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Tobacco farming: The structure of a declining sector




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Semi-permanent houses, tucked between maize and tobacco farms punctuate much of Uriri Sub-County, Migori County.

Occasionally, naked children play by the roadsides as their parents are seen hurdled in groups, perhaps discussing what the future holds for them.

Most of these people are tobacco farmers. But fortunes in the sector have continued to dwindle by the day due to local and global factors.

Migori is the biggest tobacco producer in Kenya, accounting for more than 70 percent of the yields produced in the country, according to Alliance One Tobacco, a leaf-buying organisation. But today, the county has nothing to show for that feat.

The industry was collectively paying out over Sh1.7 billion annually to farmers in the region. Alliance Tobacco Kenya was spending Sh1.2 billion on Migori farmers annually.

But now, poverty is evident in regions where tobacco was once grown, stretching from Kuria East, to Kuria West, Suna West, Uriri and Rongo sub-counties.

The once flourishing cash crop is dying away; imposing makeshift mabati (iron sheets) buying shades which were constructed by the tobacco multinationals have been vandalised while the remaining ones have been taken over by the farmers’ co-operative societies.

While some farmers have already quit tobacco farming altogether, others are still hanging on, hoping for miracles.

Mr Otieno Osoro, 43, from Wang’ Chieng’ village in Uriri remembers the days when tobacco farming posted better returns.

“We used to make good money when the sector was booming but now it is a pale shadow of its former self. The firms have introduced many grading systems which only help the companies to pay us peanuts,” he said.

“I used to plant tobacco on my three acres farm but now [I] am only allocating one acre to tobacco. The remaining space is set for food crops,” Mr Osoro added.

Leaf hawkers who operate in collusion with the tobacco firm officials have also spoilt the business, he claims.

Mr Olima Omondi said the pay today is too little. “We are paid about Sh70 per kilo, from the previous Sh180 per kilo. Companies complain that the quality of leaf from Kenya is no longer attractive in the world market.”

“From my two-acre farm, I can only make Sh40,000 – which cannot feed my family of six children and pay their fees,” Mr Omondi said.

Tobacco matures in six months. Mr Masel Oyugi however says tobacco is their main cash crop despite the frustrations.

“We need more companies here to buy our leaf… the exit of Alliance One from the Kenyan market has left British American Tobacco Kenya Limited (BAT) to enjoy monopoly and to singularly decide what to pay us,” he asserted.


He says the firm inputs they are being given by the BAT Kenya usually eat into their earnings, a claim the company refutes.

“We pay a lot for the fertilisers which are deducted from our delivery dues and leaves the farmer with nothing to take home. And this is why most farmers are scavenging for alternative cash crops,” Mr Oyugi said.

But BAT Kenya has come out to deny claims of frustrating their contracted farmers.

The firm’s manager at Oyani Leaf centre in Migori – Denis Sila – said they were giving their farmers the best treatment.

“We have challenges but we are trying our best. Of course we cannot buy all the tobacco being produced by farmers because we have our own targets as a company,” he said.

Mr Sila explained that he will investigate claims of corruption in the purchase of leaf from growers.

“We do not take bribes in order to buy the cash crop from farmers because we have a binding contract with them…but we will investigate the allegations,” the official added.

Mr John Ochola of the Oyani Tobacco Farmers Sacco is telling farmers not to lose hope.

“We will continue to engage BAT leadership to improve our terms of payment. Although we know leaf prices are dictated by the world market, but there is something that can still be done,” he said.

The Migori County Government has already threatened to kick out tobacco companies that have consistently failed to pay farmers dues on time.

Agriculture Executive Valentine Ogongo said the county administration “will not sit back and watch farmers suffer every year due to delayed payment”.

Mastermind Tobacco allegedly owes local leaf growers over Sh50 million while a tobacco merchant – Eastoback – has alleged unpaid delivery dues amounting to Sh7 million.

“This is the last warning to the two companies. Cooperate with our farmers or go elsewhere,” he told the representatives of the two companies in his office.

Mr Ogongo said only BAT Kenya “was trying to pay their dues on time”.

“The assembly is soon passing Tobacco Control Bill which will give us powers to register afresh, firms allowed to operate in this county,” Mr Ogongo said.

Representatives of the companies said they were making arrangements to offset the dues in the coming weeks.

But this may not save the ailing sector as over 10,000 tobacco growers in the county are already switching to other cash crops which can fetch them quick money. Some have gone into large-scale maize farming while others are planting cane.

“In the absence of a serious leaf merchant who can pay us on time, tobacco is a doomed crop. I have uprooted the leaves on my farm to create space for cane,” Mr Brodrick Kowino from Uriri Sub-County said.

But not all the tobacco leaves produced by farmers in the region is being bought, companies are citing low quality.

Subsequently, thousands of acres of the tobacco grown in Suna West, Kuria West and Kuria East sub-counties risk going to waste unless a new tobacco buyer came to the rescue of the growers.

“The future looks very bleak. We do not know who will buy our tobacco in the farms,” Mr Augustine Mwita, the national chairman of the Kenya Tobacco Growers Association, said.

“We are asking both the county and national Governments to speed up the process to look for us a new investor who is able to buy all our cash crop,” he said.

The farmer’s woes were compounded by the exit of Alliance One Tobacco Company four years ago, and which was the biggest leaf buyer in the county. The firm moved to Uganda and Zimbabwe two years ago, citing poor leaf quality in Kenya.

Mr Owino Likowa, a former Migori MP says tobacco farming is turning into a liability to farmers in the county.

“Poor pay, coupled with health risks one is exposed to while attending to their farms has made the business less lucrative. Farmers must just switch to other cash crops for meaningful benefits,” he noted.

The declining fortunes in the sector have seen massive layoffs by the tobacco firms within the last 10 years.



Sordid tale of the bank ‘that would bribe God’




Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –




Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

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Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

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Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

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William Ruto eyes Raila Odinga Nyanza backyard




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