Attachment J.5 Kenya_DO3_EG_IEE.pdf

USAID/Kenya DO3 Portfolio IEE pg 1

USAID/Kenya D03

INITIAL ENVIRONMENTAL EXAMINATION

PROGRAM/ACTIVITY DATA:

Program/Activity Number: 615-003 Program Activity Title: USAID/Kenya D03 (Inclusive, market-driven, environmentally sustainable economic growth) Portfolio Country/Region: Kenya/East Africa

Functional Objective: 4 Economic Growth Program Areas & Elements: 4.5 Agriculture

4.6 Private Sector Competitiveness

4.7 Economic Opportunity

4.8 Environment

Functional Objective: 3 Health Program Areas & Elements: 3.16 Maternal Child and Health

3.18 Water and Sanitation

Period Covered: FY 2014–2018 LOP Amount USD 407 Million

IEE Prepared By: Charles Hernick (Charles.Hernick@cadmusgroup.com) and Jim Jolley

(Jim.Jolley@cadmusgroup.com), GEMS/The Cadmus Group, Inc.

IEE Amendment (Y/N): No

Current Date March 2015 IEE Expiration Date Sept 30, 2020

Other Relevant Environmental Compliance Documentation:

Kenya Agricultural Value Chain Enterprises (KAVES) PERSUAP (expires FY18):

http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=40016

Kenya Resilience and Growth in Arid Lands – Accelerated Growth (REGAL-AG) PERSUAP (expires Aug 30, 2017): http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=39791

Kenya Resilience and Economic Growth in Arid Lands – Improving Resilience (REGAL – IR) PERSUAP (expires FY17): http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=40017; as amended Sept 15, 2014

Kenya Feed the Future Innovation Engine (KFIE) PERSUAP (expires May 15, 2015):

http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=39860

Kenya Request for Categorical Exclusion for Education Activities - Improved Access to Quality Education by Children of Historically Marginalized Populations IEE (expires FY17):

http://gemini.info.usaid.gov/egat/envcomp/repository/pdf/39040.pdf http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=40016 http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=39791 http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=40017 http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=39860 http://gemini.info.usaid.gov/egat/envcomp/repository/pdf/39040.pdf

USAID/Kenya DO3 Portfolio IEE pg 2

Initial Environmental Examination for the Young African Leaders’ Initiative (expires September 30, 2019):

http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=42716

Supplemental Initial Environmental Examination for East and Central Africa Regional Power Africa Energy Program (expires December 30, 2019):

http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=39951

Initial Environmental Examination of the Power Africa Transactions and Reform Program (expires December 31, 2019): http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=42951

Initial Environmental Examination of the Power Africa 2 PAD: under development

Programmatic Environmental Assessment for the Manufacture and Use of aflasafe™ in Sub-Saharan Africa: pending concurrence

East Africa Amendment to the Programmatic Environmental Assessment for the Manufacture and Use of aflasafe™ in Sub-Saharan Africa: pending concurrence

ENVIRONMENTAL ACTION RECOMMENDED

Categorical Exclusion X Negative Determination X

Positive Determination X

Deferral X

ADDITIONAL ELEMENTS:

EMMP: X | Conditions: X | PVO/NGO: | Pesticides:* X

*22 CFR 216.3 (b)(1) applies

SUMMARY OF FINDINGS:

Scope. This Initial Environmental Examination (IEE) addresses the entire portfolio of activities anticipated under the USAID/Kenya Development Objective 3 (DO3) portfolio. It applies to all economic growth activities implemented under Kenya’s 2014–2018 Country Development Cooperation Strategy (CDCS). It replaces and supersedes the Mission’s previous IEEs; except that ongoing activities for existing projects with an approved environmental mitigation and monitoring plan (EMMP) may continue operating under that EMMP. New activities under existing projects, or ongoing activities without an existing, approved EMMP must meet the conditions of this IEE regardless of the award date.

AORs/CORs and IPs:

How to Use this Development Objective IEE

A) For each activity in your project and using the table on the following pages, identify the intervention category to which it belongs. NOTE:

Intervention categories are generally organized by sector, so if your project contains activities in a single sector, they are likely to be found in only one or two of the intervention categories.

B) Go to section 3.X of this IEE corresponding to this intervention category.

Review the listed activities at the beginning of section 3.X to confirm the activity is included.

C) Then, go to the end of section 3.X to find the determination and conditions (if any) that apply to the activity.

D) Repeat A)-C) for each activity in your project. If any activity is not included, please consult the MEO.

E) Draft and implement an EMMP for each activity that receives a Negative Determination with Conditions. This EMMP must also address compliance with all general implementation conditions contained in Section 4 of the IEE. See section 4 for details, including resources to support EMMP development.

http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=42716 http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=39951 http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=42951

USAID/Kenya DO3 Portfolio IEE pg 3

The analysis and conditions identified in this IEE for cross-cutting activities, such as youth and WASH activities, are expected to apply to any such activities across the whole of the Mission portfolio.

Recommended Determinations. The following table summarizes the recommended determinations for the DO3 portfolio by intervention category. To facilitate environmental review in this IEE, illustrative portfolio activities are assigned to the intervention categories. For each intervention category, a link is provided to the entailed activity descriptions, analysis of potential environmental impacts, and activity-by-activity determinations and conditions within Section 3 of the IEE.

