Thousands of Kenyan tea farmers are facing multi-pronged challenges masterminded by a cabal of cartels serving as middlemen and corporate-styled thuggery where farmers’ income is credited as bank deposit then advanced back to them as loan at exorbitant interest rate, investigations by The Informer Media Group have established.
Despite the much touted reforms in the tea sector being championed by Deputy President Rigathi Gachagua yielding minimal results so far, farmers continue to bear a litany of unending woes.
Largely, in the tea sector, just like coffee and dairy sectors, attention has been directed to the marketing and sale process as opposed to the management of farmers’ earnings.
Even as Rigathi is scheduled to convene second tea stakeholders meet in Kericho beginning tomorrow after the Meru convention, The Informer Media Group now lays bare financial probity concerns in the management of farmers’ income and the perennial loss making investments by the Kenya Tea Development Agency (KTDA) through its enterprise wing, the Kenya Tea Packers Limited (KETEPA).
Interestingly, directors of KTDA also serve as KETEPA board members a scenario that has been pin-pointed as contributing factor to the mismanagement.
“It is unfortunate that KETEPA, an investments arm wholly owned by KTDA has never made profits for the last ten years. This begs the question as to how the institution runs and is there value for farmers’ money invested in loss making enterprises?” An insider revealed.
However, when contacted for comment, KTDA board chairman Ichoho and Group Chief Executive Officer and Managing Director Wilson Muthaura did not respond to our queries.
Instead, KTDA’s Group Public Relations Officer Ndiga Kithae pronmised to get back.
“Thanks. Will review and revert. In a meeting though.” Ndiga said through a short text message.
Our three-months long delve into KTDA’s management that unearthed cover-ups for fraudulent foreign trips claims by some KTDA Board of Directors, tendering irregularities and micromanaging of procurement processes by the board despite it being an administrative function, we established that earnings from tea sale by KTDA are made a cash bank deposits at Family Bank Kenya Limited.
Consequently, Family Bank lends KTDA Microfinance and Greenland Fedha Limited the same money, that is, farmers’ money as loan at exorbitant rates for onward lending to tea growers at an interest rate of 21 per cent against the prevailing commercial bank lending rate of 12 per cent on loans advanced.
Greenland Fedha Limited (GFL) is a subsidiary of KTDA Microfinance and both charge immoderate rates to farmers when borrowing money from their own entity.
According to internal KTDA records, there are over 700,000 small scale tea holder farmers as members of KTDA exclusive of the large tea plantations owners.
Records show that KTDA is among the shareholders of Family bank holding 15.45 per cent ownership, the Estate of Rachel Njeri Muya (13.42 per cent) ,Daykio Plantations Limited ( 12.30 per cent, Titus Kiondo Muya (5.34 per cent), Standard Chartered Kenya Nominees A/C 9660B (3.73 per cent), PA Securities ( 3.57 per cent), Kenya Orient Insurance Ltd ( 2.86 per cent) Julius Brian Kiondo Muyah ( 2.69 per cent) Ann Njeri ( 2.68 per cent) Mark Keriri ( 2.68 per cent) while an additional 35.27 per cent stake is held by other entities.
“To address problem ailing the tea sector, it is imperative to get to the bottom of the segments of KTDA that was split in 2009 into KTDA Holdings (KTDA (H)), KTDA Management Services (KTDA MS), KTDA Foundation (KTDA F), Greenland Fedha Ltd (GLFL).” Our source added.
During the two-day forum being convened in Kericho by the DP, push for a review of the Tea Act 2020 to allow for direct export of made and change of model used to elect directors of KTDA are some of the reforms being proposed.
Further, the tea sector reforms team is pushing for the establishment of a second tea auction either in Central Kenya or Kericho to supplement the one in Mombasa.
“It doesn’t make sense that tea produced in Central Kenya and Rift Valley is ferried all the way to Mombasa where there is a tea auction.” A KTDA insider added.