To complement his OPEN ACCESS co-authored article, ‘Elusive profits: understanding economic performance of local traders in the pastoral small ruminant value chain in Northern Kenya‘, in the latest issue of Nomadic Peoples (23.1, Spring 2019), Guyo Malicha Roba reflects here on pastoralists, their markets and how development strategies aimed at linking the two could be improved.
In sub-Saharan Africa, approximately 120 million pastoralists and agro-pastoralists rely on livestock production for their livelihoods. In East African countries, livestock production contributes 10–40% of agricultural Gross Domestic Product (GDP) while in Kenya, up to 8 million people depend on pastoral production for their livelihood and wellbeing and in arid and semi-arid areas up to 80% of household income is from livestock.
The critical importance of livestock production has attracted considerable investments in livestock markets and has led to numerous projects in northern Kenya that aim to ‘link pastoralists to markets’. An example of a recent project is a USAID funded development program, ‘Resilience and Economic Growth in the Arid Lands-Accelerated Growth’ (worth 20 million USD). Further investments at the local level have recently being rolled out through Feed the Future Program known as the ‘Livestock Market Systems program’ which will invest 4.5 billion Kenyan Shillings across five counties in the arid north of the country. https://www.capitalfm.co.ke/news/2018/10/us-funded-sh4-5bn-livestock-market-systems-launched/
Although we witness exponentially growing investment trends in livestock markets, to date the real benefits to livestock producers have been mixed. Part of the problem is how the livestock marketing problems are contextualised and addressed – with a lot of investment in building market infrastructure, but no full understanding of structural problems related to linkages along the chain, information flow and demand or supply specifications. When the current investments are not couched in broader livestock market challenges, building mega infrastructures like market structures, loading ramps and abattoirs can easily be equated to applying a superficial bandage to a deep wound. In such a situation, the interventions will address peripheral problems that are not central to the issues facing livestock producers. The funds sunk into mega infrastructure projects come as a substantial lost opportunity for solving the problematic situation facing the pastoralist livestock market. More so when such investments are sustained against lessons from previously built and launched market structures in northern Kenya that are either minimally used or have never been utilised at all.
Although there is a need in livestock production areas for improved marketing, what is questionable is the magnitude, impacts and results of many of the projects that have been implemented. In northern Kenya, many of these projects inadvertently ignore the existing marketing links, for example, between traders from pastoral areas and Nairobi based clients. The prevailing relational gaps expose the local long-distance traders from the pastoral region to demand uncertainty, high operating costs, economic losses, low net-profits and other vagaries of a spot market. When local long-distance traders fail to get favourable prices at the terminal markets, they have no way of offering pastoralists better prices.
The current challenges affecting livestock marketing in northern Kenya have roots in the colonial period as well as in how livestock marketing chains transitioned in the post-colonial time. The hegemonic position of white settlers with huge control over livestock supplied to the urban market imposed livestock trade restrictions on pastoral areas. This reduced trade volume has posed a barrier to individuals from pastoral areas taking up roles in the supply chain beyond that of the producer actor group. As the market system developed to connect extensive pastoral areas with multiple routes through small market centres to terminal markets, other actors with better connections to urban spaces emerged and exerted greater control over the livestock value chain, especially in the upstream (closer to the terminal market in Nairobi). After independence, pastoral areas (and by extension livestock marketed from these areas) were subjected to even more marginalisation through the absence of supportive policies and a lack of organised connections to the terminal market. This gave space for the emergence of powerful brokers to act as intermediaries at the terminal market. The dominance of brokers in Nairobi’s central markets impedes the penetration of local long-distance traders (from multiple ethnic groups in pastoral regions). In addition to substantively defining the governance of the chain over a longer period, the power imbalance in the chain explains who captures higher net-profits along the chain connecting northern Kenya and the capital.
Some cumbersome regulations drawn-up during colonial times are still applied despite the original motives being obsolete. For example, in order to transport a truck load of sheep and goats to Nairobi’s central market, a ‘No Objection’ letter from the District Veterinary Officer (DVO) in Nairobi must be obtained. On the strength of this letter, a ‘movement permit’ can then be issued in Marsabit or any other town in northern Kenya. The movement permits are usually valid for only a week, and restrict traders’ ability to deal with marketing constraints, such as difficulties in obtaining a lorry at reasonable fee.
Similarly, transportation of animals between 6pm and 6am is forbidden by law, under legal notice 119 of 1984. If traders strictly transport the animals as per the law, the arrival time would be outside market hours and, combined with more than 10 hours of travel and high day‐time temperatures in northern Kenya, would make sheep and goats weak; some might even die in transit. To circumvent the travel regulation, traders are subjected to extortion by police at many checkpoints along the highway.
A combination of old and unfavourable regulations and current position along the chain systematically disadvantage local long-distance traders from northern Kenya. In an effort to manoeuvre through extreme uncertainty, it is very common to see long‐distance traders from northern Kenya transporting a mix of different types and sizes of sheep and goats as a hedging mechanism. Although this is an important buffering strategy against severe losses, it simultaneously limits potential profits that could be made if the type and size of animals in high demand could be targeted.
Weak connections to clients imply that livestock traders have no knowledge of the actual prices for different types and sizes of goats or sheep, specific demands of buyers, specifications regarding the type of animals, sizes and other attributes preferred by end consumers and potential alternative market outlets. When all these pieces of information are unclear, the sales and profits of local traders remain uncertain and a factor of good or bad luck.
Currently, the ones linking pastoralists to markets are the local long-distance traders, such as the Rendille traders in our Nomadic Peoples article, ‘Elusive Profits: understanding economic performance of local traders in the small ruminant value chain in northern Kenya’. Therefore, to improve the margins of these local traders and pastoralists, more strategic investments are required that go beyond building market structures and mega-abattoirs within producer catchment areas. Efforts are required to improve upstream and downstream supply chain linkages in order to manage supply and demand uncertainty and to take advantage of specific demand. In particular, tailored investments that support the businesses of local traders are needed, as their activities link pastoralists to regional and terminal markets. One alternative effort is to move from spot market arrangements to contractual arrangements where traders’ purchases could be based on specified demand from diverse clients. Strengthening relationships between traders and clients will improve coordination of activities, minimise operating costs and improve information flow so that the local traders can make better and more timely decisions and thereby potentially improve their profit margins. In so doing, the situation of local long-distance traders will become less precarious and they may have opportunities for better bargains that can be passed down to the livestock producers from their pastoral communities.