Intervention Category and Illustrative Activities

Categorical Exclusion(s)

Negative Determination(s)

Positive Determination

Deferral of Threshold Decision

IEE Section Link to full analysis

1. Agricultural productivity at farm household level including market access

Support to promote cost-effective aggregation and marketing of products

Support to improve postharvest handling and processing

Support to increase transparency to market information and increase participation in markets

Enhancement and promotion of activities for increased production in dairy, horticulture and staple crops.

(w/ conditions)

3.2 link to full analysis

2. Government capacity support, development and studies

Technical assistance for national policy, regulatory, strategy development and reform for LED and GCC

Technical assistance for national Policy, regulatory, strategy development and reform for Environment and natural resources management (ENRM)

Technical assistance to county governments

Data, studies and research capacity at all levels: Climate change & natural resource management

3.3 analysis

3. Agricultural competitiveness and trade

Support to improve market infrastructure

Direct extension and demonstration of technologies and best practices to improve productivity

Build capacity and facilitate linkages with private agricultural and dairy extension services

3.4 analysis

USAID/Kenya DO3 Portfolio IEE pg 4

Promotion and provision of incentives for adoption of standards and grades, including sanitary and phytosanitary (SPS) controls for horticulture and dairy products

Capacity development of local organizations, including

4. Nutrition education, outreach, and communication for behavior change, excluding WASH

Nutrition education

Identification of knowledge gaps and conducting formative and operational research

Development and implementation of behavior change communications (BCC) strategy

Promote peer education, counseling, and support to implement established and proven approaches

Integration of nutrition into agricultural extension and food security/value chain development activities

Promote adequate complementary feeding practices

3.5 analysis

5. Water, sanitation and hygiene (WASH) and sustainable water resource management

Financial support for WASH in the arid lands through GDAs

Technical assistance for groundwater mapping in

Turkana and Marsabit

Technical assistance for Integrated Water Tower Management (IWTM)

Technical assistance to support

GOK investment in drinking water and sanitation

Technical assistance for WASH activities

Promotion of innovations to expand multiple use water systems (MUS)

Facilitation/promotion of market-based, water supply, sanitation and environmental service delivery and systems

Promotion of policies to empower women and youth in water user associations to create more membership, leadership, and employment opportunities

3.6

USAID/Kenya DO3 Portfolio IEE pg 5

6. Energy sector development including low emission development and climate change mitigation

Technical support to “Enhancing Capacity for Low Emission Development Strategies” (EC- LEDS) activities

Late stage transaction support (>10 MW Projects)

Technical support for small scale projects (<10 MW)

Support for rural electrification and off-grids energy solutions

Financial support for rural electrification and off-grid energy solutions: GDAs

3.7 analysis

7. Environment and natural resource/capital management

Host and/or provide logistical and facilitation support meetings for stakeholders

Ecosystem service valuation

Improve access to and awareness/use of environmental information for decision making on natural resources and climate change

Development and expansion of community-managed conservation landscapes and ecosystems/ Climate Resilient

Community Conservancies

Support payment for ecosystem service projects

Field test NRM innovations

3.8 analysis

8. Financial sector support

Improve financial services

Technical assistance to the financial sector

Promote Innovative Financial Instruments

Support financial sector reform

3.9 analysis

9. Infrastructure (Direct Grey Investment/Facilitating Construction)

Small scale rehabilitation/retrofitting or new construction

Large scale construction

3.10 analysis

10. Targeted support to rural poor/household food security and resilience

Finance for asset creation and food for asset creation

3.11

USAID/Kenya DO3 Portfolio IEE pg 6 investments in community assets

Technical assistance supporting access and awareness of diverse and quality foods, improving the use of maternal child health and nutrition services, and supporting community-based nutrition

Technical assistance to community owned enterprises

Support regulatory reform to increase agricultural production and food security

Conduct assessments

11. Aflatoxin control

Financial and technical support to PACA

Development and promotion of agricultural BMPs

Development, manufacture, and use of bio-pesticide products

3.12

General Implementation & Monitoring Conditions. In addition to the specific conditions enumerated in Section 3, the negative determinations recommended in this IEE are contingent on full implementation of a set of general monitoring and implementation requirements specified in Section 4 of the IEE.

In summary, these require (1) Implementing partner (IP) Briefings on Environmental Compliance Responsibilities; (2) Development of EMMPs; (3) Integration and implementation of EMMPs in workplans and budgets; (4) Integration of compliance responsibilities in prime and sub contracts and grant agreements; (5) Assurance of sub-grantee and sub-contractor capacity and compliance; (6) ABEO/ENRMO environmental compliance monitoring; (7) 22 CFR 216 documentation coverage for new or modified activities; and (8) compliance with host country requirements.

APPROVAL OF ENVIRONMENTAL ACTION RECOMMENDED:

(USAID/Kenya 003 Portfolio)

CLEARANCE:

Deputy Mission Director:

USAID Kenya & East Africa

Mission Director:

USAID Kenya & East Africa

CONCURRENCE:

AFR Bureau Environmental Officer:

Brian Hirsch

FILEN!?: ~)C... - _)j)~_ f(;_ f~_ {)6/0//{'. ~ -- t

ADDITIONAL CLEARANCES:

Mission Environmental Officer:

USAID Kenya

DO 3 Team leader:

USAID Kenya

SPA Director:

USAID Kenya & East Africa

Regional Environmental Advisor:

USAID/East Africa

Distribution List:

USAID/Kenya ABEO/ENRM/WASH Teams A/CORs and Activity Managers

., USAID/Kenya DO 3 Team leader

USAID/Kenya Strategic Program and Analysis Office

USAID/Kenya 003 Portfolio IEE • pg 7

Date:

Date: 1!/t,I~ I

Date: t;(o;fr j

Approved:

Disapproved

Date: ~'' l\ 'Q. \) \ (

Date: ~\.5" oate: 1-/w /, \

Date: Di.t \ I 4- I ".Wt ~-

USAID/Kenya DO3 Portfolio IEE pg 8

Acronyms

ABEO Agriculture Business and Environment Office AfDB African Development Bank APPEAR Aflatoxin Policy and Program for the East Africa Region BCC behavior change communication BEO Bureau Environmental Officer BMP best management practices BOD biochemical oxygen demand CAFO concentrated animal feeding operations C/AOR Contracting/Agreement Officer’s Representative CBNRM Community Based Natural Resources Management CDCS Country Development Cooperation Strategy CFA Community Forest Associations CLTS community-led total sanitation DCA Development Credit Authority DIV Development Innovation Ventures DO Development Objective EAC East African Community EC-LEDS Enhancing Capacity for Low Emissions Development Strategies EHS environmental health and safety EIA Environmental Impact Assessment EMCA Environmental Management and Coordination Act EMMP Environmental Mitigation and Monitoring Plan ENRMO Environment and Natural Resource Management Office ESDM environmentally sound design and management FIRM Financial Inclusion for Rural Enterprises Project FTF Feed the Future G2G Government to Government GCC global climate change GDA Global Development Alliances GDP Gross Domestic Product GHG greenhouse gas GMO Genetically modified organism GOK Government of Kenya KARI Kenya Agricultural Research Institute KWh kilowatt hour HDI Human Development Index IECC Integrated Environment and Climate Change Project IEE Initial Environmental Examination IMF International Monetary Fund IP implementing partner IPM Integrated pest management IPP Independent Power Producer IUCN International Union for Conservation of Nature IWTM Integrated Water Tower Management KARI Kenya Agricultural Research Institute

USAID/Kenya DO3 Portfolio IEE pg 9

KAVES Kenya Agricultural Value Chain Enterprises KDSCP Kenya Dairy Sector Competitiveness Program KEPHIS Kenya Plant Health Inspectorate Services KFIE Kenya Feed the Future Innovation Engine KFS Kenya Forest Service KHCP Kenya Horticulture Competitiveness Project KIWASH Kenya Integrated WASH Project (KIWASH)

KWS Kenya Wildlife Service MEO Mission Environmental Officer MW megawatt MUS mutiple use water systems NCCAP National Climate Change Action Plan NCCRS National Climate Change Response Strategy NEMA National Environment Management Authority NRMP Natural Resource Management Programme PA Power Africa PACA Partnership for Aflatoxin Control in Africa PAD Project Appraisal Document PEA Programmatic Environmental Assessment PES payment for ecosystem service PERSUAP Pesticide Evaluation Report and Safer Use Action Plan P-IEE Programmatic Initial Environmental Examination POU Point-of-use PPP Public Private Partnerships REA Regional Environmental Advisor REGAL-IR Resilience and Economic Growth in Arid Lands – Improving Resilience REGAL-AG Resilience and Growth in Arid Lands – Accelerated Growth SACCO Savings and Credit Cooperatives WASH water, sanitation and hygiene WRMA Water Resources Management Authority

USAID/Kenya DO3 Portfolio IEE pg 10

INITIAL ENVIRONMENTAL EXAMINATION

PROGRAM/ ACTIVITY DATA:

Program/Activity Number: 615-003

Program Activity Title: USAID/Kenya D03 (Inclusive, market-driven, environmentally sustainable economic growth) Portfolio

Country/Region: Kenya/East Africa

Functional Objective: 4 Economic Growth

Program Areas & Elements: 4.5 Agriculture

4.6 Private Sector Competitiveness

4.7 Economic Opportunity

4.8 Environment

Functional Objective: 3 Health

Program Areas & Elements: 3.16 Maternal Child and Health

3.18 Water and Sanitation

1.0 Background and Program Description

1.1 PURPOSE AND SCOPE OF IEE

This Initial Environmental Examination (IEE) addresses the entire portfolio of activities anticipated under the USAID/Kenya Development Objective (DO) 3: Inclusive, market-driven, environmentally sustainable economic growth portfolio. This IEE applies to all anticipated economic growth activities under Kenya’s 2014-18 Country Development Cooperation Strategy (CDCS), which also includes extended activities such as climate change, low emissions development, aflatoxin control as well as cross-cutting themes across all DO portfolios, such as water, sanitation, and hygiene (WASH).

For purposes of analysis, this IEE synthesizes current and anticipated DO3 activities under the office’s various projects and initiatives into a set of 11 activity “categories”, each of which contains a number of entailed “subcategories”, which are developed based on illustrative activities from the DO3 portfolio. As with all IEEs, and in accordance with 22 CFR 216, it reviews the reasonably foreseeable effects of each activity on the environment. On this basis, the IEE recommends Threshold Decisions, and in some cases, attendant conditions, for these activities. Upon approval of this IEE, these threshold decisions are affirmed and conditions become binding requirements on activity implementation.

USAID/Kenya DO3 Portfolio IEE pg 11

In addition, this IEE sets out project1-level implementation procedures intended to assure that conditions in this IEE are translated into activity-specific mitigation measures, and to assure systematic compliance with this IEE during project and program implementation. These procedures are themselves a general condition of approval for the IEE, and their implementation is therefore mandatory. This IEE is a critical element of a mandatory environmental review and compliance process meant to achieve environmentally sound activity design and implementation.

