In Kenya, ‘Nikw’a ngwete’ famine of dying while holding money unfolds
A severe drought—stretching from the hitherto food-rich farms in Tetu on the slopes of Mt Kenya to the sunbaked pasture grasslands in Isiolo and Marsabit counties—is evoking awful memories of a similar experience about 40 years ago when a nationwide drought led to a famine in Ukambani popularly referred to ‘Yua ya nikw’a ngwete’ meaning ‘I will die while holding’.
Under nikw’a ngwete famine in 1983/1984, there was no food to buy in the markets even for those with money. And now, as farmers across Kenya grapple with the sixth failed rain season in a row, the ongoing provision of government-subsidized fertilizer is offering little hope as poor rains will render to waste the effort, worsening the situation for close to five million people staring at the worst famine in decades.
The United Nations humanitarian agency has termed the ongoing drought in Kenya and in neighbouring countries in the Horn of Africa a “rapidly unfolding humanitarian catastrophe.”
And while state officials debate and pray, the country’s restive north descents on a perilous journey in what has long been the default result of climate change; an escalating fight for diminishing resources.
What’s more, this war could potentially morph further and ferment Kenya’s problematic land question and a choice between forex and food, cash crops for export or sustenance.
As vast lands in Kenya turn drier and less productive, the debate over ownership, use, and benefits of huge tracts of lands controlled by multinationals cultivating cash crops for export in a country that is mostly desert is bound to come up.
About 23 of Kenya’s 47 counties are classified as arid or semi-arid lands (ASALs) and only about 18 percent of the country’s land area is agriculturally productive: the central and western highlands, split by the Rift Valley. This zone has a temperate climate often experiencing medium to high rainfall. Kenya is warm and humid in the coastal region with very dry arid interior usually marked by low and unevenly distributed rainfall over much of the tropical country.
A section of MPs from the Rift Valley, President William Ruto’s backyard and the country’s bread basket, have previously voiced concerns over renewals of the lease holdings of individuals and multinational companies after the 2010 Constitution terminated 999-year leases to a maximum of 99 years; singling out James Finlay, Unilever and George Williamson tea companies, which own vast lands in Kericho, Nandi and Bomet counties.
The MPs imputed transfers of the lands and properties whose state of their leases remained unknown and without consultations with the local community representatives.
County governments have also stepped up bids to be involved in the renewal of the land leases citing the National Land Commission’s key rulings on historical land injustices in which the local community suffered after they were evicted to give room for multinational tea companies.
But the companies such as Unilever have maintained they purchased the plantations after the colonial government atrocities; for its case, in 1987, and therefore cannot comment on historical claims being made against the British government.
The shift in colonial economy into modern Kenya did little to change the flow of goods from Kenya to the West. Tea and coffee, which were scarcely used in Kenya retained their position as the main exports in a market where holding dollars was more important to a deficit economy than commodities whose consumption was low in their own localities.
Kenya being a net importer needs foreign exchange to buy its deficit of food products such as wheat, maize, and edible oil as well as petroleum, machinery and fertilizer.
Read also: Why revamped fertilizer web portal is set to be a key plank in Africa’s food agenda
The country has been willing to forgo its arable land in exchange for the American currency but increasingly global market upheavals, poorly worked out contracts and complex ownership structures have often whittled down the comparative advantage.
Over the years, the $1.32 billion from tea and coffee exports have been dwarfed by a faster growing source of dollars—the rising number of Kenyans living and working in the diaspora—who are clocking in $4.027 billion reducing the significance of agricultural exports in the country’s economy.
Jobs for citizens have also been put on the chopping board as low margins in the global markets push tea companies towards greater efficiency that has meant switching to mechanised harvesting of greenleaf much to the chagrin of locals rendered jobless with no alternative incomes.
Kericho County Governor Erick Mutai said the multinationals are dangling the threat to quit the country as a condition to be allowed to use tea plucking machines at the expense of keeping jobs for locals, a political hot topic and pain point for thousands of jobless Kenyans.
The governor disclosed that lopsided contracts favoured the multinationals limiting what they paid in taxes and levies and putting in doubt the assumption that Kenya earns significant direct revenues from the use of one of its rarest resource.
“They’re not remitting enough revenue to counties and are paying peanuts as the lease,” he is quoted.
But the most visceral accusations levelled against multinationals in Kenya is engaging in transfer pricing, which denies tea farmers the true value of their produce, cheats the taxman and reduces the dividends earned by its few Kenyan shareholders.
Transfer pricing happens when goods or services are exchanged between divisions of the same company, with the sole aim of dodging the payment of taxes.
