Brian Koome Kinoti

NOONKOJIT ENTERPRISES LTD LIVESTOCK FATTENING, HAY MAKING AND ANIMAL SLAUGHTERING BUSINESS PLAN AUGUST 2022 2 TABLE OF CONTENT LIST OF FIGURES...................................................................................................................... v 1.0 EXECUTIVE SUMMARY..................................................................................................... 1 1.1 Background..............................................................................................................................1 1.2 Project Concept....................................................................................................................... 1 1.3 Our Impact...............................................................................................................................2 1.4 Environmental Impact........................................................................................................... 2 1.5 Source of Raw Material.......................................................................................................... 3 1.6 Products/Services...................................................................................................................5 1.6.1 Red Meat & Red Meat Livestock Production Process Flow.................................... 6 1.6.2 Hay Production.............................................................................................................. 7 1.7 Route to Market...................................................................................................................... 8 1.7.1 Mature Livestock..........................................................................................................9 1.7.2 Red Meat........................................................................................................................9 1.7.3 Hay/Silage.................................................................................................................. 10 1.8 Human Capital......................................................................................................................10 1.9 Location, Buildings and Infrastructure Servicing the Proposed Premises, and Amenities Required............................................................................................................ 11 1.10 Purpose of Funds Required and Impact Created Towards the Project.......................14 1.10.1 Risks Identification and Mitigation Measures.......................................................17 2.0 BUSINESS PROFILE.......................................................................................................... 19 2.1 Company Legal Status......................................................................................................... 19 2.2 Company Ownership/Shareholding Structure............................................................... 19 2.3 Vision statement....................................................................................................................19 2.4 Shares and Shareholding Structure.................................................................................... 20 2.5 Detailed Organization Chart...............................................................................................21 2.6 Corporate Governance......................................................................................................... 21 2.6.1 Preamble...................................................................................................................... 21 3 2.6.2 Corporate Governance Core Principles.................................................................. 22 2.6.3 Governance Structure................................................................................................ 24 2.6.4 The Role of the Board................................................................................................ 25 2.6.5 The Board Committees.............................................................................................. 25 2.6.5.1 Finance & Audit Committee..................................................................................25 2.6.5.2 Audit committee......................................................................................................25 2.6.5.3 Environmental & Social Impact Committee........................................................26 2.6.5.4 Risk & Compliance committee.............................................................................. 26 2.6.5.5 Governance, Strategy & Business Development Committee............................27 2.6.5.6 Management Committee........................................................................................27 3.0 THE ECONOMY & THE MARKETS.............................................................................. 28 3.1 Economy Overview.............................................................................................................. 28 3.1 Agriculture Sector.................................................................................................................28 3.1.1 Cattle and calves slaughtered in formal channels,- (Unit: ‘000 head).29 3.1.2 Sheep and goats slaughtered- (‘000 head)...............................................29 3.1.3 Small ruminants population, meat and milk production and trade.................... 30 3.1.4 Recorded Marketed Agricultural Products at Current Prices (Ksh. Million)..... 30 3.1.5 Consumer Price Indices for Food and Non-Alcoholic Beverages by COICOP Classes,-........................................................................................................ 31 3.1.6 Volume and Price Indices of Recorded Sales of Agricultural Production,-..................................................................................................................... 31 3.2 Manufacturing Sector and Value Addition.......................................................................32 3.2.1 Quantum Indices of Manufacturing Production,-................................. 33 3.2.2 Percentage Change in Quantum Indices of Manufacturing Production,-....................................................................................................................... 34 3.3 Impact of Global Externalities.............................................................................................35 3.4 Foreign Exchange Exposure................................................................................................ 36 3.5 Public Finance....................................................................................................................... 37 3.6 Effects of COVID-19............................................................................................................. 38 4 3.7 The 2022-23 Fiscal Policy Stance.........................................................................................40 4.0 MARKETS AND THE COMPETITION......................................................................... 42 4.1 Product and Product Mix.................................................................................................... 42 4.2 Demand and Supply Trends of the Product..................................................................... 42 4.3 Supply Gap/Opportunity................................................................................................... 42 4.4 The Competition................................................................................................................... 43 4.4.1 Competitors Products Mix......................................................................................... 45 5.0 FINANCIALS....................................................................................................................... 47 5 LIST OF FIGURES Figure 1: Our Impact.................................................................................................................... 2 Figure 2: Environmental Impact................................................................................................. 3 Figure 3: Map of Kenya showing arid and semi-arid district................................................ 