The analysis and conditions identified in this IEE for cross-cutting activities such as youth and WASH activities are expected to apply to any such activities across the whole of the Mission portfolio.

Although this IEE replaces and supersedes the Mission’s previous IEEs, any ongoing activities operating under an approved environmental mitigation and monitoring plan (EMMP) may continue operating under that EMMP. New awards and currently operating activities without an approved EMMP as of Sept.

30, 2014, must meet the conditions of this IEE.

1.2 PROGRAM BACKGROUND (CONTEXT & JUSTIFICATION) 2

The USAID Kenya CDCS 2014-183 outlines the five problem areas that must be addressed to DO 3:

Inclusive, market-driven, environmentally sustainable economic growth:

DO3 will be accomplished by activities that help create the enabling environment needed for Kenya to achieve inclusive, market-driven, and environmentally sustainable economic growth. Increased household food security and ecosystem resilience, and increased capital flows for productive investment, combined with a more business-friendly enabling environment for private investment, and efforts to address critical energy and transport infrastructure issues are essential to transforming

Kenya’s economy. USAID/Kenya will support policy and regulatory reform to reduce the burden of compliance, create incentives to unlock Kenyan capital for productive use, and reduce barriers to domestic and international trade. Activities will specifically promote agricultural productivity and value chain competitiveness while conserving natural resources and strengthening resilience.

1.3 DESCRIPTION OF ACTIVITIES

DO3 will be accomplished by five Intermediate Results (IR), as follows:

IR 3.1: Increased household food security and resilience – primarily for the rural poor

IR 3.2: More resilient people and ecosystems to climate change in a green growth economy

IR 3.3: Increased public and private capital flows

1 The terms “activity” and ‘project” are used throughout this IEE per their standard meaning in environmental impact assessment, and NOT as per USAID’s new programming framework. As such, a project is a cluster of activities executed under a single, thematically focused prime contract or award; e.g. the ‘Health Policy Strengthening (HPS) Project.’ By contrast, in USAID’s new programming framework, “project” describes a sector- or sub-sector portfolio, covering multiple contracts or awards, and “activity” denotes a single such contract or award (“implementation vehicle.”) 2 References from USAID/Kenya Country Development Cooperation Strategy FY2014-18 and Yes Youth Can IEE (http://gemini.info.usaid.gov/egat/envcomp/document.php?doc_id=39482).

3 USAID/Kenya Country Development Cooperation Strategy 2014-18. May 2014. Available at:

http://www.usaid.gov/sites/default/files/documents/1860/CDCS-w%20Annexes%20Lo.pdf http://www.usaid.gov/sites/default/files/documents/1860/CDCS-w%20Annexes%20Lo.pdf

USAID/Kenya DO3 Portfolio IEE pg 12

IR 3.4: Improved enabling environment for private sector investment

IR 3.5: Private sector engagement in infrastructure development facilitated

These five intermediate results are not just complementary but are mutually reinforcing. Together they constitute an operational platform for focusing USG resources and leveraging other resources from public, especially GOK and other donors, and private actors. DO 3 fully integrates four Presidential Initiatives into a framework for action that will target key drivers of economic growth needed to move Kenya’s economy on a higher flight path of broad-based growth and accelerate key policy reforms needed for private investment to flourish.

The DO3 portfolio under the new CDCS includes the following projects.4 This is a limited list, which is intended to provide examples indicative of the nature of the portfolio and its implementation mechanisms. Complete detailed descriptions of the projects included in the DO3 portfolio are provided in the relevant PADs.

1.3.1 Kenya Integrated Environment and Climate Change (IECC) Project.

IECC will use a comprehensive, integrated approach with a focus on: biodiversity, climate change, energy, water, hygiene and sanitation (WASH) in areas with significant investment and collaboration with Feed the Future (DO 3), Health and Human Capacity (DO 2), and Devolution (DO 1). It contributes most directly and significantly to the high level outcomes of IR 3.2 - Resilient people and ecosystems in a green growth economy which effectively constitutes its logical framework goal. The IECC will integrate and complement IR3.1 in restoration of ecosystem services through the water towers and water resource management authority mechanisms to enhance resilience of people and ecosystems; IR 3.3 in increasing private and public capital flows in nature-based enterprises through mechanisms such as

Development Credit Authority (DCA); and IR3.5 in facilitating private sector engagement in clean energy technologies and infrastructure to enhance low emissions development for a green growth economy.

The project will focus in two ecologically vulnerable landscapes of Kenya, under two new programs:

Community Conservancies and Integrated Water Towers Management. Additionally, the project will work at the national level to support smooth devolution of climate change and natural resource management; support the GOK’s national/transnational efforts to combat wildlife trafficking and address policy and regulatory harmonization in alignment with Kenya’s constitution.

1.3.2 Feed the Future.

For the overall Feed the Future (FTF) program, USAID/Kenya will integrate FTF value chain investments to improve competitiveness, generate off- and on-farm enterprise and employment opportunities, and encourage and support diversification into higher value commodities in target areas.

Through a number of programs, USAID/Kenya will focus on the growth of competitive value chains and diversify within and outside agriculture. Generally, activities will:

Focus on smallholder dominated, and female inclusive value chains, linking producers to markets, 4 See footnote 1 regarding use of the terms “project” and “activity” throughout this IEE.

