Connect with us

Data Stories

Who Owns Kenyan Banks?

While banks have begun to adhere to disclosure requirements spelt out in the prudential guidelines issued by the Central Bank of Kenya (CBK) much more needs to be done, particularly pertaining to competition policy and regulation to put checks and balances on the monopolisation of the banking sector in Kenya. 

Published

on

Download PDFPrint Article

Banking in Kenya dates back to the pre-colonial periods. The first banks largely concentrated on financing international trade along the Europe-South Africa–India axis, but later diversified operations to tap the opportunities for profitable banking created by a growing farming settler community and pioneer traders in the local economy to whom they provided deposit and credit facilities. 

Indian money lenders operating quasi bank services as early as the 18th century were probably the first bankers but the first recognisable bank was Jetha Lila Bankers from India, which was established in Zanzibar in 1880. In 1889 the National Bank of India appointed the trade house of Smith Mackenzie to be their agent in Zanzibar. Smith Mackenzie had a Mombasa branch in 1887 which was taken over by the Imperial British East Africa (IBEA) in 1888.  The National Bank of India established its own office in Zanzibar in 1892. In July 1896 the National Bank of India established a branch in Mombasa renting premises from Sheriff Jaffer. 

In April 1909, the East Africa Post Office Savings Bank Ordinance was passed and in April of the following year, the Ordinance for the Regulation of Banks established in the East Africa Protectorate was passed.  The former Ordinance established the first bank in the formal sense while the latter enabled the National Bank of India to become the first commercial bank. By 1911 there were only three banks: The National Bank of India, The Standard Bank of South Africa that came in December 1910 which later merged with Anglo-Egyptian Bank Ltd to form Barclays Bank in 1926 and Kathiawad and Ahmedabad Banking Corporation which had a short-lived presence in Mombasa from 1910 to 1915. 

In 1920 the East Africa Protectorate was declared a colony of the British Empire and its name changed to Kenya. The new colonial starters helped the Banks grow rapidly mainly through European Deposits and Asian customers. The banking services were not available to Africans, the only banking sources for Africans was the Post Office savings bank which started in 1910 as a department of the Colonial Postal service, even then the service was only available in places where Officials of the colonial service were stationed and therefore did not reach the majority of Africans who resided in rural areas.

The steadily growing economy in Kenya would soon lead to an influx of new banks between 1950 and 1959. In 1951 the Dutch bank Nedelandsche opened a branch in Nairobi. It was followed by the Bank of India which opened its first branch in Treasury square in Mombasa on January 17th 1953 and the Bank of Baroda on December 4th of the same year with its first branch also in Mombasa. The Pakistan based Habib Bank AG Zurich Ltd came in 1956 while the Ottoman Bank and Commercial Bank of Africa (CBA) rounded off the rush by establishing branches in the country in 1958.

After Indian attaining independence from Britain in 1947 and the subsequent hiving off of Pakistan, India changed its name in 1958 to National Oversees and Grindlays bank later called National and Grindlays Bank following its merger with Grindlays bank another landing based bank which traced its roots to Calcutta India. By 1951 the Banks had expanded its branches considerably but employment opportunities for Africans in the Banking industry took a long time to materialize. Indeed, it was not until June 1963 a few months before the country attained independence that the first African manager of a Bank branch Peter Nyakiamo was appointed. 

After independence, the changing landscape of banking began to note the entrance of fully indigenous banks. In June 1965 the first fully locally owned Commercial Bank, the Cooperative Bank of Kenya was registered as a Cooperative Society; initially, it served the growing farming community. Cooperative bank as it came to be known commenced its operations as a Bank on January 10th 1968.  The first fully Government-owned Bank the National Bank of Kenya was established on June 19th 1968. In 1971, the Kenya Commercial Bank was formed following the merger of the National and Grindlays Bank, with the government owning a 60-per cent majority stake. It took the poll position as the largest of the country’s commercial banks in terms of deposits and number of branches.

