County officials have plans to raise investment and employment

Located at the heart of Kenya, Meru has a rich history dating back many centuries. The name of the region is derived from mieru – “quiet forests” – and was coined by the Masai people in reference to Meru’s forested regions of Imenti and Tigania.

As is the case for most of Kenya’s regions, Meru currently relies heavily on primary sector activity, with agriculture providing approximately 80% of the county’s income. Meru’s fertile soil, favourable climactic conditions and altitudinal variation mean that various crops can be grown, including tea, coffee, miraa (khat), horticulture (mainly flowers, fruits and vegetables) and grains (wheat and maize).

Industrial activity, while limited, is ripe with potential and investments are being made to propel the county up the agricultural value chain into processing industries. The main components of the tertiary sector are banking, trading and hospitality.

Geography & Climate

The county is geographically situated in the centre of Kenya, and it also straddles the equator. Meru borders Isiolo to the north and north-east, Tharaka-Nithi and Nyeri to the southwest, and Laikipia to the west. Mount Kenya, 56% of which is in Meru, also borders Meru County in the south-west. Given that Mount Kenya rises to its peak within Meru, the county’s altitude varies from 300 metres to 5199 metres above sea level. This variation allows for both agricultural and ecological diversity, and the topography greatly affects economic activity. The highland zones cover most of the county’s area, with seven out of nine subcounties in the higher altitudes. Buuri and Tigania are in the midland zones, close to Isiolo County in the north.

Meru’s land area covers 6936 sq km, of which 26% is protected forests. Despite Meru’s relatively small size – Turkana County is over 70,000 sq km – the climate varies considerably. On the rainy side of Mount Kenya, south and south-west Meru receive moderate to high rainfall of around 2500 mm annually while the lower midlands in the north and north-east are dry and receive 300 mm annually. Other parts of Meru average 1200 mm of rainfall per year.

Population 

Meru County has 1.5m inhabitants, with a stable population growth rate of just over 2%. The population is projected to rise to 1.6m by 2017. There were 672,984 eligible voters at the end of 2012, of whom 489,515 were registered.

Agriculture is the backbone of Meru’s economy, and most of Meru’s population lives in rural areas. According to national government portal Kenya Open Data, 12% of Meru’s population lives in urban areas, compared to the national average of 32%. The population is relatively young, with 26% aged 20 and below and 35% aged 30 and below. Gender distribution is relatively even, although it is worth noting that for people above the age of 60 women outnumber men by a factor of 1.15.

The major towns in the county include Meru Town, Maua, Nkubu and Muthara. Meru Town, the largest city in the county, has a current population of approximately 74,000. The collective population of the four major urban centres is projected to grow in line with the county average of 2.1%, to reach 135,840 by 2017. The population density varies across the subcounties, with the lowest in Buuri and the highest in Igembe South, with higher density in more fertile areas. Igembe South is the most suitable area in Meru for farming while Buuri is semi-arid but suitable for certain types of large-scale farming.

Human Development 

Meru’s Human Development Index score is 0.5622, higher than the national average of 0.505 but lower than Nairobi, which scores the highest in the country with 0.6533. Meru has among the lowest poverty rates in Kenya at 28.3%, and even small-scale farmers tend to hold large cash reserves, according to John Againe, a board member on the County Public Service Board.

The officially cited figure for the size of the labour force is 800,000 or half of Meru’s population, translating to one worker for every non-worker. However, it is estimated that around 65% of the labour force is unemployed, a contrast which is likely due to the fact that – as in many regions of East Africa – informal activity plays a significant role.

To tackle the high rate of unemployment, the county government has proposed several policy interventions, for example, upgrading infrastructure through large, labour-intensive projects, such as constructing rural roads, building dams and restoring the county’s airstrips. The County Assembly is also pushing for fairer recruitment policies based on merit, as well as the implementation of anti-discrimination rules.