4 Figure 4: Cattle Population in Millions as at 2020....................................................................5 Figure 5: feedlots...........................................................................................................................6 Figure 6: Product and Services....................................................................................................7 Figure 7: Flow of the process.......................................................................................................8 Figure 8: Production Flow Chart................................................................................................ 9 Figure 9: Recent trends & Projections in Exchange Rates..................................................... 38 1.0 EXECUTIVE SUMMARY 1.1 Background 80% of Kenya is classified as arid and semi-arid where the climatic conditions in these regions are so harsh for crops that only livestock production can thrive. These regions provide the bulk of red meat consumed in the country through herding, commercial ranching and small-scale dairy-meat production where production is pasture-based. The animals kept are the highly adapted indigenous zebu (small East African Zebu and Boran) or exotic beef (for example, Hereford, Simmental, Charolais, Angus) breeds and their crosses kept mainly by the commercial ranchers. Animal fattening involves keeping livestock in enclosures called feedlots where the animals are fed, conditioned and fattened with a protein balanced, high energy diet in order to achieve consistent weight , improve animal health to obtain better quality of beef and other conditioning goals. It takes 3 months to feed, fatten a cow for example. Meaning that in one year 4 fattening cycles are achievable. With a capacity of 300 cattle per acre, this equates to an output of 1200 cattle per acre, per year, consistently. 1.2 Project Concept Approximately 80% - 90% of red meat consumed in Kenya comes from pastoralist practices, with the remainder coming from highland livestock. While a large portion of the red meat consumed in Kenya comes from Kenyan herders, a significant portion, 20-25%, comes from neighboring countries making Kenya a meat deficit country. NOONKOJIT ENTERPRISES LTD is setting up a 30-acre ranch in Kajiado county 6 primarily focused on fattening cattle, goats and sheep for sale and slaughter. Additionally, the company will venture to set up a slaughterhouse for red meat processing. Our initial planned head-count is 100 Calves and 300 mix of sheep and goats The country has seen an increase in demand for red meat and red meat products over the past 5 years since 2017. We shall as well grow fodder for the purpose of feeding the livestock and to produce hay, to be used to feed the livestock and for sale as well. Since we have room to expand, we intend to increase the carrying capacity of the ranch exponentially from the proposed initial 100 calves and 300 sheep and goats as we penetrate the market and solidify both the upstream and downstream linkages This business proves lucrative, not just to NOONKOJIT but also to the communities surrounding it economically, socially and the environment. 1.3 Our Impact 1.4 Environmental Impact Going by the below model, our farm will be removing approximately over 83.3 tons of carbon from the atmosphere annually 7 Figure 2: Environmental Impact 8 1.5 Source of Raw Material Figure 3: Map of Kenya showing arid and semi-arid district Kenya has 23 ASAL counties, which constitute about 88% of the country’s land mass. Of the 23 counties, 9 of them are classified as arid and 14 as semiarid. The extent of aridity within each of the ASAL counties and across counties is variable, not homogenous. The arid counties are predominantly pastoral (high mobility of pastoralists and livestock), with limited crop farming. The semi-arid counties are mostly agro-pastoral, with integrated crop/livestock production systems common. In terms of socioeconomic development, the ASALs are generally marked by low human development (e.g. high levels of poverty, low literacy) and low population density but a high growth rate and poor infrastructure. However, they are also endowed with a variety of natural resources, key among them being wildlife biodiversity, forests, wetlands, various minerals and diverse cultural characteristics. A total of 1.5 million livestock died in three months to March 2022 on the back of a biting drought that has affected millions of Kenyans, putting the lives of pastoralists who rely on animals at stake. 9 The Agriculture Ministry says farmers lost 253,000 cattle, 1.21 million sheep/goats and 43 camels as the drought witnessed since last October continues to devastate households. The most affected regions are arid and semi-arid lands where livestock is their economic mainstay. The ministry recommended slaughtering off-take for weak animals, promoting fodder and pasture establishment and conservation to avert more deaths. Nookojit will not only buy young healthy calves, lambs and kids but during such difficult times we can offer livestock slaughtering services as well buy weak but healthy animals and fatten them. From the map above Kajiado county and her close neighbours Mwingi, Kitui, Machakos and Makueni are all Semi-Arid,so we are offering meaningful intervention to these areas which have a combined estimated population of over 4.7 Million people. The bar graph below shows the cattle population in Millions as at 2020 Figure 4: Cattle Population in Millions as at 2020 Livestock, that is, calves, sheep and goats, will primarily be sourced from pastoralist communities living in arid and semi-arid areas of the country. These communities provide 80% - 90% of all red meat consumed in the country thus ensuring a steady supply of livestock. The feeds for the animals will primarily be farmed within the premises and some will be manufactured. Institutions like KALRO, UoN -Upper Kabete, ILRI, Mazingira Institute. The livestock will be contained in feedlots, where they are easily fed, fattened and conditioned, while being monitored for pests and diseases in a controlled environment. The feedlots have the capacity to hold 300 cows 10 per acre, and- sheep/goats per acre. Figure 5: feedlots As earlier intimated, Hay shall be grown on our own farm on a minimum 25 Acres with the remaining 5 Acres committed to animal structures, abattoir and company site offices 1.6 Products/Services Red meat and red meat products are an important part of the East African diet, with cattle accounting for 77% of Kenyan ruminant take-off for slaughter. The quantity of manufactured and processed foods increased by 3.1% in 2021. Meat and meat products manufacturing quantity has increased by 13.1% (KNBS 2022 Economic survey). Despite slight fluctuations, in favor of other food varieties, red meat consumption has remained within the same range since 2011. Compared to other equivalent products red meat is easily accessible, and when the market is stable, affordable. Urbanization increases the consumption of red meat and meat products. In 2018, Kenya's urbanization rate was 26.56%, against 26.11% in 2017, and 25.66% in 2016. Since 2011 Kenya's urbanization rate has been rising, and this is expected to continue in the long term. Devolution is presently driving urbanization. Devolution has created opportunities in the counties, which in turn has encouraged consumers to move from the rural to the urban areas. Urbanization is also a result of infrastructural development which opens up previously inaccessible areas thus stimulating trade. Although there exists competition in the meat 11 and meat processing business, models employed by a number of ranchers are inefficient thus creating a chance to cannibalize their market. The present opportunity is not only in fulfilling demand but also in new business models and product differentiation that respond to the needs of end-users and vendors alike. One being the production of high-quality meat and meat products, which are consistent in both quality and supply, which in turn builds consumer trust. Calves, sheep and goats will be purchased from local herders and ranchers as well. Once fattened, some animals will be sold whole, others will be slaughtered for offloading to the market by intermediaries who have refrigerated vans and relevant heath certificates for distribution to butcheries, supermarkets, hotels and institutional buyer. We intend to split our mature livestock on 50:50 basis between what we slaughter and what we offload to the market alive. We deem this risk diversified approach shall help us understand the market from an experience point of view. This model shall be adjusted or retained as we go. Figure 6: Product and Services 1.6.1 Red Meat & Red Meat Livestock Production Process Flow The main product of this venture is red meat livestock, red meat and red meat products .The process will start with the acquisition of either young, weak and/or underweight livestock from herders. These will then be kept in a feedlot where they will be fed intensively on a schedule in order to achieve a certain body weight and composition. 