The formation of the Government-owned Banks had the desire to fight the speeding of the provision of affordable banking services to the majority of the population. It also prompted Foreign-owned bank to take measures to remain relevant in the Kenyan markets and beyond.  Today, according to the Bank supervision annual report 2017, Kenya currently has 44 banks. 31 of the banks are locally owned while the remaining 13 are foreign-owned. Among the 31 locally owned banks, the government of Kenya has a shareholding in three of them, 27 of them are commercial banks and one is a mortgage finance institution, known as Housing Finance.

Kenya Banking Sector

Illustrated by Mdogo / The Elephant

Of the 44 banks, ten are listed on the Nairobi Securities Exchange with respect to the names of their shareholders namely Barclays Bank of Kenya Ltd, Stanbic Bank Kenya Limited, Equity Bank Ltd, Housing Finance Ltd, Kenya Commercial Bank Ltd, NIC Bank Ltd, Standard Chartered Bank (K) Ltd, Diamond Trust Bank Kenya Ltd, National Bank of Kenya and Co-operative Bank of Kenya Ltd. The shareholding structure of these banks constitutes, one that is state-owned, six locally owned and three that are foreign-owned. 

Together, they act as representatives of local, foreign, state, single and block shareholding in Kenya. 

In 2016, in the wake of the collapse of three lenders —Dubai, Imperial and Chase banks — precipitated by weak corporate governance practices that allowed irregular issuing of loans to politically connected customers, wanton insider lending and running of parallel banks, the Central Bank of Kenya issued orders for banks to disclose top shareholders on their websites. An outcome of this has been greater transparency and public trust. However, as this analysis illustrates, is a network of individuals, companies and banks who are the major shareholders of Kenyan banks.

Let us examine this?

The National Bank of Kenya’s two key shareholders are the National Treasury of Kenya and the National Social Security Fund (NSSF). The NSSF holds 48.1% of the ordinary shares as well as 20.7% (253 million) of the non-cumulative preference shares in the Bank. The National Treasury holds 22.5% of the ordinary shares as well as 79.3% (900 million shares) of the Bank’s non-cumulative preference shares. The remaining 29.5% of the ordinary shares are held by the general public through the NSE namely, Kenya Reinsurance Corporations, Best Investments Decisions Ltd, Co-op bank custody a/c 4003a, Craysell Investments Limited, NIC Custodial Services a/c 077, Equity nominee Ltd a/c 00084, NBK Client a/c 1( Anonymous) and Eng. Ephraim Mwangi Maina who has 0.3% shares.

Kenyan Banks: Shareholding

Illustrated by Mdogo / The Elephant

*******

Co-operative Bank of Kenya public and was listed on December 22nd 2008.

Shares previously held by the 3,805 Co-operative Societies and unions were ring-fenced under Co-op Holdings Co-operative Society Ltd which became a strategic investor in the Bank with a 64.56% stake (3 Billion shares), followed by Gideon Maina Muriuki with 1.9% shares, Kenya Commercial Bank nominees a/c 915B 0.8% shares, NIC Custodial Services a/c 077 0.7% shares,Stanbic Nominees Ltd a/c Nr  1030682 0.5% ,Aunali Fidahussein Rajabali and Sajjad Fidahussein Rajabali 0.4%, Amarjeet Balooobhai Patel and Baloobhai Chhotabhai Patel, Old Mutual Life Assurance Company,Kenya Reinsurance Corporations and Standard Chartered Nominees Resd a/c ke11443 hold 0.3% shares each. 

Co-op bank custody a/c 4003a (anonymous) has shares in two banks, National Bank of Kenya and Standard Chartered.

********

On 31st December 2014, Equity Group holdings PLC  finalized an internal restructuring that culminated in its conversion into a non-operating holding company, Equity Group Holdings Limited (EGHL) in order to further meet its objectives. The Bank arm was founded in 1984 as Equity Building Society (EBS). In 2006, the Bank was listed at the Nairobi Securities Exchange where it has become the largest Bank by market capitalization. The listing also attracted Helios, a strategic investor, to invest USD 185 million in 2007. 

Arise BV is the top investor at Equity Bank Limited with 12% shares. Aris-constituting Norfund, FMO and Rabobank-paid kes17.6 billion for a share of Equity Group Holdings KES147 billion market valuation. Aris took over the shares held by Norfininvest.