For the longer term, programmes are under way to provide professional development from an early age, promote vocational education, support value-adding industries, and encourage citizens to explore alternative careers through sports and the arts. The literacy rate has risen to 80% over in recent years through a concerted government initiative that saw the establishment of 74 adult learning centres. In 2012, 910 adults enrolled in these centres and they were staffed with 312 teachers. There has been a higher uptake by women than men, at a ratio of 62 to 38 per 100.

Government

Meru’s government has two branches: executive and legislative. The executive is in charge of county administration and is led by the governor and a team of 10 county executives, each in charge of sector portfolios. Peter Munya became the first governor of Meru after winning the first sub-national elections in March 2013. Those same elections saw the selection of 69 officials for the legislative branch, known as the County Assembly.

The administrative region of Meru was established in 1911 and divided into three smaller administrative units in 1992. In accordance with the 2010 constitution, one of these units was later split to become the counties of Meru and Tharaka-Nithi. The constitution also carved out several smaller administrative units within Meru. There are nine subcounties (also known as constituencies), and each subcounty has further smaller divisions called wards. The nine subcounties are Igembe South, Igembe Central, Igembe North, Tigania West, Tigania East, Imenti, Central Imenti, South Imenti and Buuri. Each subcounty has five wards, with the exception of South Imenti and Central Imenti, which have six and four, respectively.

Development Plans

The County Integrated Development Plan 2013-17, which guides the county’s economic planning policy, states the government’s primary objective for the coming three years as, “To facilitate sustainable development and wealth creation in the county through commerce, technological innovations and industrialisation that leverages on our skilled human resources, agriculture, wildlife, biodiversity and cultural heritage.” To achieve its goals, the government is aiming to support large gross county product (GCP) contributors like agriculture; rehabilitate smaller sectors, such as tourism and manufacturing; and build infrastructure to support demand.

One challenge to planning, which is common to many Kenyan counties, is the lack of county-level data, such as GCP and investment levels. Where data is available, the most recent figures are often from the last national census in 2009. To resolve this, Meru’s administrators are planning to set up a county bureau of statistics. Martin Gikunda, the chief officer for lands, economic and physical planning, explained that the county government is in the process of procuring a contractor to conduct a baseline survey to establish county economic data components, such as an appropriate basket of goods to measure inflation.

Fiscal Oversight

With decentralisation, county governments are responsible for managing their own budgets. However, the revenues side is tightly regulated, with the national government allocating the bulk of county budgets through a complex formula and strictly governing what fees county governments can levy. Meru received some KSh4.8bn ($54.7m) from the national government during fiscal year 2013/14, the first year since devolution. The county planned to raise KSh800m ($9.12m) from local sources; however, the county Department of Treasury has revised its estimates on revenue down to KSh600m ($6.84m). By comparison, only KSh300m ($3.42m) was raised locally during fiscal year 2012/13. The county government had initially planned to spend KSh10bn ($114m) on Meru programmes in the 2013/14 budget, which had to be scaled down to match the funding reality.

The Public Finance Act of 2012 requires that at least 30% of each county’s resources be devoted to development through new capital expenditures. While many counties have struggled to meet this ratio, Meru plans to exceed the minimum requirement in the next fiscal year and spend 40% of the county budget on new development expenditures. Meru is expecting a 15% increase in the national allocation for fiscal year 2014/15, to KSh5.5bn ($62.7m), while local revenue collection is estimated to be KSh500m ($5.7m).

Investment Centre

To facilitate investment, the county is establishing one-stop service windows known as Huduma (“service”) centres. Meru will establish five Huduma centres per subcounty by June 2016, at a cost of KSh260m ($2.96m). The objective is to bring government services closer to citizens. These centres will serve as an information hub for investors, making it easier for them to conduct business. The longer-term plan is to transform the Huduma centres into one-stop shops for other business needs.