For instance, a shareholder fight is brewing at Limuru Tea, a company listed at the Nairobi Securities Exchange (NSE) and majority owned by Unilever Tea, has unearthed allegations that most of the profits from the tea is shifted abroad through a revolving door of management of related companies selling the tea to itself in exchange for credit notes.
Businessmen Joe Wanjui, who owns 25.4 per cent shareholding through a nominee account together with Mr Wainaina Kenyanjui, who owns 2.3 percent stake through Africa Reit, have launched a court case to halt sale of Unilever’s 52 percent stake in Limuru Tea after the British company rejected their bid to place an alternative offer to American-British private equity and investment entity, CVC Capital.
Dr Wanjui is no stranger to Unilever. He is the former chief executive officer of East Africa Industries (now Unilever). In the dispute, the minority shareholders accuse Unilever of dominating Limuru Tea board with six out of eight board members being either current employees, former workers or ex-board members of the British multinational.
The minority owners claim Unilever sells inputs such as fertilizer and labour to Limuru Tea at exorbitant costs and is the only buyer of the company’s tea leaves yet it sets the price which is usually lower than the offer at the Mombasa tea auction.
They say Unilever also delays payments of over Kes100 million annually owed to Limuru Tea, sometimes past 15 months, effectively granting itself free loans with an indefinite settlement period.
While the allegations are under investigations by the Capital Markets Authority (CMA) and subject to court proceedings, a governance report by the regulator seemed to verify some of the claims.
“Apart from executive directors, who are all employees of Unilever Tea (Limuru Tea majority shareholder), no independent or executive directors has any experience in the agricultural sector to ensure the company provides proper oversight, strategic direction and that the company thrives and delivers value to shareholders,” CMA noted in a damning corporate governance report.
The suit indicates that returns from the multinationals are debatable even while confirming political concerns about the land issues during such transactions. Concerns about the true value of the land being held by the multinational has been raised by the small shareholders claiming the value of the land has been suppressed.
They claim Limuru Tea is undervaluing its 696.8 acre plantation. The company annual report shows the company buildings and freehold land is being held at a carrying amount of Kes1.4 million as at December 2021.
The minority shareholders asked the CMA to investigate Limuru Tea accusing the firm of valuing its land holding at Kes1 million against an estimated value of Kes23 million per acre or a total of Kes16.2 billion. This means with Kes1 billion, one can buy the entire stake of Limuru Tea and get land worth Kes16.2 billion, grossly undervaluing the company at the NSE.
The question of the opportunity cost of growing exports for forex to buy fertilizer against using the scarce arable land to grow food on the frontlines of climate change will make it much more difficult for multinational growers to make their case.
With consecutive seasons of failed rains, even areas in the country that had not witnessed drought are feeling the heat and now the clamour for water for irrigation and not all the fertilizer forex can buy. ‘Nikw’a ngwete’ famine of dying while holding money is fast unravelling however you look at it.
In a recent morning show on Citizen TV, Tetu MP Stephen Wandeto said that farmers in his area are counting losses following total crop failure owing to poor rainfall distribution in the October – December season.
Tetu in Nyeri County, along with other traditionally food-secure zones of Kirinyaga, Kiambu, Embu, Meru, and Murang’a counties are experiencing their longest sustained heat wave in 40 years, according to data from the National Drought Management Authority.
The drought has prompted all manner of responses from President William Ruto’s government, from appeals for finances from individuals and corporates to the international community as well as prayers for divine intervention for rains and support to mitigate the damage, which is partly exacerbated by the extreme impact of climate change.
“We now need God to send us the rain,” President Willian Ruto said on February 14, adding, “I urge all people from all faiths… to pray for our country.”
Overall, 23 counties across Kenya are in various stages of the worsening drought with 13 marked ‘alarm phase’; seven including Narok, Tharaka Nithi, Makueni, Nyeri, Meru, and Laikipia in the ‘alert’ phase while Baringo, West Pokot and Embu are in ‘normal phase’ according to authorities at NDMA.
Counties reeling in the alarm phase—the worst state—are Taita Taveta, Isiolo, Kilifi, Kwale, Samburu, Turkana, Wajir, Kitui, Kajiado, Mandera, Garissa, Tana River and Marsabit.
Kenya’s worst drought in decades threatens the survival of over one million children below five years who now require treatment for acute malnutrition and about 200,000 pregnant and lactating mothers who need medical interventions to alleviate severe cases of malnutrition.
Over 2.5 million livestock deaths have been reported in Marsabit, Samburu, Mandera, Wajir, Isiolo, and Garissa counties leaving the population even more vulnerable as camels, cows, goats and sheep are the economic mainstay of the pastoralist communities.
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