12 Upon achieving the desired conditions, the livestock will be taken to the slaughterhouse where they will be euthanized and their carcasses cut up and processed as required. The flow of the process is as shown below: Figure 7: Flow of the process 1.6.2 Hay Production As a secondary product, hay will be made from fodder grown in a designated area of the ranch. Upon growing, the fodder will be harvested, dried and baled up ready for storage and for sale to the distributors or end consumer. 13 The production flow chart is as below: Figure 8: Production Flow Chart 1.7 Route to Market NOONKOJIT ENTERPRISES LTD intends to use all viable routes to get our products and services delivered to the market. We have already established that potentially viable models include working with the existing meat distributors who own transportation vans, at the gate/on the farm sales. On the gate sale model too is an option we are not leaving out to complement the previous. Focusing on the core business while outsourcing other competencies seems to us that we shall be a leader in quality, consistency, product innovation as well as brand trust. Below are our conceptualized routes to market and business model 14 1.7.1 Mature Livestock 1.7.2 Red Meat 15 1.7.3 Hay/Silage ​ 1.8 Human Capital The below shows our planned staff establishment which we believe will be core to our initial years of operations. We believe it’s a dynamic structure that is flexible enough to adapt to the dynamic nature of typical businesses. 16 1.9 Location, Buildings and Infrastructure Servicing the Proposed Premises, and Amenities Required We are planning to operate on a plot of land in Kajiado (TITLE NO. KAJIADO/ELANGATA-WAUS/2688) that we have verified is well established with necessary utilities and infrastructure support. The total land area for the Noonkojit Enterprises Ltd ranch is 30 acres, all privately purchased. The operation has several structures, which provide some of our human resource residence as well as a slaughterhouse, fodder and hay processing and storage units, and sheltering facilities for the livestock. 17 The main buildings Table 1: Farm Structures and Shelter ​ ​ Utilities: Reliability and Availability In addition to the buildings listed above, the project will require supporting infrastructure and amenities for full operation. The main amenities required for the effective and consistent running of the project are water, power and security. Ranch perimeter fences will be set in order to ensure security. Watering facilities will include a solar powered borehole, complete with storage facilities spread out through the 30 acres. Additionally, 465Watt solar panels will be placed, complete with 10kWh batteries and a 5KW inverter to ensure clean, affordable energy supply throughout the ranch. For the provision of POWER and SECURITY, the following systems and structures will be set up: No. Item Type Quantity 1. Generator 40kVA 1 2. Electric Fencing 1 3. HVAC 2 4. Exterior Lighting 1 For the provision and proper storage of WATER: No. Item Type Quantity 1. Borehole 1 2. Borehole Solar 5.5kVA 1 System 3. Water Storage Steel Overhead 1 4. Water Storage Water Silo 3 18 Specifications of Motorvehicles and Machinery The equipment and resource inventory table gives a breakdown of the equipment by name, the model number and quantity while the quotes are attached on the annex. No. 1. Item Specifications 15kw Solar System 465 watts jinko all-weather solar panels (10 Units) 10kwh lithium-ion battery (6 Units) 5kw 48v puresine hybrid inverter (1 Unit) Roof mount solar mounting structure (3 Units) Installation accessories (1 Unit) Quantity 1 2. 4x4 Pickup Single Cab 1 3. Tractor and Trailer Zetor 2160, 4WD – 60HP 1 3 DiscPlough 10 Tonne Tipping Trailer 4. 5. 6. Feed Processing 5 Disk Mower Machinery 4-wheel rake JOHN DEERE S160 HAY BALER -45HP DISC FARMKING PLOW DISC KUHN CUTTING MACHINE 5 TONNE TIPPING TRELLER Slaughtering Killing Box Equipment Dehiding Machine Carcass Dressing Elevating Platform Inspection Carcass Washing Refrigerators/Freezers 1 1 - 1 19 1.10 Purpose of Funds Required and Impact Created Towards the Project Our budget will be channeled towards capital expenditure as well as working capital requirements. Further breakdown of each budget item is given in the financials. It also details the technologies to be employed 20 21 1.10.1 Risks Identification and Mitigation Measures The following have been identified as the major risk involved with ranching, hay production and meat processing; 1. Livestock fattening. The inherent risks identified in this practice include pests and disease outbreaks, theft of livestock, and starvation. However, these risks are easily mitigated by having regular veterinary and sanitary services to mitigate the risk of pests and disease outbreak; installation of a perimeter wall, security lights, alarm system and having a guard on-site for security of the ranch; and providing manufactured food to the animals thus reducing the reliance on climatic conditions for feeding. A borehole will also be sunk to 22 ensure consistent water supply for the livestock. 2. Hay production Inherent risks identified with this business include poor weather and climatic conditions, pests and diseases outbreaks, and security of the fodder and hay itself. These can be mitigated in the following ways; sinking a borehole on-site to ensure constant supply of water to the ranch, treatment of fodder and soil to prevent and cure diseases affecting the fodder and hay, and employing the aforementioned security measures to keep the investment safe. 3. Slaughter and meat processing The major risks identified here are accidents, which are costly in terms of human capital, insurance premiums and legal fees, power interruptions, and disease outbreaks. This business' major product, meat and meat products are quite perishable and require to be kept in specific conditions in freezers to maintain freshness. NOONKOJIT ENTERPRISES LTD., will mitigate the risk of accidents and injury to personnel by; inspecting the equipment and machinery to ensure their usability and safety and equipping the workers with personal protective equipment for their own protection, having a solar installation and a back up generator system in order to ensure consistent power suppy to the slaughter facility and freezers. Finally, the meat processing process will be subject to quality assessment. The premises will be maintained in accordance with regulatory sanitary standards, and regularly inspected to prevent any possible disease outbreaks caused by poor sanitary practices. 23 2.0 BUSINESS PROFILE 2.1 Company Legal Status NOONKOJIT ENTERPRISES LTD. is a Private Limited Company incorporated on 4th April, 2022, as a private limited company registration number PVT-JZUG5LGV in accordance with the Companies Act, 2015. 2.2 Company Ownership/Shareholding Structure ​ 2.3 Vision statement To be a pace setter in production of improved livestock breeds, animal feeds and products and causing real impact to people in Arid & Semi-Arid Lands (ASAL) and the country as a whole 24 2.4 Shares and Shareholding Structure The company’s shares are 1,000 ORDINARY SHARES, at a price-per-share of 100 shillings. 