running core business Dividends to
  share holders

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Proposed Business Model III

• Individually owned enterprises within the
  community
• Source of Business Capital- Individual NBEs
  /entrepreneurs
• Core Business Owners and Managers - Individual
  members of a community
• Individual NBE Business form - Any legitimate,
  member of a legally constituted natural resource
  user group
• Community level Business form - Marketing
  cooperative
• Private Sector Partner Business form - Any
  legitimate but provide reliable outlet for the
  NBE products
• Resource ownership/user rights - bonafide natural
  resource users (either individually or within a
  group)
• Commodity marketing and distribution
• Private sector partners/agents or Individual NBEs
  or community marketing structures
• Business services - Private sector partner/firm
  stand alone or embedded

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• END