Other shareholders include James Mwangi and British American Investment Company Kenya Ltd with 127 Million shares, Standard Chartered Nominees with 121 Million shares, Equity Bank ESOP 117 Million shares, Standard Chartered Kenya Nominees Ltd a/c 107 Million Shares, Fortress Highlands Ltd 101 Million shares, Equity nominees Ltd a/c 93 Million shares, Stanbic Nominees Ltd a/c and Aib Nominee a/c Solidus Holdings Ltd hold 92Million shares. 

******

Kenya Commercial Bank, Eastern Africa is the oldest and largest commercial bank started its operations in Zanzibar as a branch of National Bank of India In 1896. The bank extended its operation to Nairobi in 1902, which had become the headquarters of the expanding railway line to Uganda. In 1975, The Government of Kenya acquired majority shareholding and changed the name to Kenya Commercial Bank. In 1988, the Government sold 20%of its shares at NSE through an IPO that saw 120,000 new shareholders acquire the bank. The National Treasury is the top investor at Kenya Commercial Bank with 17.5% shares, followed by National Social Security Fund (NSSF) with 173 Million shares, Standard Chartered Nominee a/c with 69 Million shares, Standard Chartered Nominees Ltd a/c with 63 Million shares,CFC Stanbic Nominees Ltd a/c with 61 Million shares, Standard Chartered Kenya Nominee a/c with 58 Million shares, Standard Chartered Kenya Nominees Ltd a/c with 52 Million shares ,Standard Chartered nominees a/c ke002382 with 46 Million shares, Standard Chartered nominees a/c ke9688 with 45 Million shares and  Standard Chartered Kenya nominees non-resd a/c 9069 with 36 Million shares.

********

Amalgamated Banks of South Africa (ABSA) Group Limited formerly known as Barclays Africa Group Ltd has the highest shares, 68.5% at Barclays Bank of Kenya, followed by Standard Chartered Nominees Resd a/c ke8723 e with 75 Million shares, Standard Chartered nominees resd a/c ke11401  with 46 Million shares, Kenya Commercial Bank Nominees Limited a/c 915b with 41 Million shares,Standard Chartered nominees resd a/c ke11450 with 38 Million shares, Kenya Commercial Bank Nominees Limited a/c 915a with 34 Million shares, Standard Chartered nominees a/c 9230 and Standard Chartered nominees non-resd. a/c 9913 hold  23 Million shares, Goodwill (Nairobi) Limited a/c 94 with 21 Million shares and the Jubilee Insurance Company of Kenya Limited with 20 Million shares.

******

Standard Chartered Bank Kenya Limited was established in 1911 with the first branch opened in Mombasa Treasury Square. The Bank was listed on the Nairobi Securities Exchange in 1989. The public shareholding is just over 25% (remainder held by Standard Chartered PLC) and comprises over 30,000 shareholders. Standard Chartered Holdings is the top shareholder with 73.5% shares and operates as a subsidiary of Standard Chartered Holdings International B.V.  Standard Chartered Holdings (Africa) BV is an Overseas UK company opened on 17 May 2002. Kabarak Limited follows with 3.5 Million shares, Co-op Bank Custody a/c 4003A with 1.9 Million shares , Standard Chartered Kenya Nominees – a/c KE002382 and Standard Chartered Nominees – resd a/c KE11450 they both hold 1.7 Million shares, Standard Chartered Nominees – a/c 9230 they both hold 1.5 Million shares, Kenya Commercial Bank Nominees Limited – a/c 915B and Standard Chartered Africa Limited, they both hold 1.4 Million shares, Old Mutual Life Assurance Company Limited  with 1.3Million shares and Standard Chartered Nominees – resd a/c KE11401 holds 1.1Million shares. 

Standard Chartered Kenya Nominees Ltd a/c (anonymous)  has almost equal shares in two banks, Equity Bank limited and Kenya Commercial Bank.

Standard Chartered nominees a/c ke002382 (anonymous) has shares in two banks, Diamond Trust Bank and Kenya Commercial Bank.

