21 Aug

Nandi, Bomet and Kericho, which are tea growing counties in the Rift Valley, are demanding that multinational tea companies start paying land rates of Sh10,000 per acre up from Sh100 that they have been paying since 1926. Now, it’s estimated that these multinational companies hold more than 500,000 acres of tea plantations in Kericho, meaning the county expects to receive Sh5 billion. In Nandi, the multinationals are estimated to hold about 300,000 acres of tea plantation, which means the county expects to receive Sh3 billion. Bomet, where the tea companies are estimated to hold more than 150,000 acres, expects Sh1.5 billion. For any county, the prospects of receiving such amounts of money would be exciting. But we can expect that the multinationals to push back at the proposal because it will heavily hit their bottom lines. To be having a land rate as low as Sh100 negotiated almost 100 years ago running till today as these multinationals make billions is just immoral. In fact, the counties are indeed late to negotiate new land rates. But these counties need to tread carefully whilst pushing for this proposal. Taxing productive land like the tea plantations, which employ many of the locals and generate foreign exchange, exhorbitantly has the potential to disincentivise the use of that land, reversing the productivity gains. Tea is also a plantation crop that is cultivated in large estates because of the need of close coordination between farm-level production and processing. So, the counties need to be cautious not to disrupt the land use. 


On the other hand, Sh100 is way too low especially when these counties are expected to generate more revenues and land is their biggest resource. With the proposal of Sh10,000, the counties are working with a modest inflation adjustment of around five percent from 1926 to present. So, there is a good case from both sides in the push and pull over the proposal. According to a story published by this paper recently, Nandi has indicated that the multinationals have agreed to pay Sh400 million. So, that possibly suggests that the county has struck a deal with the multinationals of Sh1,300 land rate per acre. That will be a fair agreement between the two parties and especially if they county plans to increase the land rates gradually. This will be progressive because it will not come as an income shock to the multinationals, especially during these times when tea trade has not bounced back to the pre-pandemic levels. In general, land is the main resource for the many counties and levying land rates makes sense for them as a source of revenue, but counties need to apply it progressively. The tea plantations case is different because of the low charges they were levied in a deal not revised since 1926. But counties ideally should target holders of large tracts of land not put into commercial use. This will encourage the holders to use the land for productive use with greater economic impact. This story also opens a new conversation about land rights and use in Kenya that is rarely talked about. 


Why is Masai Mara Game Reserve, for example, under the management of Narok County and collects more than Sh.3 billion every year yet Tsavo Park is under the national government and not Taita Taveta County? Locals from Narok have argued that Masai Mara is communal property and so has to be managed by the community. Maasai Mara is the leading earner in terms of foreign exchange for the Narok county government, which collects at least Sh3 billion yearly. So what makes so Tsavo different that it can’t be managed by the locals, not forgetting that Tsavo covers more than two-thirds of Taita Taveta? We are simply denying Taita Taveta the right to two-thirds of their land. 

Source: Business Daily