This is the first country programme evaluation (CPE) of Kenya by the Independent Office of Evaluation of IFAD, since the Fund started its operations in the country in 1979. The evaluation made it possible to assess the results and impact of IFAD-funded activities in the country, and to generate findings and recommendations that will serve as building blocks for the forthcoming Kenya results-based country strategic opportunities programme (COSOP), which will be prepared jointly by IFAD and the Government of Kenya following the completion of the evaluation.

The results of the IFAD-Government of Kenya partnership in the last decade have been generally encouraging, especially recognizing that the partnership was at its lowest levels in the 1990s due to the suspension of IFAD activities in the country. Among other areas, the CPE found useful results in natural resources management and environmental conservation, community development, and the introduction over time of approaches that favour income generation and commercialization of small farmers as a means to rural poverty reduction.

IFAD’s participatory and bottom-up approaches as well as emphasis on community development, and grass-roots institution building are valued by the Government and all main partners in Kenya. These characteristics including its focus on rural small farmers, distinguish IFAD from other donors in the country. They are critical for building ownership at the local level that can contribute to better sustainability of benefits. Projects have also promoted domestic water supply, sanitation facilities and public health infrastructure, even though these are not areas of IFAD’s comparative advantage and should be reconsidered in the future to limit the fragmentation of the country programme. A number of innovations have been introduced through IFAD-funded projects and there are examples of scaling up. However, both innovation and scaling up are not driven by a coherent agenda and are pursued currently on an ad-hoc basis.

The CPE underlines that the highly varied nature of sub-sector activities financed through IFAD-supported projects in Kenya and insufficient attention to policy dialogue and partnerships with bilateral and multilateral donors have constrained the Fund from contributing even more widely to improving rural incomes and livelihoods. Moreover, its largely exclusive focus, in the past, on medium to high potential areas in the south west of the country has also not enabled the Fund to contribute to exploiting the large economic potential in the arid and semi-arid lands, where around 30 per cent of all rural poor people live in Kenya.

IFAD’s performance as a partner in Kenya has been satisfactory in the past decade. To its credit, useful efforts have been made to effectively reactivate a suspended portfolio in the 1990s. Since 2000, IFAD prepared two COSOPs for Kenya, financed six new loans, established a country presence with an out posted country programme manager (CPM) and associate CPM in Kenya, shifted to direct supervision and implementation support in all on-going and new operations, set up a proactive country programme management team with various in-country partners, and established its first regional office in Nairobi headed by a portfolio adviser. IFAD has however not engaged sufficiently in policy processes and in developing strategic partnerships.

The CPE underlines a number of areas of concern regarding the performance of Government, including weak project implementation capacity at the district level, small allocation of counterpart funds in the context of IFAD-supported projects, insufficient commitment to policy implementation, slow flow of funds, and inadequate financial management, auditing and procurement processes. Although improving gradually, its national budget allocation to the agriculture sector has consistently fallen short of the 10 per cent target enshrined in the 2003 Maputo declaration. The fragmentation of its institutional architecture - with ten different ministries dealing with agriculture and rural development - has created dispersion of resources and challenges in the delivery of projects and their co-ordination. The Government appears now to be seriously concerned in revitalising the sector, and has recently issued a new agriculture sector development strategy, signed the CAADP Compact, and adopted a new national constitution. Moreover, the Ministries of Finance, Planning, Agriculture, Livestock, Water and Irrigation, Public Health and Gender, Children and Social Development, have designated desk officers who follow IFAD matters in a more timely manner.

IFAD has provided a number of country-specific grants to Kenya including global and regional grants that cover Kenya, inter-alia, on rural finance, sustainable land use, promotion of traditional drought resistant crops, agriculture water management, prevention of HIV/AIDS, knowledge management, and livestock production and marketing. The grants have been useful in undertaking research on key topics of concern to the country programme. However, the evaluation found that there are opportunities for better linkages between grants (especially global and regional grants) and investment operations. It also noted that grant recipients in Kenya were not fully aware of other grant activities in the country, thus limiting possible synergies among them and across the investment portfolio.

As in a large number of IFAD-supported operations globally, efficiency of operations in Kenya is the weakest performing evaluation criteria covered by the CPE. Some of the reasons for weak efficiency include slow procedures for replenishing project special accounts, delays in payment of services, high overall project management costs as a proportion of total project costs, multiple components and institutions involved in project execution, and in some cases, cost overruns that are hard to explain. Ensuring better efficiency therefore is an area that merits concerted attention and efforts in the future.

The Kenya country office in Nairobi has enabled the Fund to gain a better understanding of country context and develop greater communication and dialogue with a range of partners. The Government of Kenya, project staff and others are highly appreciative of the permanent physical presence of the CPM in Nairobi. Being based in the country, the CPM is able to provide more timely project supervision and implementation support, even though the country office’s overall capacity and resources to engage in policy dialogue remains constrained. This is partly due to the vast amount of work in the design of new operations and managing the six projects that are currently under implementation, but also due to the fact that the policy agenda and priorities are not sufficiently defined. The relationships, roles and responsibilities between the Kenya country office and IFAD’s regional office for East and Southern Africa have yet to be fully articulated.

The IFAD regional hub set up in Nairobi in 2007 was developed into a full-fledged regional office at the beginning of 2011, the first such decentralized organization structure in any of the five geographic regions covered by IFAD operations. The portfolio adviser is supported by three technical experts on gender, land and finance issues. The evaluation believes the establishment of such a regional office is an interesting innovation, as it provides an opportunity to bring IFAD closer to the ground in order to more effectively support the activities it finances throughout the region. However, the evaluation could not find any evidence of analytic work that led to the establishment of the regional office in Nairobi, nor why such an office was first set up in IFAD’s East and Southern Africa region. In any case, moving forward, there is a need to develop more clarity on the organizational structure of the regional office, its relationships with headquarters and the various country programmes in the region, the technical expertise that should be housed there, and its work programme.