Standard Chartered nominees a/c ke11450 (anonymous) has shares in two banks, Housing Finance and Barclays Bank of Kenya

******

Stanbic Bank Kenya Limited (SBK) was established in 1958 when Ottoman Bank incorporated its first subsidiary in the region. In 1969, Ottoman Bank sold its Kenyan operations to National and Grindlays Bank (NGB Kenya) making its exit from the East African market. Stanbic nominees ltd a/c nr00901 is the top shareholder at Stanbic bank with 60.0% shares, followed by Standard Chartered nominees non-resd. a/c 9866 with 34 Million shares, Standard Chartered nominees non -resd. a/c 9867 with 13 Million shares, Standard Chartered Kenya nominees Ltd, a/c ke20510 with 9 Million shares, Standard Chartered Kenya nominees Ltd a/c ke002012 with 8 Million shares, Standard Chartered nominees Ltd non-resd a/cke11663 with 7 Million shares, Standard Chartered nominees non-resd. a/c ke9053 with 5 Million shares, the Permanent Secretary to the Treasury of Kenya with 4.3 Million shares, Standard Chartered nominee account ke17661 with 4.1 Million shares and Standard Chartered Kenya nominees ltd a/c ke23050 with 3.6 Million shares.

******

Diamond Trust Bank Group is an African banking group active in Burundi, Kenya, Tanzania, and Uganda. It has operated in East Africa for over 70 years. It is an affiliate of the Aga Khan Development Network (AKDN) and the flagship of DTB Group is Diamond Trust Bank (Kenya), which was founded in 1946.  Aga Khan Fund for Economic Development is the top shareholder at Diamond Trust Bank with 16.5% shares, followed by Habib Bank Limited with 45 Million shares, The Jubilee Insurance Company of Kenya Limited with 27 Million shares, Standard Chartered Nominees a/c KE18965 and ,Standard Chartered Nominees a/c KE18972  have 5.2 Million shares, The Diamond Jubilee Investment Trust (U) Limited with 3.8 Million shares, Standard Chartered Nominees a/c KE002382 with 3.5 Million shares, Aunali Fidahussein Rajabali and Sajjad Fidahussein Rajabali with 3.3 Million shares, Standard Chartered Nominee Non Resd a/c KE11752 and CFC Stanbic Nominee Limited a/c NR1873738 have with 2.7 Million shares.

******

Housing Finance Limited is a large mortgage finance company in Kenya. The company was established in November 1965, to promote a savings culture and homeownership among the citizens of newly independent Kenya. Major investors in the company include the Commonwealth Development Corporation (CDC), whose shareholding at one time was as high as 60%, and the Government of Kenya, which at one time owned 50% of the company. CDC has since divested from Housing Finance Limited and the Kenyan Government has substantially reduced its shareholding.

In 1992 Housing Finance Company of Kenya became listed on the Nairobi Stock Exchange. 

Britam Investment Company (Kenya) Ltd is the top shareholder at Housing Finance with 19.9% shares, followed by Equity Nominees Limited a/c 00104 with 44 Million shares, Britam Insurance Company (Kenya) Ltd with 33 Million shares, Britam Insurance Company (Kenya) Ltd with 23 Million shares,Standard Chartered Nominees Resd a/c KE 11401 with 14 Million shares, SCB a/c Pan African Unit Linked FD with 11 Million shares,Permanent Secretary Treasury with 8 Million shares,Kenya Commercial Bank Nominees Ltd a/c 915B with 5 Million shares,Standard Chartered Nominees Resd a/c KE11450 and Kenya Commercial Bank Nominees Ltd a/c 915A have 4 Million shares. 