100% of the NOONKOJIT ENTERPRISES LTD. shares are held by one DAVID OTIENO AKENDO ENG. DAVID OTIENO AKENDO is a proficient and accomplished professional Electrical Engineer with over 10 years’ experience and extensive knowledge in design, construction, operation and maintenance of power systems network. He is an astute manager with business acumen and keen interest in stakeholder engagement and satisfaction, profitability and growth. He bears strong interpersonal and organizational skills with the ability to manage and mentor teams. His professional experience is as below; ❖​ Kenya Power and Lighting Company, Sept 2020 to Date ▪​ County Business Manager, Kajiado County ❖​ Kenya Power and Lighting Company, Apr 2016 to Sept 2020 ▪​ Senior Engineer Operations & Maintenance, Nairobi West Region ❖​ Kenya Power and Lighting Company, Mar 2013 to Apr 2016 ▪​ 3rd Assistant Engineer Operations and Maintenance, Parklands - Kitsuru Zone ❖​ Safaricom Limited, Aug 2008 to Feb 2010 ▪​ Network Management Technician ❖​ Kenya Power and Lighting Company, Mar 2011 to Mar 2013 ▪​ 4th Assistant Engineer Operations & Maintenance, Nairobi North ❖​ Kenya Power and Lighting Company, Feb 2010 to Mar 2011 ▪​ Apprentice Engineer 25 2.5 Detailed Organization Chart 2.6 Corporate Governance 2.6.1 Preamble This framework provides an overview of the corporate governance structures, principles, policies and practices of the Board of Directors (the board) of Noonkojit Enterprises Ltd (NEL) which together will enable NEL to meet governance expectations of a Limited Liability Company. We are committed to high standards of governance that are consistent with regulatory expectations and evolving best practices and that are aligned with our strategy. We believe that good governance is not just about overseeing NEL and its practices, but doing so in a way that’s transparent, independent of management and ethical. It involves the board actively engaging with all stakeholders, knowing the business and 26 its risks, challenging management where necessary, understanding the challenges and opportunities of a changing industry and economy, setting robust standards and principles that will guide NEL to success and helping clients thrive and communities prosper. To serve the interests of shareholders and other stakeholders, NEL’s corporate governance system is subject to ongoing review, assessment and improvement. The board proactively adopts governance policies and practices designed to align the interests of the Board and management with those of all stakeholders and to promote the highest standards of ethical behavior and risk management at every level of the organization. 2.6.2 Corporate Governance Core Principles Principle Description Directors are the stewards of NEL, exercising independent judgment in overseeing management and safeguarding the interests of stakeholders. Stewardship In fulfilling its stewardship role, the board seeks to instill and foster a corporate environment founded on integrity and to provide management with sound guidance in pursuit of long-term shareholder value. Directors are key advisors to management, advising on strategic direction, objectives and action plans, taking into account business opportunities and NEL’s risk appetite. In carrying out this oversight Strategic Oversight role, the board actively engages in setting the long term strategic goals for the organization, reviews and approves business strategies, corporate financial objectives and financial and capital plans that are consistent with the strategic goals and monitors NEL’s performance in executing strategies and meeting objectives. The board oversees the frameworks, policies and systems to identify and manage risks to the businesses, and seeks to embed a strong risk Risk Oversight management culture throughout NEL. The board actively monitors the organization’s risk profile relative to risk appetite and seeks to ensure that management’s plans and activities provide an appropriate balance of return for the risks assumed and are prudently focused on generating shareholder value. Independence Independence from management is fundamental to the board’s effective oversight, and mechanisms are in place to ensure its 27 Accountability Continuous Improvement independence. All direct and indirect material relationships with NEL are considered in determining whether a member of the board is independent. Transparency is a hallmark of good governance. The board is committed to clear and comprehensive financial reporting and disclosure, and constructive stakeholder engagement. The board has carefully defined the expectations and scope of duties of the board, its committees and management. The board is committed to continuously improving its corporate governance principles, policies and practices. NEL’s approach to corporate governance is designed to align the interests of the board and management with those of stakeholders especially debt holders, to support the stewardship role of the board and to enhance the board’s ability to safeguard the interests of stakeholders through independent supervision of management. To ensure policies and practices meet or exceed evolving best practices and regulatory expectations, NEL’s corporate governance system is subject to ongoing review by the governance committee. 28 2.6.3 Governance Structure Our governance structure establishes the fundamental relationships among the board, its committees, management, shareholders and other stakeholders. We set our ethical values and our strategic and corporate objectives, and we determine our plans for achieving and monitoring performance through this structure. ​ 29 2.6.4 The Role of the Board The board is responsible for the overall stewardship of NEL and fulfills this responsibility by overseeing management and aiming to enhance long- term shareholder value, significant social impact and environmental conservation. The major shareholder shall pick directors based on their key competencies in matters regarding our core business, finance, environmental matters, impact investment, monitoring & evaluation, management and evolve on the go. The board’s role consists of two fundamental elements: decision-making and oversight. The decision-making function is exercised through the formulation with management of fundamental policies and strategic goals and the approval of certain significant actions. The oversight function concerns; ❖​ Review of management decisions and the adequacy of systems and controls ❖​ Implementation of policies. ❖​ Makes major policy decisions, ❖​ Participates in strategic planning, ❖​ Delegates to management authority and responsibility for day-to-day affairs ❖​ Review management’s performance and effectiveness. 2.6.5 The Board Committees 2.6.5.1 Finance & Audit Committee The role of the finance committee is primarily to provide financial oversight for the organization include budgeting and financial planning, financial reporting, and the creation and monitoring of internal controls and accountability policies. More specifically to; 1.​ Develop an annual operating budget with staff. 2.​ Approve the budget within the finance committee. 3.​ Monitor adherence to the budget. 4.​ Set long-range financial goals along with funding strategies to achieve them including debt management. 5.​ Develop multi-year operating budgets that integrate strategic plan objectives and initiatives. 6.​ Present all financial goals and proposals to the board of directors for approval. 