Meru benefits from a comparatively high level of digital infrastructure, with mobile network coverage reaching 95% of the county. Only some parts of Tigania lack coverage. The county government has budgeted KSh2.5bn ($28.5m) over the five-year County Integrated Development Plan through 2017 to build 17 projects related to ICT improvements, including enhancing the county’s internet connectivity, establishing a county data centre, automating revenue collection processes and ICT education.

Cash-Rich County 

There is lots of money in Meru,” said Charles Kiara, county branch manager of Kenya Commercial Bank. “It has one of the highest incomes per capita in the country.” Furthermore, Meru residents have a relatively high disposable income. A strong banking system supports cash-rich Meru, which has the highest concentration of financial institutions outside Nairobi and Mombasa – 18 banks operate in Meru across a 32-branch network, including a branch of the Central Bank of Kenya. Meru also has the third-highest cash circulation nationally.

The major commercial banks operating in Meru are a mix of foreign and national firms, including Barclays, Kenya Commercial Bank, National Bank of Kenya Cooperative Bank, Equity Bank and Standard Chartered Bank. A number of microfinance institutions provide credit to micro and small enterprises. Most notable among these are Faulu Kenya, Kenya Women Finance Trust, and the Small and Medium Enterprises programme. Several insurance firms also operate in Meru, including APA, CIC and UAP.

Despite the county’s strong financial position, there are concerns that Meru’s risk-averse culture means that money is saved rather than invested. This is reflected by a low loan-to-deposit ratio of less than 50% among almost all the banks, a not uncommon trend in many emerging markets in Africa.

Agriculture 

About half of Meru’s total area is under cultivation for staple (food) and cash ( commercial and export) crops. The main staple crops are maize, sorghum, various beans, various peas and green grams, while the main cash crops are coffee, tea, wheat, cotton, miraa (khat) and flowers.

The agricultural landscape consists of mainly smallholder farms. Indeed, 98.6% of farms are small scale, according to the Ministry of Agriculture’s “Meru County Profile 2013”, not an unusual level for Kenya or indeed African agricultural markets in general. The national average farm size is 0.8 ha, but size varies according to population density: more sparsely populated areas see farm sizes up to 2 ha while densely populated areas have farms averaging 0.4 ha.

The total area under cultivation for staples, cash crops and horticulture is 283,300 ha, 16,200 ha and 20,200 ha, respectively. Staples yield is around 1m tonnes annually. Tea is the county’s largest cash crop, with around 45m kg produced annually. Correspondingly, tea is Meru’s biggest revenue earner, bringing in $1-2 per kg to fetch some KSh4bn ($45.6m) annually over the past few years. However, a recent price slump will likely result in significantly lower revenues in 2014. The most lucrative product among all of Meru’s agricultural products is cut flowers, which earn KSh200-250 ($2.28-2.85) per kg.

Funding of an additional 11% is being allocated to the agriculture sector’s budget for fiscal year 2014/15. The County Fiscal Paper, which sets out the budget for the fiscal year ending June 2015, has set the following as priorities: providing input supply support; increasing production and productivity; strengthening the use of modern technology; reducing the losses from disease and pests; and improving marketing and branding. The County Integrated Development Plan has also earmarked KSh2.1bn ($23.94m) to promote the sector through June 2018.

Activities will include improving storage facilities; promoting value addition through food processing; rehabilitating the coffee and cotton sectors; introducing soil management programmes; improving input supply provision; as well as extending services support. Some examples of the other budgeted programmes through June 2018 are the KSh50m ($570,000) farmers’ empowerment programme and the KSh1.5m ($17,100) capacity-building programme. These initiatives include post-production technology transfers, extension services and grants.

Farmers have also been offered tax breaks, subsidised equipment leases and low-cost land as incentives. They already benefit from access to subsidised fertiliser via the National Cereals and Produce Board, under the Ministry of Agriculture. Through this programme, the county receives fertilisers at 50% of market price, and the fertilisers are then offered to local farmers through the county agricultural board.