*******

Investments & Mortgages Limited was formed as a private company providing personalised financial services to business people in the Nairobi area. In 1980, I&M, as the company was known at that time, was registered as a Financial Institution under the Banking Act. Following changes in the regulations of the Central Bank of Kenya, I&M became a commercial bank in 1996. In 2013, I&M Bank created I&M Holdings Limited, as the holding company of all the group’s businesses and subsidiaries. The holding company’s shares of stock are listed and publicly traded on the Nairobi Securities Exchange under the symbol I&M. Minard Holdings Limited is the top shareholder at I&M Holdings with 19.9% shares, followed by Tecoma Limited with 76 Million shares, Ziyungi Limited with 73 Million shares, Standard Chartered Kenya nominees Ltd a/c ke002796 with 41 Million shares. 

********

Kenya Reinsurance Corporation has shares in two banks, Cooperative Bank and National Bank of Kenya.

******

National Social Security Fund (NSSF) has shares in two banks, National Bank of Kenya and Kenya Commercial Bank.

******

NIC Custodial Services a/c 077 (anonymous) has shares in two banks, Cooperative Bank of Kenya and National Bank of Kenya. 

******

The National Treasury has shares in two banks, Kenya Commercial Bank and National Bank of Kenya. 

*****

The Jubilee Insurance Company of Kenya Limited has shares in two banks, Diamond Trust Bank and Barclays Bank of Kenya.

********

Banks play an important role in the economy of a country. When banks efficiently mobilize and allocate funds, this lowers the cost of capital to firms, boosts capital formation, and stimulates economic activities. Thus, weak governance in the banking sector can have far-reaching consequences to the economy of a country. In the recent past, the banking sector in Kenya has witnessed a number of corporate governance issues that sent jitters among millions of bank customers resulting in a confidence crisis. While banks have begun to adhere to disclosure requirements spelt out in the prudential guidelines issued by the Central Bank of Kenya (CBK) much more needs to be done, particularly pertaining to competition policy and regulation to put checks and balances on the monopolisation of the banking sector in Kenya. 

Dataset

This story was produced in partnership with Code for Africa’s iLAB data journalism programme, with support from Deutsche Welle Akademie.

Support The Elephant.

The Elephant is helping to build a truly public platform, while producing consistent, quality investigations, opinions and analysis. The Elephant cannot survive and grow without your participation. Now, more than ever, it is vital for The Elephant to reach as many people as possible.

Your support helps protect The Elephant's independence and it means we can continue keeping the democratic space free, open and robust. Every contribution, however big or small, is so valuable for our collective future.

By

Juliet Atellah is a data journalist based in Nairobi, Kenya

Data Stories

Deedha: How Pastoralists Communities Are Effectively Managing Drought and Conflict

With climate trend likely to worsen, it is crucial now for development partners, Civil Society Organizations (CSOs), and policymakers to rethink climate change adaptation and management in light of pastoralist’s indigenous knowledge and traditional resource governance structure such as Deedha to protect pastoralism which has continued to provide a lifeline to millions of households in the horn of Africa.

Published

on

Deedha: How Pastoralists Communities Are Effectively Managing Drought and Conflict
Photo: ekrem osmanoglu on Unsplash
Download PDFPrint Article

The first known drought in Northern Kenya was about 120 years ago (Wajir 1901, Mandera and Garissa 1902, Tana River 1905, and Isiolo 1927). Since then, 30 major droughts have been recorded in Northern Kenya. While a slow-onset disaster, drought occurrence has reduced to an interval of every 1-2 years in the last two decades.

Despite Africa’s minimal role in global warming, climate risks in Africa are growing bigger and continue to impact negatively rural agriculture and the pastoral economy.

In northern Kenya, drought often results in loss of lives and livelihoods, forcing thousands of households to drop out of pastoralism. Additionally, the Lack of rains undermines the growth of pasture and water availability for both humans and livestock. And as scarcity sets in, the use, control, and access to pasture and water are contested, often leading to risks of violent conflict.

Drought uncertainty triggers an old age survival strategy; – mobility where pastoralists either move to escape drought, conflict, or both. This strategy is incorporated within a traditional resource governance mechanism called Deedha amongst the Borana pastoralists group living in southern Ethiopia and Northern Kenya counties of Isiolo and Marsabit.