USAID/Kenya DO3 Portfolio IEE pg 13 improving input supply, and increasing access to financial and business development services.

Be used to make agriculture more attractive to youth by expanding access to assets and technology, and supporting the transformation of Kenya’s agriculture businesses and markets.

Focus on supporting regulatory reform, promoting community owned enterprises, and collaborating with DO1 to ensure the effective provision of essential public services by devolved government.

Specific activities under the FTF Strategy include:

1.3.2.1 Integrated Agricultural Transformation Program

Kenya’s relatively weak yields per hectare and low revenues make diversification critical to transforming the agricultural sector. This program targets inclusive agricultural sector growth through improved value chain competitiveness, expanded multiplication effects that generate off- and on-farm enterprises and employment opportunities, and greater diversification into higher value per hectare commodities.

It will reduce poverty and hunger by focusing on smallholder-dominated value chains and link smallholders into growing markets, while improving accessibility and affordability of financial and business development services inputs. Finally, the Program will help vulnerable populations – comprised of women and youth and the very poor – to engage in market-oriented activities through income- and consumption-smoothing interventions and by buying down the risks of market participation; and diversify into drought tolerant crops and on-, off- and non-farm activities.

Three value chains will be targets of this program including investment, productivity, handling, technology transfers, education, and improved market access. Briefly, the value chains are the

Maize and Drought Tolerant Staple Crop Value Chain. Promoting improved transfer of technologies will require investment in agricultural research to develop improved technologies.

Equally important is the dissemination of knowledge of these technologies, accompanying management practices, the extension services to transfer knowledge on how best to use technologies, and the commercialization and dissemination of technologies to farmers who need them.

Diary value chain. Work within this value chain will build on the work of the Kenya Dairy Sector

Competitiveness Program (KDSCP), which aimed to improve Kenya’s dairy industry. Milk quality is poor due to unhygienic milking and handling practices and under-developed “cool chains” from farm to processor. Husbandry skills are low, cost of production at farm level is high, and adoption of technologies is low, often constrained by lack of finance. Combined with high processing and packaging costs, consumers are faced with a high cost, often low quality product.

Therefore, activities will promote sustainable business organization, service provision, training, and address issues with husbandry, handling practices, quality standards, and the availability of stock.

Horticulture value chain. Kenya produces a wide range of horticultural products for export.

Large export-oriented companies using sophisticated greenhouse production systems dominate the cut flower industry. However, an estimated 200,000 smallholder farmers with landholdings of less than one hectare produce the rest of the products, including fruits, vegetables, herbs and spices. As a follow-on to the Kenya Horticulture Competitiveness Project (KHCP) set to end in

USAID/Kenya DO3 Portfolio IEE pg 14

February 2015, horticulture value chain will focus on increasing market access and sales by smallholder farmers; broaden the types of horticulture products to increase export potential;

create a national production and market intelligence system; improve access to market with enhanced protection for consumers and the environment; and expand economic activity and opportunities to new enterprises.

1.3.2.2 Kenya Feed the Future Innovation Engine (KFIE)

Kenya Feed the Future Innovation Engine (KFIE) invests in innovation to accelerate development outcomes in the agricultural sector. Similar to a venture capital fund, the KFIE is a mechanism by which innovative private sector strategies that support food security and nutrition are proactively discovered, incubated and scaled-up for wide-spread impact. “Private sector strategies” means that the proposed innovation must, at maturity, be financially sustainable without donor or other public resources – although an exception could be where the innovation is considered to be for the “public good” and is adopted by the GOK for further implementation with its own resources, e.g., extension services. The

KFIE supports experimentation and reward proven success, seeking projects that represent “game changing” methodologies and approaches that, at their maturity, materially and beneficially affect a significant number of Kenyan households.

Although the innovations cannot be predicted at this time because they will be proposed by the developers, there are certain illustrative activities such as:

Identifying agricultural varieties resistant to disease, pests, and drought;

Facilitating access to farm inputs through collaborative business ventures

Reducing transaction costs including the “last mile” of extension services;

Buying down the risks of providers to develop, test, and market products

Facilitating private sector investment and selecting co-financing infrastructure, technology and capital good; and

Spurring on- and off-farm employment.

1.3.2.3 Kenya Agricultural Value-Chains Enterprises Program (KAVES) The Kenya Agricultural Value-Chains Enterprises Program (KAVES) is one of USAID/Kenya’s initial investments in FTF. KAVES will apply value chain competitiveness with selected value chains by facilitating change in both the individual value chains and the broader market and household farming systems, looking for synergies across value chains such as common constraints and/or actors. The broader market system refers to the inter-relationships among the value chains as well as maize and the service markets that support the market system, including financial, business development, agronomic and livestock-related services. KAVES will leverage experiences and investments of other USAID projects other developments and the GOK in order to take lessons learned and prior success to the necessary scale to achieve the ambitious goals of the program.

KAVES focuses on developing the maize, drought tolerant crops (drought tolerant maize, sorghum/ millet, pulses), dairy and horticulture value chains. KAVES builds on and expand existing value chain programs. The integration of the value chain activities offers significant opportunities to address cross-

USAID/Kenya DO3 Portfolio IEE pg 15 cutting issues in the areas of gender, youth, nutrition, and natural resources management as well as important market development activities that benefit multiple value chains.

