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Crude raids add no value to tea reforms

Friday April 30 2021


Police officers in Kenya Tea Development Agency (KTDA) Nairobi offices on April 17, 2021. PHOTO | JEFF ANGOTE | NMG

We all agree that the Kenya Tea Development Agency (KTDA) needed to go through a shake-up. We also agree that there were operational and governance challenges that needed to be addressed. The concerns about conflict of interest of directors and the transparency in payment of bonus and dividends were legitimate. The idea of more power to the factories is not without merit.

But let us not rock the boat too much. In pushing changes and reforms in the tea sector, let us not be crude. I don’t agree with the manner in which the raids on both the Mombasa Tea Auction and KTDA headquarters were conducted.

It is fair enough to investigate suspicions of price fixing, deliberate suppression of prices, and other forms of cartel-like behaviour and dealing that may be happening at the Mombasa auction.

But the most disquieting feature of what we saw last week was the savage manner in which the raids conducted on the auction. This is the world’s biggest tea auction. Indeed, the Mombasa Tea Auction is what the New York Stock Exchange is to international financial markets. It is the benchmark for international tea prices.

In the civilised world, raids on stock exchanges and commodity markets are conducted by regulators. When we have problems with banks, we leave it for the Central Bank of Kenya to conduct the raids. When we suspect price fixing on the Nairobi Securities Exchange, we leave it to the Capital Markets Authority.

But when you bring in the police to raid an international auction, the impression out there is of a government descending to a police state. I am not against the reforms taking place in the tea industry. The crooks must be found out and brought to justice.

While it’s is true that no one is above the law, it is equally true that as long as the 2010 Constitution lasts, everybody, including rank and file employees of both KTDA and the Mombasa Tea Auction — who may not even know the shenanigans being investigated — is entitled to the enjoyment of protection from State terrorism.

You report to work one morning and you are told you cannot access your office because the whole place has been turned into a crime scene.

What happened at the Mombasa Tea Auction is as crude as sending those brutish City Council askaris to raid the NSE to investigate front-running or insider dealings on stocks.

Let us not forget that descent into a police state is deceptively easy. And we need to get the tea reforms over with so that we can calm the anxieties and unpredictability, which the noisy politicking by both ministers and the anti-reform brigade, are causing to the international marketplace for tea.

As a country we have not thought strategically about what we should do to leverage our position as a world power in the tea industry. KTDA — for all its weaknesses and faults — remains the world’s biggest tea marketing company.

Many years ago, the London tea auctions collapsed because we withdrew our tea from there. That is how you exercise market power when you are a leading player on the world stage.

Had KTDA been ambitious enough, it should have thought about buying into or merging with some of the leading tea brands in Western capitals. How else can our famers ever get a share of those high prices that a cup of branded tea fetches in London, New York or Toronto?

KTDA is a sleeping giant. Indeed, the reason the Tata Group of India took over Tate and Lyle was because the company came to terms with the reality that—in so far as commodities are concerned — value addition is more profitable when it takes place in the adjacent locality of the biggest consumers of tea.

The problem in this country is that we have allowed national policy and strategic interest on tea to be driven too much by parochial and short term concerns. No wonder we are celebrating the removal of Peter Kanyago from leadership in the tea industry as if it were a major achievement.

2021-04-30 11:00:00

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By admin