2.6.5.2 Audit committee Management of NEL is responsible for the preparation, presentation and integrity of the financial statements and for maintaining appropriate accounting and financial reporting principles, policies, internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The external auditor is responsible for planning and carrying out, in accordance with 30 professional standards, an audit of the annual financial statements and an audit of internal control over financial reporting. The external auditor also reviews the quarterly financial information. The audit committee’s purpose is to review the adequacy and effectiveness of these activities and to assist the board in its oversight of: i)​ The integrity of the Company’s financial statements; ii)​ The external auditors’ qualifications, independence and performance; iii)​ The effectiveness and independence of the Company’s Internal Audit Services, Finance and Compliance functions; iv)​ The adequacy and effectiveness of internal controls; and v)​ The Company’s compliance with legal and regulatory requirements. Each member of the audit committee must be independent and financially literate. At least one member must have accounting or related financial management expertise, as the board interprets such qualification in its business judgment. 2.6.5.3 Environmental & Social Impact Committee Given the unique nature of our business we feel compelled to have at the strategy level this committee. Climate mitigation including but not limited to reduction of Greenhouse Gases Emissions as well as sensitizing the neighbouring communities on coping mechanisms and mitigation efforts remains a top priority for us. We desire to have experts at this level so that they can guide management and steer community engagement and participation, build strategic partnerships for NEL with players in the field that includes Governmental and non-governmental actors. Social impact investing still remains a field not well understood especially in mindsets that are purely commercial minded. We would want NoonKojit to be a leader in balancing these interests so that we can sustainably operate and socially responsible. 2.6.5.4 Risk & Compliance committee The risk & compliance committee is responsible for overseeing risk management at NEL, balancing risks and rewards while ensuring that management has in place policies, processes and procedures designed to identify and effectively manage the significant risks to which NEL is exposed as well as compliance to all statutory and regulatory requirements. Annually, the risk committee reviews and recommends to the board for approval NEL’s Enterprise Risk & Compliance Framework, which is the amount and type of risk NEL is willing to accept and compliance to be adhered to in the pursuit of its business objectives. The committee also reviews regular reporting on the assessment of NEL’s risk profile as measured against the approved risk appetite. 31 2.6.5.5 Governance, Strategy & Business Development Committee This Committee is responsible for; 1)​ Advising the board in applying governance principles, monitoring developments in corporate governance and adapting best practices to the needs and circumstances of NEL. The governance committee also advises the board on relationships with the local community, governments, and has oversight of NEL’s approach to corporate citizenship 2)​ Set, review, approve and synchronizes the strategic plans of business units ,make recommendations and provide guidance to the board regarding both division level strategies and the overarching strategy of the corporation 3)​ Review and oversee the development and implementation of the NEL's growth strategies and make recommendations to the Board with respect to investments in such growth strategies or acquisitions and divestitures for which the Board's approval is required 2.6.5.6 Management Committee Among the key functions of this committee shall include; 1)​ Advising the board on succession planning, compensation and human resources policies and practices, as well as compensation risk management. Annual reviews of executive talent development strategies, succession plans for key senior leadership roles and readiness of the Company’s executive talent to deliver strategic goals of NEL. 2)​ Ensure that everything the organization does supports its vision, purpose and aims. Establish the fundamental values, the ethical principles and strategic direction in which the organization operates. 3)​ Ensure seamless coordination among units and departments and maintaining a robust mission driven enterprise 3.0 THE ECONOMY & THE MARKETS 32 3.1 Economy Overview Kenyan GDP stood at $98.84 billion in 2020 and 110.00 USD Billion by the end of 2021 according to the World Bank statistics .The GDP value of Kenya represents 0.19 percent of the world economy. Kenya’s real gross domestic product (GDP) is projected to grow by 5.5 percent in 2022 and 5.2 percent on average in 2023–24. This growth rate, while still strong, will be a moderation following a remarkable recovery in 2021 from the worst economic effects of the pandemic, when the country’s economy grew by 7.5 percent, much higher than the estimated average growth in Sub-Saharan Africa of 4 percent. Economic growth in 2021 was supported by improved performance in key sectors of the economy including; Manufacturing (6.9%), Wholesale and Retail Trade (7.9%), Real Estate (6.7%), Transportation and Storage (7.2%), and Financial and insurance activities (12.5%). Agriculture remained the dominant sector, accounting for about 22.4 per cent of the overall GDP in 2021. Industry related activities and service activities accounted for about 17.0 per cent and 60.6 per cent, respectively in 2021. Nominal GDP increased from KSh 10,716.0 billion in 2020 to KSh 12,098.2 billion in 2021 while Gross National Disposable Income increased from KSh 11,058.4 billion in 2020 to KSh 12,588.2 billion in 2021. Gross domestic per capita increased by 11.4 per cent from KSh 220,132.2 in 2020 to KSh 245,145 in 2021. 3.1 Agriculture Sector We are operating in the upstream and downstream Agricultural sector value chain. Taking a look at its performance. In 2021, agriculture sector recorded mixed performance. The sector recorded a contraction of 0.1 per cent in 2021 compared to a growth of 5.2 per cent in 2020. The observed performance was attributed to erratic and poorly distributed long rains as well as inadequate short rains. Aggregate maize production decreased from 42.1 million bags in 2020 to 36.7 million bags in 2021 explaining the trends maize flour has taken in 2022. Coffee production declined by 6.0 per cent from 36.9 thousand tonnes in 2019/20 to 34.5 thousand tonnes in 2020/21 crop year. Tea production declined by 5.6 per cent from 569.5 thousand tonnes in 2020 to 537.8 thousand tonnes in 2021, due to unfavorable weather conditions. However, the volume of sugar cane deliveries increased from 6.8 million tonnes in 2020 to 7.8 million tonnes in 2021, largely attributed to improved cane availability in most of the sugar zones. The volume of horticultural exports increased by 4.5 per cent from 313.7 thousand tonnes in 2020 to 405.5 thousand tonnes in 2021. During the review period, the volume of marketed milk increased by 26.6 per cent from 682.3 million litres in 2020 33 to 801.9 million litres. Overall value of marketed agricultural production increased by 4.3 per cent from KSh 505.3 billion in 2020 to KSh 527.0 billion in- Cattle and calves slaughtered in formal channels,- (Unit: ‘000 head) Item Cattle Calves 2017 & 2 590.0 - - - - Source: KNBS (2022) 3.1.2 Sheep and goats slaughtered- (‘000 head) Item Sheep goats 2017 and 9 206.7 2018 2019 2020 2021 10 247.6 11 302.7 12 040.2 478.0 34 3.1.3 Small ruminants population, meat and milk production and trade Year Sheep & Meat production Trade Value (1 Milk Production Goats (head) (tonnes) 000 USD) (Liters) Import / Export- /- /- /- /- /- Source: Population, meat and milk production from FAOSTAT, Trade values from KNBS cited in www.trademap.org 3.1.4 Recorded Marketed Agricultural Products at Current Prices (Ksh. Million) Item Cattle calves Goats Sheep 2017 & 93 630.2 - - - - & 6 782.4 7 758.8 7 591.4 7 403.6 10 592.8 35 Source: KNBS - Consumer Price Indices for Food and Non-Alcoholic Beverages by COICOP Classes,- COICOP Classes of Food and Share Non-Alcoholic Beverages (%) Division 2019 2020 2021 % change Live Animals, meat and other parts 4.777 of slaughtered land animals 101.61 104.64 114.45 9.4 3.1.6 Volume and Price Indices of Recorded Sales of Agricultural Production,- Base: 2001=- 2018 2019 2020 2021 Quantum Indices Livestock and Products 321.3 348. 