Based on the ratings of portfolio performance, non-lending activities and COSOP performance, the overall IFAD-Government of Kenya partnership in the past decade has been rated as moderately satisfactory.

Recommendations

The findings and conclusions of the CPE form the basis for the following six recommendations to serve as building blocks for the preparation of the next Kenya COSOP.

Future geographic and sub-sector priorities. The next COSOP should be built on the foundations of IFAD’s comparative advantage and specialization in Kenya. The new COSOP should specify that IFAD will include loan-funded investments in the arid and semi-arid lands (ASALs), which has a large untapped economic potential (e.g., in irrigated crop farming and livestock development) and is home to around 50 per cent of all rural poor in Kenya. This would be consistent with the Government’s own priorities of developing the ASALs to promote national economic development. The COSOP should specifically analyse, among other issues, the poverty profile of the rural poor in ASALs, the prevailing institutional capacities and infrastructure to support economic development, as well as the opportunities for partnership with other donors who could provide essential complementary inputs. Working in the ASALs can also contribute to enhancing efficiency of IFAD-funded projects, in light of the poverty incidence in those areas.

Moreover, the COSOP should clearly define a narrower set of sub-sectors to prioritize in the future, including commodity value chain development with greater engagement of the private sector, small-scale participatory irrigation development especially in the arid and semi-arid lands, livestock development, agriculture technology to enhance productivity and long-term soil fertility, and natural resources and environmental management. The COSOP should explicitly articulate thematic areas that will not be covered by IFAD interventions in the future, including domestic water supply, health and sanitation, as they are not areas where IFAD has a comparative advantage.

Development approach. IFAD should continue working on community development and promote participatory and bottom-up approaches to agriculture and rural development, building strong grass-roots institutions and investing in gender equality and women’s empowerment. These are IFAD trademarks and areas of support highly appreciated by Kenyan partners. As such, IFAD’s renowned development approach should be weaved into its broader efforts aimed at commercialization and promoting small farming as a business. For example, contributing to empowerment of small farmers through training and promoting grass-roots institution development (e.g., dairy cooperatives) would provide them greater access to markets and better prices.

Innovation and scaling up. The next COSOP should clearly highlight areas where innovation will be pursued in the country programme, following a thorough assessment of areas where the introduction of innovation in agriculture can contribute to better results in reducing rural poverty. Some examples to consider in Kenya include small scale participatory irrigation and water management in arid and semi-arid areas to ensure sustainable use of ground water, and the engagement of private sector, such as supporting small firms that can provide agro-processing services for livestock value addition. The new COSOP should devote emphasis to scaling up for wider poverty impact. This will however require greater investment in building partnership with multilateral development banks and other donors as well as engage the Government in policy dialogue, based on good practice examples and lessons emerging from the field.

A more integrated country strategy. The new COSOP should more precisely articulate how the various IFAD instruments (loans, regional and country grants, policy dialogue, partnership building and knowledge management) will complement each other and contribute towards the achievement of country programme objectives. For instance, this will require attention to ensuring synergies across investment operations, across regional and country specific grants, as well across investment operations and grants and non-lending activities (policy dialogue, knowledge management and partnership building). The non-lending activities will need to be resourced adequately, if they are to truly contribute to strengthening coherence within the country programme.

In terms of priority for policy dialogue, based on the experience from IFAD-supported projects, the Fund could support Government in developing new and refining existing policies for livestock development especially in arid and semi-arid areas, water management, and private-sector engagement in small scale agriculture. Partnerships with the African Development Bank (AfDB), Food and Agriculture Organization of the United Nations (FAO), United States Agency for International Development and World Bank should be strengthened, especially in identifying options for co-financing operations and scaling up, as well as undertaking joint policy dialogue with Government on key agriculture and rural development issues.

Better government performance. The Government will need to ensure that it puts in place the necessary supporting policy and institutional framework, as well as allocate the required resources, that will lead to the regeneration of pro-poor growth in the country’s agriculture sector. In particular, the Government will need to ensure that its auditing, financial and procurement systems are strengthened to ensure responsible use of IFAD loan funds, as well as work towards increasing its share of counterpart funds in IFAD-supported projects. On its side, IFAD can provide support to capacity building of government officials for better service delivery at the local level, support the Government in the implementation of the national irrigation policy, and contribute to improving national financial and procurement systems to ensure more timely flow of funds and due diligence in use of resources.

IFAD’s physical presence in Kenya. The country office could play a greater role in evidence-based policy processes, which will however require allocating the required resources and time. The role of the CPM in policy dialogue should also be reflected adequately in his/her annual performance evaluation system objectives. It is essential that the relationships between the Kenya country office and the IFAD regional office in East and Southern Africa (ESA) be rapidly outlined and communicated to all concerned in Kenya and throughout the region.

It is recommended that the regional office’s organizational structure be articulated clearly, including its relationships with headquarters and the various country programmes in the region, the technical expertise that should be housed there, and its work programme. In this regard, it would be advisable to develop specific indicators that can be used to evaluate the performance and contribution of the regional office at an appropriate time in the future, including indicators that might shed light on value for money of the regional office. Similarly, it would be useful for ESA to prepare a periodic progress report on the regional office for the IFAD Senior Management, outlining the achievements and challenges of such a decentralised organizational arrangement.