Agriculture plays a crucial role in the economy of sub-Saharan Africa. A feature of particular significance about the region is that the majority of households are heavily dependent on agriculture as their major source of livelihood. Smallholder agriculture is the principal producer of staple foods and cash crops, accounting for very large shares of national production and marketed output. For the respective countries, therefore, the performance of smallholder agriculture has crucial implications for the overall economic development process including the alleviation of rural poverty. The demands created by steadily increasing populations, and the pressing need to increase agricultural productivity means that these countries must continuously adopt methods to intensify agricultural production. Livestock production is an important consideration in the agricultural development of the region. Livestock, and especially cattle, have historically played multiple roles both in economic life and in socio-cultural traditions of African people. Cattle have been valued not simply as a source of food (milk, blood and meat) and hide but also as a visible form of wealth and a source of social prestige. In certain parts of the region, cattle still provide a valuable source of draft and traction power both for the plough and for transportation carts whereas in Arid and semi-arid lands (ASAL), cattle still provide a valuable security against famine. Traditionally, cattle were a valuable item in the payment of bride price while beef was a valued food item in ceremonies. Moreover, cattle manure is still valued as a fire-fuel and building material in ASAL whilst in arable areas it is valued as a fertilizer. In brief, cattle have retained their multiple roles among the African people. The relative importance of each role, however, varies with production and ecosystems (Freeland 1998; Fitzhugh 1998). In the high potential areas, the economic importance of the cow has increasingly shifted to commercial milk production while at the same time retaining the complementary role of sustaining soil fertility for sustainable agricultural production. In such area, increasing population pressure interacting with the need to sustain soil fertility has driven the change in production structure with dairying becoming an important component of agricultural production. . Eastern Africa is Africa’s most promising region for dairy production. The region is predominantly rural, with over 80 per cent of its inhabitants deriving its livelihood heavily from agriculture. It holds over 40 percent of Africa’s cattle resource of about 222 million (FAOSTAT). This study looks at the development of dairy industry in two east African countries⎯ Kenya and Uganda (Figure 1). From the early 1910s, Kenya has developed a dairy industry that ranks among the largest in sub-Saharan Africa. The industry is especially noted for its smallholder base. Uganda, on the other hand, has a large unexploited potential for dairying. In order to highlight special aspects of the respective country’s industry, the study looks at the countries in turns. The study seeks to take a historical look at the respective dairy industries with a view to identifying major turning points in their respective developments. We then apply the DE-A-R framework in analyzing the circumstances surrounding ii respective turning points, including the socio-political forces that influenced the specific forms of change. Our purpose is to identify the forces, and key actors, that have driven changes in the systems, and to understand the impact these changes have had on the overall production, on smallholder incomes and on the environment by comparing across countries. We hope to identify key ingredients necessary for achieving successful smallholder dairy growth elsewhere.