2 - 343.3 Price Indices Livestock and Products 331.2 333. 0 - 418.3 36 3.2 Manufacturing Sector and Value Addition The Manufacturing Agenda of the BIG 4 is anchored on the following pillars I. Contribution to Gross Domestic Product (GDP) from 9.2% in 2016 to 15% by 2022 II. Increase value and volume of exports III. Consumer benefits of manufacturing IV. Economic and exports diversification In 2021, real value added in the manufacturing sector grew by 6.9 per cent compared to a growth of negative 0.4 per cent recorded in 2020. The share of the manufacturing sector to GDP was 7.2 per cent while the volume of output expanded by 6.0 per cent in the same period. The growth was mainly due to increased production of Other Non-metallic Mineral Products like cement, Leather and Related Products and Dairy Products sub sectors among others. However, in the review period decline in production was recorded in Prepared and Preserved Fruits and Vegetables, Animal and Vegetable Fats and Oils, Furniture and Pharmaceutical Products sub sectors. The formal employment in the sector increased by 6.7 per cent to 338.0 thousand in 2021 from 316.9 thousand in 2020. Overall annual inflation as measured by the Producer Price Index rose by 7.32 per cent to 109.55 in 2021. 37 Total credit advanced by both commercial banks and industrial financial institutions to the sector increased to KSh 464.0 billion in 2021 from KSh 410.3 billion in 2020. In the same period, total sales by EPZ enterprises increased by 21.5 per cent to KSh 98.7 billion in 2021. Exports by EPZ enterprises increased by 22.8 per cent to KSh 91.3 billion in 2021. In 2019, the share of agriculture in Kenya's gross domestic product was 34.15 percent, livestock industry contributed approximately 16.15 percent and the services sector contributed about 43.22 percent. Over the 5-year period -), the contribution of manufacturing sector to the Kenyan GDP has fallen from 0.11% to 0.08%. The slowed growth was partly attributable to high cost of inputs and stiff competition from cheap imports. Further, the 11.11% decline in manufacturing between 2016 and 2017 was attributable to uncertainties related to the 2017 general elections. In particular, the slowdown experienced in 2017 led to a 10.8 percent decline in the volume of food products manufactured in 2017 compared to 1.9 per cent growth in 2016. Cumulatively, the manufacturing sector growth declined by 0.054% during the period between 2013 and- Quantum Indices of Manufacturing Production,- Industry Divisions Descriptions Meat and Meat Products and Groups 2017 2018 2019 2020 2021 100.0 106.0 117.1 87.1 98.5 Base: 2017=100 38 3.2.2 Percentage Change in Quantum Indices of Manufacturing Production,- Industry Divisions and Groups Weigh Descriptions t 2017 2018 2019 2020 2021 Meat and Meat Products 8.2 6.0 10.5 -25.6 13.1 0.9 39 3.3 Impact of Global Externalities The impact of the war in Ukraine is weighing on the global economic recovery from the pandemic. Domestically, a key risk to the outlook is a further worsening of the current drought, which is having a devastating effect on food security and livelihoods in affected parts of the country and is necessitating increased social spending on food assistance. For example, using the Integrated Food Security Phase Classification, it is estimated that 3.1 million Kenyans (out of 13.6 million) living in counties with arid and semi-arid land are food insecure. The war in Ukraine has triggered a costly humanitarian crisis that demands a peaceful resolution. At the same time, economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest. Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January. Beyond 2023, global growth is forecast to decline to about 3.3 percent over the medium term. War-induced commodity price increases and broadening price pressures have led to 2022 inflation projections of 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected last January. Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential. The baseline economic projections assume that below average rains will hamper agricultural performance and accounts for the downside effects of the ongoing war in Ukraine through increased global commodity prices. Kenya’s economic performance remained strong in the early months of 2022, but external challenges have mounted. The economy is vulnerable to the commodity price shocks resulting from the war, particularly through fuel, fertilizer, wheat and other food imports. Global financial conditions have also tightened sharply, increasing external financing costs. However, Kenya’s exposure to the war in Ukraine through direct trade linkages is small, with Russia and Ukraine accounting for only 2.1 percent of total goods trade between 2015 and 2020. Similarly, tourists from Ukraine and Russia do not account for a significant share of Kenya’s tourism market. On the upside, measures by the Central Bank of Kenya (CBK) that maintained an accommodative monetary policy stance cushioned the economy and helped bolster recovery. Inflation has recently moved higher to 7.1 percent year-on-year in May 2022 as domestic food prices, and fuel prices in March, April and May, increased following the surge in global commodity prices due to the escalating tension between Russia & 40 Ukraine. The full impact of the global oil price and other commodity prices shock on domestic prices has been cushioned by government subsidies which have, however, come at a fiscal cost. In response to the ongoing surge in global commodity prices and supply disruptions that have added to inflationary risks, the CBK increased the Central Bank Rate from 7 to 7.5 percent in their May 30 meeting to anchor inflationary expectations. Fiscal consolidation is key to sustaining the recovery, by creating strong conditions for private investment and reopening space for development spending. Fiscal performance has also benefitted from the strong economic recovery supporting revenues, but this is now being countered by the cost of subsidizing fuels. The rebound in economic activity and ongoing tax reforms and revenue administration improvements have boosted revenue collection. For example, revenue in the current fiscal year through Q3 remained on target and performed above the previous year’s outturn (12.3 percent of GDP in Q3 2021/22 against a target of 11.2 percent of GDP in Q3 2020/21). As a result, the fiscal deficit in Q3 FY2021/22 shrank to 3.9 percent of full-year GDP from 4.4 percent a year earlier. However, the limited pass-through of higher international oil prices to consumers is generating fiscal costs, with the total monthly cost of subsidizing fuel estimated to be approximately US$66 million 3.4 Foreign Exchange Exposure Foreign exchange reserve declined to $ 7.8 Billion (4.8 months of import cover) at the end of November 2020 from $ 8.96 Billion (5.6 month of import cover) at the end of November 2019. In January 2022, foreign exchange reserves for Kenya was 13,095 million US dollars. Though Kenya foreign exchange reserves fluctuated substantially in recent months, it tended to increase through February 2021 - January 2022 period ending at 13,095 million US dollars in January 2022. Foreign Exchange Reserves decreased to- USD Million in May from- USD Million in April of 2022 The local currency weakened by 8.9 to kes. 110 to the US dollar at the end of November 2020 compared to kes. 101 to the dollar the previous year. For 2022, the International Monetary Fund (IMF) said that faster than expected Federal Reserve moves could rattle financial markets and trigger capital outflows and currency depreciation. Broad-based U.S. wage inflation or sustained supply bottlenecks could boost prices more than anticipated and fuel expectations for more rapid inflation, triggering faster rate hikes by the U.S. central bank. However a gradual, well-telegraphed tightening of U.S. monetary policy would likely have little impact on emerging markets, with foreign demand offsetting the impact of rising financing costs. "Emerging economies should prepare for potential bouts of economic turbulence," the IMF said, citing the risks posed 41 by faster-than-expected Fed rate hikes and the resurgent pandemic. The USDKES increased 0.0500 or 0.04% to- on Friday April 1 from- in the previous trading session. True to IMF predictions, June 2022 saw the dollar hit highs of 117.89 for a shilling for the CBK Indicative rates. Below is a glimpse of the recent trends and near –run projections. Figure 9: Recent trends & Projections in Exchange Rates 3.5 Public Finance In 2021/22, the National Government total revenue including grants is expected to grow by 15.7 per cent from KSh 1,815.1 billion in 2020/21 to KSh 2,100.7 billion. Total expense is expected to grow by 1.4 per cent to KSh 2,672.0 billion in 2021/22 with recurrent and development expenditures estimated at KSh 2,314.1 billion and KSh 358.0 billion, respectively. The total stock of National Government debt was KSh 7,188.1 billion as at end of June 2021, with external debt accounting for 53.5 per cent of the total debt. A total of KSh 1,094.0 billion is expected to be spent on National Government debt servicing .The inflation is also projected to remain within the central bank of Kenya target of 2.5% to 7.5% and fiscal and current account deficits are forecasted to narrow as a result of improved revenue collection and resumption of exports. 