While generating growth will be critical to poverty reduction in these areas, KAVES will ensure that program activities are designed to improve food security and reduce risk among vulnerable populations, particularly women and youth, and to contribute to improved nutrition. For the risk averse vulnerable populations, the program will take a livelihoods-approach that includes risk mitigation, asset-protection, and consumption- and income- smoothing activities as a platform from which the poor can lift themselves out of poverty.

KAVES activities are designed around four core components:

1. Improved Competitiveness and Trade

2. Increased Farm Household Productivity

3. Improved Nutrition-related Behaviors and Improved Access to Diverse and Quality Food

4. Building Sustainable Local Organizations.

1.3.2.4 Resilience and Economic Growth in the Arid Lands (REGAL) USAID/Kenya is currently supporting a five-year project in the Northern Arid Lands of Kenya under the

Resilience portfolio. This project falls under the expanded Feed the Future strategy and focuses on resilience and economic growth. The vision of the REGAL project is to have economic and social stability increase across Kenya’s arid lands fueled by empowered and resilient communities, well managed natural resources, expanded and diversified economic opportunities, vibrant local institution, and good governance by 2017. The REGAL project seeks to identify, integrate and sustain humanitarian investments that prove to be effective in increasing resilience and reducing the need for recurrent humanitarian assistance, subsequently building on these investments to accelerate sustainable economic growth.

Two activities are being implemented under the REGAL project; Improved Resilience (REGAL-IR) and

Accelerated Growth (AG) – REGAL-AG. The REGAL-IR activity focuses on disaster risk reduction, diversification of livelihood opportunities, community management of natural resources, improving market access and improving nutritional outcomes. REGAL-AG’s key focus is to facilitate behavior change in actors along the value-chain, in order to improve their economic resilience, profitability and growth. These activities are implemented in a coordinated and integrated model, working together with other FTF programs, humanitarian assistance activities, health and nutrition activities, as well as WASH activities.

1.3.2.5 Financial Inclusion for Rural Microenterprises (FIRM) USAID/Kenya’s Financial Inclusion for Rural Microenterprises (FIRM) program, managed by ABEO, assists

County governments in leveraging private finance to deliver services, primarily by helping governments identify investment opportunities and develop investment plans. ABEO works to support devolution through activities designed to play a catalytic role in accelerating investments in agriculture, energy, and water, among others. Activities under the FIRM project create these opportunities by supporting the

USAID/Kenya DO3 Portfolio IEE pg 16 development of policy frameworks, public-private partnerships, and planning activities, and by supporting devolved functions and activities at the Council of Governors and county government levels.

Core activities focused on strengthening the enabling environment include the County Public Private

Partnership Support Activity and the Financial Sector-County Co-Operative Policy Framework, Bills, and

Regulations Activity. ABEO’s FIRM program also promotes youth participation and engagement by providing the Council of Governors with a system for managing its Youth Internship Program, the latter of which provides youth with an opportunity to gain valuable employability experience and skills.

1.3.2.6 Science and Technology

Through science and technology initiatives, the USAID/Kenya may support various research institutes and GOK agencies to provide technical input into agriculture projects. Among them are

The Kenya Agricultural Research Institute (KARI), which is one of the leading agriculture research organizations in Kenya, and brings together research programs in food crops, horticultural and industrial crops, livestock and range management, land and water management, and socio-economics. KARI promotes sound agricultural research and technology generation and dissemination to ensure food security through improved productivity and environmental conservation. Fodder preservation is the key to smoothing milk flows over the entire year, and new fodder varieties developed by KARI can improve nutrition and decrease feed costs while increasing milk production.

The Kenya Plant Health Inspectorate Services (KEPHIS), which functions in support of Kenyan farmers, may receive assistance and capacity building support in its mission to assist with developing drought tolerant crops to increase their quality and availability to farmers. Activities may include dissemination of such research results, particularly in terms of seed certification, control of pests, diseases and food safety.

The University of Nairobi to enable it to provide outreach messages on biotechnology to various sections of the community, including the academia, media, GOK senior officials, political leaders and other key biotechnology stakeholders.

1.3.2.7 Development Credit Authorities and Global Development Alliances USAID/Kenya may leverage key financial vehicles such as the use of DCAs or Global Development

Alliances (GDAs) to develop innovative guarantees and leverage resources and facilitate local market actors to provide financial services to one another and target beneficiaries in the agricultural sector. The

Mission may use DCA resources to expand opportunities for and strengthen the capacity of local entities, including financial institutions and private and non-governmental partners that are pursuing value chain participation in the Strategy’s focus areas. FTF resources will be used to support financial sector advisory services, which are critical for building awareness of agribusiness opportunities, and the institutional capacities of banks and the local private sector – key ingredients for the DCA and Strategy’s success. USAID/Kenya will look to the GDA model to identify public-private partnership opportunities where direct awards can be made to local entities.

1.3.2.8 Aflatoxin Control

USAID/Kenya in partnership with USAID/East Africa are supporting programs focused on aflatoxin control. USAID views the bio-control of aflatoxins as an important programming option for advancing

USAID/Kenya DO3 Portfolio IEE pg 17 numerous development objectives across the Africa region. Concern over aflatoxins in sub-Saharan

Africa has grown in recent years, with entities such as the Partnership for Aflatoxin Control in Africa

(PACA) advocating for regional strategies and coordination to reverse negative effects on agricultural output and human health. USAID is an active participant in these efforts. Through projects like AflaSTOP and the Aflatoxin Policy and Program for the East Africa Region (APPEAR), USAID is supporting numerous initiatives to combat the prevalence and impact of aflatoxins. Many USAID-funded interventions focus on research, the strengthening of collaborative relationships, and the development and promotion of agricultural best management practices (BMPs) to control aflatoxins, such as post-harvest handling and storage. Under the APPEAR project, USAID is also supporting the commercialization of an aflatoxin bio-control product: aflasafe™.