Deedha: How Pastoralists Communities Are Effectively Managing Drought and Conflict
Practiced over a century, the system is elaborate; ‘it considers and plans how pasture and water resource’ is planned to last between seasons. Unique and structured, Deedha planning depends on the number of rains received and the pasture regenerated. So effective is the ‘system’ that the knowledge has supported the rearing of cattle to date despite high vulnerability and weak resilience traits.

For a long time in Kenya, cattle keeping has remained synonymous with the Maasai people. Yet in Kenya’s north and southern Ethiopia, the Borana communities have kept cows for equally long periods, so valued attached is that they have family names.

Various groups, including men, women, and young men, have also composed songs praising the cow’s beauty, walking style, milk yields, and how the herd owner moves around with them in the best of rangelands with constant surveillance against the raiders.

So emotive is any cattle disposal plan that a family meeting must be called, where reasons are evaluated to ascertain whether the sale is justified or not.

Another anecdote is also told of how various species respond to different needs, particularly water where camel would stay for a more extended period, followed by goats and sheep and cow in that order. At the same time, this story avers different resilience traits; the Boran has refused to divorce themselves from cattle keeping despite scaled up advocacy on the need for livelihood diversification in the wake of climate change and conflict risks.

Promotes Sustainable use of rangelands

Founded on the principle of sustainable use of the rangelands, the Deedha system is reciprocal. It encourages sharing resources and providing a safe drought haven for other pastoralist groups from other fragile counties such as Wajir, Garissa, Marsabit, Samburu, and even Laikipia.

The system is designed to encourage mobility over large tracts of land, helping the pastoralists break the pest cycle, aerate the soil (breakdown of soil with hooves), and manage unwanted vegetation.

The institution of Deedha is headed primarily by an elder, with each area having its Deedh (traditional grazing area to a particular group), which is linked to other deedha’s.

Informal but highly effective, the Deedha employs critical rangeland management, where the systems consider rangeland planning based on ecological vulnerabilities, livestock populations, an anticipated influx in determining when and where livestock moves, and whether there is a need for activation of the strategic boreholes.

The system partitions the rangeland into three grazing parts as dry, wet, and drought grazing areas, with also flash floods along the Ewaso Ngiro River considered as a season and blessing due to pasture regeneration in the swampy areas. In managing and protecting the rangelands, the Deedha traditional systems discourage sedentarization in strategic rangeland as part of conservation strategy after the use and boreholes areas, where Genset/pumps are mobilized during drought crises and demobilized on the fall of rain.

Manage drought and conflict

The system also incorporates the young people into Deedha resource planning and use and this is for two reasons; undertake pasture and security surveillance (Aburu and shalfa) in the far-flung Deedha’s which borders known or perceived enemy territory.

The system is so unique that critical access planning is done based on anticipated risks and livestock (species) vulnerabilities where Hawich (Milking herd) and non-milking herds (Guess) are split as defined by production and physical traits, respectively.

Hawich (Milking herds) are lactating, and some old and weak female breeds while non-Milking (Gues) are young female and male breeds with the ability to trek long distances searching for pasture and water. The system also calls for the protection of migratory and watering routes. While water for all livestock species is a priority, this customary system prioritized water for livestock in transit and the donkey over other livestock species for its role in household management. The system’s effectiveness has also seen it advocates for the protection of watershed areas and ensuring the cleanliness of the water point environs after all the livestock has been watered.

Deedha: How Pastoralists Communities Are Effectively Managing Drought and Conflict
The Deedha also has in place resource sharing plans internally and externally, where Deedha in one location consult another Deedha before any decision is made. Such arrangement is also captured and advocated for by more recent attempts in enhancing resource sharing and ending conflict through such declaration as the Modogashe-Garissa, first entered in 2001 which calls for strengthening of resource governance and sharing framework between communities during drought. Thus, Deedha proactively enhances resilience through resource sharing and a framework for negotiations between communities during drought.

While Isiolo also had its fair share of drought, the use of this highly effective system has cushioned pastoralist group in Isiolo against the drought, only making foray into other communities’ rangeland in 1992 when Isiolo livestock moved to then Moyale District, Kauro in Samburu in 2000 and 2017 again to Moyale. The migration in 2017 was necessitated by fear following conflict escalation between the Borana and Samburu, leading to loss of 7 lives and over 3000 head of cattle in what the local Borana communities cite as security imbalances created by the Northern Rangeland Trust (NRT) to instil fear and force local pastoralists communities to abandon key strategic drought reserve in Chari Rangelands in favour of wildlife conservancies.