3.6 Effects of COVID-19 Kenya’s economy was hard hit hard through supply and demand shocks on external and domestic fronts, interrupting its recent broad-based growth path. Apart from the COVID19 crisis, the locust attack which started early 2020, has affected many parts of 42 Kenya especially the North East. It has had a negative impact on the food security and growth of the agriculture sector in the country. However, if it takes longer than expected to bring the COVID-19 (coronavirus) pandemic under control the anticipated GDP growth of 5.9% in 2022 may not be achieved. The downside risks include a protracted global recession undermining Kenya’s export, tourism and remittance inflows, further tightening of COVID-19 health response measures that disrupt the domestic economic activity, fiscal slippages and weather-related shocks. Post COVID recovery has been given a blow by the Russia-Ukraine war. After rebounding to an estimated 5.5 percent in 2021, Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January. Beyond 2023, global growth is forecasted to decline to about 3.3 percent over the medium term. War-induced commodity price increases and broadening price pressures have led to 2022 inflation projections of 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected last January. Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential., reflecting continued COVID-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks. Although output and investment in advanced economies are projected to return to pre-pandemic trends next year, they will remain below in emerging market and developing economies (EMDEs), owing to lower vaccination rates, tighter fiscal and monetary policies, and more persistent scarring from the pandemic. Various downside risks cloud the outlook, including simultaneous Omicron-driven economic disruptions, further supply bottlenecks, a de-anchoring of inflation expectations, financial stress, climate-related disasters, and a weakening of long-term growth drivers. Because EMDEs have limited policy space to provide additional support if needed, these downside risks heighten the possibility of a hard landing. This underscores the importance of strengthening global cooperation to foster rapid and equitable vaccine distribution, calibrate health and economic policies, enhance debt sustainability in the poorest countries, and tackle the mounting costs of climate change. In his speech on Mashujaa day on 20/10/2021, the President of Kenya came up with a stimulus economic programmes to enable the sector recover from the adverse effect of COVID-19.He directed the National Treasury to allocate Sh1.5billion in support of the 43 communities affected by the ongoing drought in the ASAL counties as part of the National Livestock Off take Programme. The president also directed the Cabinet Secretary for Agriculture to issue a framework that will facilitate the reduction of the cost of animal and chicken feeds within seven days. In the petroleum sector, the Head of state directed the Ministry of Petroleum & Mining, jointly with the National Treasury to develop a framework for stabilization of petroleum prices by December 24 2021.This is so as to cushion Kenyans and industries against the turbulence caused by the volatility in fuel prices. He also directed the Ministry of Energy to secure the full implementation of the report of the Presidential Taskforce on Review of Power Purchase Agreements. The report establishes a pathway for the reduction of electricity prices by 30 per cent by December 24 2021.This is an incentive to the manufacturing sector given that the cost of power is a big nightmare on the income statement and the bottom lines of corporates. On financial processes and transactions, it was noted that the implementation of cash transactions requirements by banks has not been facilitative of the operations of MSMEs and has to some extent inhibited their growth. In this regard, he ordered the National Treasury to revise upwards the cash transactions reporting threshold from the current mark of Sh1 million applicable to both withdrawals and deposits by customers. The head of state directed relevant authorities to effect a moratorium of listing in Credit Reference Bureaus (CRBs) for a period of 12 months to end September 2022 on loans below Sh5 million. The move is set to cushion borrowers who have been negatively listed by lenders. He noted the measures if fully implemented will grow the economy by Sh25billion and complement ongoing State interventions that are expected to sustain the momentum of economic recovery. 3.7 The 2022-23 Fiscal Policy Stance The economy recovered strongly in 2021, as economic activities continue to pick up following the easing of COVID-19 restrictions as well as targeted stimulus interventions by the Government. The economy is estimated to recover and grow by 7.6 percent in 2021 from a contraction of 0.3 percent in 2020 according to Treasury though the market holds a more bearish stance. In 2022, the economy is projected to stabilize at 6.0 percent. The outlook will be reinforced by the ongoing implementation of the strategic priorities of the Government under the “Big Four” Agenda and the interventions under the third Economic Stimulus Programme. 44 The economy continues to record remarkable macroeconomic performance with inflation remaining within target range and short-term interest rates remaining low and stable while lending to the private sector has been strong. Achievements under the Economic Stimulus Programme (ESP) Since the outbreak of COVID-19 pandemic in 2020, the Government has been implementing the Economic Stimulus Programme. Some of the achievement realized under this program include: • Infrastructure Development; rehabilitated access roads and footbridges to optimize the use of local labour and materials, thereby generating over 200,000 jobs for the youth under the “Kazi Mtaani” Programme. • Improved Education Outcomes; constructed additional classrooms in primary and secondary schools, recruitment of 1,000 contract teachers and 1,000 ICT interns to support digital learning in public schools. • Enhanced Liquidity to Businesses; provided seed capital to operationalize the Credit Guarantee Scheme in order to support SMES access credit. Fast tracked payment of VAT tax refunds and pending bills. • Improved Health outcomes; recruited 5,000 additional diploma and certificate level health interns. • Agriculture and Food Security; subsidized supply of farm inputs through the e-voucher system to reach up to 200,000 small scale farmers; and enhanced community based irrigation projects. • Tourism; supported hotel renovations through soft loans channeled through the Tourism Finance Corporation and supported Kenya Wildlife Services to engage 5,500 community scouts; • Improved Environment, Water and Sanitation Facilities; rehabilitated wells, water pans and underground tanks; expanded rain