The chief executive officer of the Kenya Tea Development Agency (KTDA) Lerionka Tiampati may be forced to resign following sentiments by President Uhuru Kenyatta that the agency’s ‘poor corporate governance’ had caused farmers to lose up to Sh50 per kilo of tea sold.
The directives given by the president fell short of disbanding the agency to undertake major reforms he suggested, a pointer that the State may have lost confidence in the current management. The allegations by the president suggest that farmers have been losing more than half of their tea earnings, a huge sum that has driven loan-dependency and rising poverty levels in tea farming zones.
“As a result of poor corporate governance, farmers who would be earning about 91 shillings per kilo for their tea, are currently earning about 41 shillings with 50 shillings per kilo going to brokers and middlemen,” said the president in his address to the nation.
It was also the first time that the State admitted there is possible corruption within the tea marketing sector especially during the direct sales where KTDA insiders collude with buyers on pricing. To manage the mess, the president directed that 80 percent of tea must be sold through the auction and only 20 percent should be sold through direct sales.
KTDA reforms: Will Tiampati be trusted in the implementation?
The soft-spoken Tiampati is now expected to provide answers to some of the issues the president raised, especially to the farmers who have been complaining of the low pay that KTDA either blames on overproduction or international pricing movement. The question is whether farmers and the State will trust him to provide leadership during the reforms.
The president cited a conflict of interest by directors and lack of clarity in the declaration of dividends by subsidiary companies of the KTDA has another major failure of the management.
“It is clear the governance of KTDA and entire marketing of tea will require to be restructured if we are to assure our tea farmers get more revenue from their tea sales,” said the president, hinting to a possible overhaul of the KTDA.
The sentiments will add fuel to lobbyists who have been calling for major restructure of KTDA, with others like the former Permanent Secretary Irungu Nyakera going to court to force reforms.
Another far-reaching directive by the president is to explore the option of KTDA paying farmers no less than 50 percent of their deliveries as monthly payments with the balance being paid as an annual bonus. Currently, KTDA pays Sh16 per kilo on monthly sales with the rest being paid during the annual bonus.
The president also directed for the establishment of a self-sustaining stabilisation fund to cushion farmers against price fluctuations and ensure implementation of guaranteed minimum returns.
Uhuru called for immediate actualization of the intensive tea value addition noting that evidence had shown countries that add value to their tea earn more.
For instance, in 2018, while Kenya exported 476 million kilos of tea, earning 140 billion shillings, Sri Lanka exported 288 million kilos, which is about 60 percent of Kenya tea exports, but earned more, an equivalent of 150 billion shillings.
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