USAID/Kenya will evaluate—and may ultimately promote—AflaSTOP or aflasafe™ for aflatoxin-related efforts in the country. At present, however, the USAID East Africa Regional Mission (USAID/East Africa) based in Nairobi has been the lead working with the East African Community to advance PACA’s policies and programs.

1.3.3 WASH.

The goal of KIWASH, which is a flagship project for the mission over the next five years, will be to improve lives and health through development and management of sustainable water, sanitation, and hygiene services in Kenya. Through this new project, USAID/Kenya aspires to take a greater leadership role in the Kenyan water/WASH sector by adopting an ambitious approach that goes beyond past efforts to directly provide services for the few, and seeks to contribute to transformational, sector-level change that will enable sustainable provision of services for all.

The IECC activities, especially the water towers component, will focus on enhancing climate change decision-support tools for improved watershed and environmental restoration upstream and ensure the people downstream have access to safe and clean water, while the WASH activities will focus on drinking water and sanitation downstream. The IECC community conservancy and policy mechanism will also complement the WASH activities by improving on natural resource governance and climate change adaptation, both of which are significant in integrated water resource management.

USAID/Kenya through its 5-yr KIWASH program will pursue opportunities to directly fund local organizations through direct grants to local civil society organizations and government to government

(G2G) support through Water Resource Management Authority (WRMA). The Mission’s Host Country

Contracting assessment process has evaluated 15 GOK entities (nine of which have received a passing grade) and four other entities. A planned second phase of reviews will examine another 10 organizations. The Mission will use these results to determine the mitigation measures required by the entities to qualify for G2G funding. KIWASH may invest in capacity building assistance to support implementation of mitigation measures and open up the opportunity of G2G funding. The project aims to increase resiliency to such environmental shocks that would further these efforts. Such activities are intended to have both short and long-term impacts on resiliency.

USAID/Kenya DO3 Portfolio IEE pg 18

1.3.4 Power Africa.

The President’s Power Africa Initiative supports the development of the African power sector through financing, grants, technical assistance, and investment promotion.

The Power Africa project in Kenya will place in country a variety of experts to identify the least expensive and most effective ways to integrate more renewables into Kenya’s energy mix. The project has already awarded three $100,000 grants to the following organizations: Solar World Ltd. and Afrisol

Energy Ltd. to produce solar-powered water systems; Afrisol Energy Ltd. to use bio-digesters and biogas for urban businesses; and Mibawa Suppliers to expand delivery of pay-as-you-go lighting and chargers.5

In the future, it will support different aspects of wind energy projects in Kinangop, Kipeto and Lake

Turkana.

This support to increase the contribution of renewable energy in the national grid will go a long way in the implementation of the supporting National Climate Change Action Plan and Enhancing Capacity for

Low Emissions Development Strategies (EC-LEDS) activities. This will complement the IECC objective of reduced emissions.

2.0 COUNTRY HEALTH AND ENVIRONMENTAL SITUATION (BASELINE

INFORMATION)

2.1 ENVIRONMENTAL BASELINE

Geography. Kenya is located in East Africa with 536 km of coastline along the Indian Ocean. It shares borders with Ethiopia and Somalia to the north and northeast, South Sudan and Uganda to the west, and Tanzania to the south. The total area of the country is around 580,000 km2. Mount Kenya, located in the Kenyan Highlands, is the highest point in the country, and the second highest point in Africa at 5,199

m. Mount Kenya National Park is also listed as a UNESCO World Heritage Site. Kenya is home to low plains in the East along the Indian Ocean, rising to highlands in the center of the country which are divided by the Great Rift Valley, a 6,000 km trench running from northern Syria to central Mozambique.

A fertile plateau lies to the west of the country. Kenya has a population of almost 45 million people, 3.4 million of which live in the capital city of Nairobi, located in the central highlands. Mombasa, located on the southeastern coast of Kenya, is the second largest city by population, at almost 1 million. 6

Climate. Due to its location along the Rift Valley and various other landforms, Kenya’s variable climate brings frequent droughts and floods and uneven rainfall. The climate in Kenya ranges from tropical along the coast, to dry in the interior. Average annual rainfall is about 630 mm, ranging from less than 200 mm

5 What Power Africa Means for Kenya. Accessed via internet on 5 August 2014 at: http://www.usaid.gov/powerafrica/partners/african-governments/kenya 6 U.S. Central Intelligence Agency World Factbook. Accessed via the Internet 28 July, 2014 at: https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html http://www.usaid.gov/powerafrica/partners/african-governments/kenya http://www.usaid.gov/powerafrica/partners/african-governments/kenya https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html

USAID/Kenya DO3 Portfolio IEE pg 19 in northern Kenya, to 1800 mm on Mt. Kenya.7 Long rains occur from March to June and short rains from October to November. 8

Ecological zones. Kenya has diverse ecological zones and habitats, including lowlands and mountain forests, wooded and open grasslands, semi-arid scrubland, dry woodlands, inland aquatic, and coastal and marine ecosystems. Wetlands are an important factor in Kenya’s economy, affecting agriculture, livestock production, hydroelectric power, fisheries and tourism.