water harvesting; and undertook flood control and mitigation measures. • Manufacturing; promoted the “Buy Kenya Build Kenya” policy, sustained operations of local motor vehicle manufacturers and provided credit to Micro, Small and Medium Enterprises in the manufacturing sector. • Social Protection; enhanced cash transfers to the vulnerable and the emerging urban vulnerable as a result of the pandemic The “Big Four” Agenda was initiated in 2019 by the Government to foster socio-economic development and provide solutions to the various problems facing Kenyans. The realization of programmes under the “Big Four” Agenda is a critical path 45 to supporting sustainable economic recovery, accelerating employment creation, supporting manufacturing activities, enhancing health coverage, improving food & nutrition security and living conditions through affordable housing. As such, Ksh 146.8 billion has been allocated in the FY 2022/23 to support implementation of priority programmes under the “Big Four” Agenda, in various Ministries, Departments and Agencies. Implementation of appropriate policies coupled with enhanced investments in the manufacturing sector continues to yield results and has led to creation of a conducive business environment for industrial growth, creation of jobs and improved livelihoods. In the FY 2022/23, Ksh 10.1 billion has been set aside to promote local industries under various Ministries, Departments and Agencies Ksh 2.6 billion Development of a Freeport and Industrial parks-SEZ Mombasa Ksh 1.0 billion Credit Guarantee Scheme Ksh 3.0 billion Supporting Access to Finance and Enterprise Recovery (SAFER) Ksh 1.3 billion Kenya Industry and Entrepreneurship project Ksh 626.0 million Provision of finances to SMEs in manufacturing sector KIE Ksh 200.0 million Constituency Industrial Development Centre Ksh 85.0 million Development of SEZ Textile Park in Naivasha Ksh 142.8 million Cotton development (RIVATEX)-subsidy and extension support Ksh 410.4 million Modernization of RIVATEX 4.0 MARKETS AND THE COMPETITION 4.1 Product and Product Mix The main products and services offered by the business are; a)​ Livestock – bulls, heifers, calves, goats and sheep b)​ Red meat carcass – beef, mutton, goat meat, offals, carcass skin, hooves and horns Processed meat – sausages, boerewors, canned beef (At later Stages) c)​ Hay d)​ Professional slaughter services This product mix makes production, marketing and sale of the products simple. There is a low risk of the products and services competing with each other, as a matter of fact, there is an interdependency and flow within the products and services to be offered. This allows for the easy adjustment of the business model to produce more of the product that is most on demand at any given moment in time. 46 4.2 Demand and Supply Trends of the Product According to the Kenya National Bureau of Statistics 2022 Economic Survey, meat and meat products posted a notable increase (13.1%) in 2021. Live animals, meat and other parts of slaughtered land animals saw a percentage share increase of 9.4% in the food and non-alcoholic beverages by COICOP classes, between the year 2020 and 2021 indicating an increase in demand for red meat and meat products in general. This is expected to soar higher with our increasing population and increasing middle-income cohort. 4.3 Supply Gap/Opportunity Pastoralist communities produce 80%-90% of the red meat consumed in the country. Animals raised in the rangelands are subject to adverse weather and climatic conditions, prone to contracting diseases and pests, vary widely in size and weight measurements in different weather conditions and are exposed to all manners of insecurity. As much as Kenyan herders contribute a larger percentage of the red meat consumed in the country, a significant percentage, 20%-25%, comes from neighboring countries, making Kenya a meat deficit nation. NOONKOJIT ENTERPRISES LTD. Is coming into the industry as an intervener to spur growth in the red meat production within the country. This will be done by employing the use of feedlots which are structures where the livestock are fed, fattened and conditioned in order to achieve a desired and consistent weight and health standard. Livestock fattening, as opposed to herding, as a means to bridge the red meat supply gap bears several inherent advantages; i.​ It produces consistent results in terms of livestock weight and health standards as the animals are fed and given water on a schedule. They are also immunized and treated regularly ii.​ The space required for feedlots is significantly less than that required for herding iii.​ Feedlots are more secure than free roaming iv.​ Feedlots rely less on the weather and climatic conditions The fattening and conditioning for intensive beef farming takes 3 months meaning that in a year 4 fattening cycles are possible. With a capacity to hold 300 cattle per acre, or 900 goats/sheep per acre, one feedlot has the annual capacity to fatten and condition 1200 cattle per acre, or 3,600 goats/sheep. 4.4 The Competition Red meat is generally the most consumed type of meat in all types of households in 47 Kenya with a 75% and above consumption rate. The average Kenyan consumes 15 kilogrammes of meat each year, with Nairobi residents eating two kilos more than the rest of the country. There is more meat consumed by Nairobians compared to those in Mombasa and Nakuru, as well as those in Kajiado and Eldoret. Even with such a high demand for the product Kenya has had a meat deficit of 300,000 metric tonnes per year by 2019. As a result of the scarcity, meat from neighboring countries must be imported to meet Kenya’s growing demand. The Key players in the Kenyan red meat market are a handful of breeders, and a majority of them are meat processors. They include; 1. Quality meat packers, 2. Kenya meat commission, which is government owned 3. Kenya meat processors ltd, 4. Choice meat, 5. Ken meat and 6. Farmers' choice. Together they control over 70% percent of the formal market share. The large-scale meat and meat product processing companies are able to spend significantly on marketing and enjoy customer brand recognition. Their market concentration is densely populated areas with established distribution networks and have strong relationships with herders, ranchers and outlets. These large-scale companies are characterized by multiple quality standards targeting different market segments including premium products. Large scale meat processing companies do however struggle to serve remote locations due to high transportation costs and inaccessible road network in some regions. Also, the small and medium processors have a market focus for these areas with competitive prices. This is a market characterized by the Bottom of the pyramid market and price overrides quality. 48 4.4.1 Competitors Products Mix COMPANY PRODUCTS LOCATION Quality Meat Packers Ltd. (QMP) Beef Products Beef Cuts Beef Carcass Beef Sausages Lamb & Goat Products Lamb Carcass Lamb Choice cuts Goat carcass Goat Cuts Kangundo Road Kenya Meat Commission (Kenya Meat Commission) Beef Cuts Offals Value-Added Products Corned Beef Canned Ox Tongue Sausages Meatballs Beef Burgers Carcasses Whole Lamb/Goats Prime Beef Carcass Choice Beef Carcass Lamb/Goat Cutlets Standard Beef Carcass Athi River Choice Meats Ltd. Kahawa West (Choice Meats Halal) Beef Products Beef Cuts Beef Carcass Goat Products Goat Carcass Goat Cuts Processed Products Beef Sausages Minced Meat Beef Burgers Beef Meatballs 49 KenMeat Ltd. (KenMeat) Beef Products Beef Cuts Beef Carcass Goat Products Goat Carcass Goat Cuts Sheep Products Mutton Carcass Mutton Cuts Athi River Kenya Meat Processors Ltd (KMP) Beef Products Beef Cuts Beef Carcass Goat Products Goat Carcass Goat Cuts Farmer’s Choice Ltd. (Farmer’s Choice) Beef Products Beef Cuts Beef Carcass Beef Sausages Chipolatas Beef Bacon Salami Beef Brawn Beef Smokies Beef Mince Smoked Beef Sandwich Ham Beef Pet Food Lamb Products Lamb Carcass Lamb Choice cuts Lamb Sausage Lamb Cubes Lamb Leg Bone-In Bulk Rolled Lamb Leg Goat Products Goat Carcass Goat Cuts 50 Kahawa West, Nairobi 5.0 FINANCIALS 51