With cartels trumped, KTDA lives

Changing anything in Kenya, especially if it involves the government or some public affair, is the hardest thing. The minute you make public a decision to pursue such change, the cartels crawl out of the woodwork, retain the service of vicious bloggers and politicians and unleash oily PR snakes. 

Commercial court case filers are procured and magistrates or even judges lined up. Expensive knifemen in lawyer robes enter the scene. Parliamentary summonses are fired at you. In some cases, regulatory authorities, even law enforcement agencies, take an interest in your affairs.

You need a skin of Teflon to make change. And an armour-plated head to make you impervious to threats, vilification, sometimes even entreaties. And you could get killed, depending on the viciousness of the cartels feeding off whatever you want to change. If it is a sector that leads in foreign exchange earnings, the fierceness of the response touches the stratosphere.

Kenya is a lost nation: Its people worship money and will go to any extent to steal it. Kenyans have no honour when it comes to money; their word is worthless. They are unscrupulous and relentless. They will profit unfairly and dispossess the widows and the orphans, if need be.

Kenya Tea Development Authority is a monster; a huge, wealthy institution, neither private nor public, but whose capacity to destroy — or enrich — livelihoods is phenomenal. KTDA, which by every telling is badly run, has been punching way below its weight to transform the lives of the 650,000 farmers who depend on it. But to change it, to reform it, is truly a tough job.

For this column, I interviewed our local KTDA expert, John Kamau, the man who not only writes about reforming the agency but sat in the committee that developed the proposals to reform it. KTDA-run factories have a cumulative debt of Sh4.8 billion, he said, KTDA Holdings a $1 million debenture. Farmers paid Sh3 for every kilo of tea sold to try offsetting these debts.

10 good things

Tell me 10 good things that will come from these changes at KTDA, I challenged the oracle. And here they are:

First, KTDA will not get its claws at farmers’ money. Tea brokers, buyers and auction organisers will pay the proceeds of tea sales straight to the factories within two weeks. Previously, KTDA used to give some traders tea on credit and manage farmers’ accounts. The only money it will lays its hands on is its management fee.

Two, farmers will get their money on time. The factory must pay farmers at least half of the money for their green leaf within 30 days of receiving money from the sale. The balance should also be paid within strict deadlines. Previously, you delivered your crop but whether or when you would be paid remained a prayer item.

Three, KTDA was like an evil child that had turned on its parents, took over their affairs and oppressed them. Although it is an appointed agent of the factories, which are independent limited companies, it dictated who can run for directorship. It also provided its own Company Secretary; so, unfavourable discussion of KTDA was not allowed. Farmers will conduct their polls and appoint their Company Secretaries.

Four, back-door trading at the auction, the route by which farmers lost their money, has been eliminated. Everything is bought and sold through the auction.

Five, The Tea Board of Kenya must approve all agreements between factories and management agents, such as KTDA. KTDA has previously been accused of taking powers of the factory boards and entering into opaque agreements.

Six, the contract between a management agent and a tea factory shall be for five years and renewed at the discretion of the latter. Previously, it was 10 years and a factory had to give a three-year notice to quit.

Transparency in sales

Seven, there is transparency in the sales; farmers can monitor their tea through the value chain. The auction organiser, the East Africa Tea Traders Association, has a legal obligation to establish an electronic trading platform that is accessible to all players, including the farmers.

Eight, directors and any other official in the tea factory, management agent or any other entity will personally be responsible for any loss or offence committed while acting on behalf of such a body, unless it was without their knowledge or the person took reasonable steps to prevent it.

Nine, fees for services will now be capped: The amount paid by a factory for services rendered by a tea broker shall not exceed 0.75 per cent of the gross sales.

Ten, 70 per cent of current KTDA assets were acquired when it was a parastatal, and before June 2000, when its existence was extinguished through a gazette notice. The modern-day KTDA took over the assets, liabilities, obligations and the mandate of the authority, including all its employees. Then it’s a public entity, isn’t it?

Agriculture Cabinet Secretary Peter Munya, his Interior counterpart Fred Matiang’i and all the rest who fought for change in the tea sector have done a brave and fantastic job. Let tea farmers eat their sweat.

And with a new management team, KTDA has a good chance at a great future too.

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