The marine waters and mangrove areas along the coast are rich in biodiversity and provide locals the opportunity to fish, although

Lake Victoria produces 90% of

Kenya’s total catch. Forests are even more significant, supporting not only agriculture and tourism, but also watershed functions.

Kenyan forests are also home to some of the highest levels of biodiversity in the country.9

Soils. Soil type in Kenya varies greatly due to topography and variable rainfall. Soils in Western Kenya are mainly acrisols, cambisols, and their mixtures, and are leached with iron and aluminum oxides.

Young nitosol and andosol soils of volcanic origin are located in the central highlands while coastal soils are generally coarse and low in organic matter and include arenosols, luvisols, and acrisols. Soils in arid and semi-arid areas include vertisols, gleysols, and phaeozems, and contain pockets of sodicity and

7 Food and Agriculture Organization of the United Nations. Accessed via the Internet 28 July, 2014 at:

http://www.fao.org/nr/water/aquastat/countries_regions/kenya/index.stm 8 Water for Agriculture and Energy in Africa: the Challenges of Climate Change Conference. Accessed via the Internet 28 July, 2014 at:

http://www.sirtewaterandenergy.org/docs/reports/Kenya-Draft2.pdf 9 Convention on Biological Diversity. Accessed via the Internet 28 July, 2014 at:

http://www.cbd.int/countries/profile/default.shtml?country=ke#facts

USAID/Kenya DO3 Portfolio IEE pg 20 salinity. Soils in these areas are characterized by low fertility and vulnerability to erosion. Soil salinity is widespread along the Lake Baringo basin in the Rift Valley and in the Tavetta division in the coastal provinces. 10

Water resources and irrigation. Kenya is characterized as a water scarce country, where demand exceeds renewable freshwater sources. Total renewable water resources totaled 30.7 billion m3/year in

2008.11 Of this total, 30.2 billion m3/year is surface water, and 3.5 billion m3/year is groundwater (most of this is overlap with surface water). Kenya has 9 lakes; most are saline besides Victoria, Naivasha, and

Baringo. Additionally, lakes Nakura and Naivasha are designated as Ramsar sites as wetlands of international importance for the conservation of biodiversity. Kenya has 5 main drainage areas: Lake

Victoria, the Rift Valley and inland lakes, Athi River and coast, Tana River, and Ewaso Ng’iro River, which is the largest, covering 36.3% of the country.12 Hydroelectric power meets approximately 61% of Kenya’s electricity demand at 677.3 MW, whereas hydroelectric potential totals 6,000 MW. The largest hydroelectric power station is Gitaru, at 225 MW. 13

Agriculture is the largest source of water withdrawal, at 79.2%. Irrigation potential in Kenya is estimated at 353,060 ha, with over 50% from the Nile basin (Lake Victoria).14 While 16% of the land has medium to high potential for irrigation, less than 10% is used, totaling only 2% of total arable land. Smallholder and commercial/private schemes dominate irrigation development; seventy-five percent of Kenya’s agricultural output is produced by small-scale farms. A major obstacle to the expansion of irrigation is the rising cost of modern irrigation projects. Due to a lack of investment, the amount of irrigated land in

Kenya hasn’t changed for 30 years. Consequently, Kenyans depend heavily on rainfed agriculture, which contributes to 80% of the nation’s employment. 15 The main irrigated crops are rice, maize, sugarcane, vegetables, bananas, citrus, coffee, tea, cotton and flowers. 16

Biodiversity. Kenya’s vast biodiversity is due to its long evolutionary history, variable climate, and habitat and ecosystem diversity. The Kenya Wildlife Service (KWS) manages the protected areas in

Kenya which are home to major biodiversity sites, but 70% of Kenya’s biodiversity falls outside these areas. Kenya hosts five globally important hot spots of biodiversity and 61 important bird areas. There are 7000 plants, 25,000 invertebrates, 1,133 birds, 315 mammals, 191 reptiles, 180 freshwater fish, 692 marine and brackish fish, 88 amphibians and 2,000 species of fungi and bacteria in Kenya. Fourteen of

10 Food and Agriculture Organization of the United Nations. Accessed via the Internet 28 July, 2014 at:

http://www.fao.org/nr/water/aquastat/countries_regions/kenya/index.stm 11 United Nations Environment Programme. Accessed via the Internet 28 July, 2014 at: http://www.unep.org/dewa/Portals/67/pdf/Kenya.pdf 12 Food and Agriculture Organization of the United Nations. Accessed via the Internet 28 July, 2014 at:

http://www.fao.org/nr/water/aquastat/countries_regions/kenya/index.stm 13 Water for Agriculture and Energy in Africa: the Challenges of Climate Change Conference. Accessed via the Internet 28 July, 2014 at:

http://www.sirtewaterandenergy.org/docs/reports/Kenya-Draft2.pdf 14 Food and Agriculture Organization of the United Nations. Accessed via the Internet 28 July, 2014 at:

http://www.fao.org/nr/water/aquastat/countries_regions/kenya/index.stm 15 Irrigation Potential and Investment Return in Kenya. Accessed via the Internet 28 July, 2014 at:

http://www.sciencedirect.com./science/article/pii/S0306919214000712?np=y 16 Water for Agriculture and Energy in Africa: the Challenges of Climate Change Conference. Accessed via the Internet 28 July, 2014 at:

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