Untold, Deedha also calls for the protection of endangered tree species such as AcaciaAnthath and Qalqalch in which users are not allowed to overexploit, with individuals found out on the wrong punished. Equally, the system put communities at the Centre of wildlife conservation as it discourages reckless killing either for food or even trophies. The system also advocates for leaving water in the trough for wildlife to access in areas where the only water sources are deep wells.

Deedha is an example of bottom-up ‘law or rules’ for rangeland management; it addresses environmental and wildlife conservation. Like in predictive climate science, Deedha elders consider planning on how the previous seasons have performed. Further, the elders can predict trends and rain behaviour patterns based on Uchu, who closely work with the institution of elders.

With climate trend likely to worsen, it is crucial now for development partners, Civil Society Organizations (CSOs), and policymakers to rethink climate change adaptation and management in light of pastoralist’s indigenous knowledge and traditional resource governance structure such as Deedha to protect pastoralism which has continued to provide a lifeline to millions of households in the horn of Africa.

Continue Reading

Data Stories

Punitive Government Policies Jeopardise Kenya’s Food Security

The government is criminalising Kenyan farmers and leaving the country’s food security at the mercy of multinational corporations.

Published

on

Punitive Government Policies Jeopardise Kenya’s Food Security
Photo: Adrian Infernus on Unsplash
Download PDFPrint Article

By 2021 your typical Kenyan smallholder farmer was producing 75 per cent of the foods consumed in the country. Yet the draconian laws imposed on the agriculture sector by the government have been facilitating their exploitation by private sector actors including multinational corporations. This is in total contradiction with President Uhuru Kenyatta’s move to include food security in his Big Four Agenda and begs the question of how the country can achieve food security when farmers are discouraged from producing food by these punitive laws.

Recently, there was an uproar on social media regarding the Livestock Bill 2021. The point of contention in the yet to be gazetted Bill is a clause that bars Kenyan farmers from keeping bees for commercial purposes unless they are registered under the Apiary Act. The government, through the Permanent Secretary for Livestock Mr Harry Kimutai, tried to justify this by saying that the aim of registering beekeepers is to commercialise beekeeping instead of it being a traditional practice.

Local pastoralist, agrarian and forest-dwelling communities have practiced beekeeping since time immemorial and it has been part of the subsistence economy of smallholder farmers who pass on this rich knowledge and expertise from generation to generation.

Bee-reaucracy

In its current form, the Livestock Bill 2021 will drive smallholder beekeepers out of honey production and pave the way for multinational corporations under the guise of regulating the sector. It is no different from the Agricultural Sector Transformation and Growth Strategy 2019-2029 that seeks to move farmers out of farming into “more productive jobs”, opening the door for their exploitation and impoverishment by agro-capitalists.

In a recent media interview, Mr Kimutai said that Kenyan honey is contaminated with pesticide residues. But if the government is indeed concerned about improving honey production, it should start by banning the use of toxic pesticides that are detrimental to bees and contaminate the quality of honey. Pesticides such as Deltamethrin have been found to be toxic to bees yet they are still used in Kenya.

Local pastoralist, agrarian and forest-dwelling communities have practiced beekeeping since time immemorial.

Section 93 subsection(1) of the Bill bars the importation, manufacturing, compounding, mixing or selling of any animal foodstuff other than a product that the authority may by order declare to be an approved animal product. This offence attracts a fine of KSh500,000 or imprisonment for a term not exceeding 12 months, or both.

Smallholder livestock farmers in Kenya have been growing “napier grass” to feed their cows and for sale to other farmers. Do these new regulations mean that they shall be committing an offence by growing their own feed and selling it within their localities?

Another punitive regulation is the Crops (Irish Potato) Regulations 2019, that requires transporters, traders and dealers to be registered with their counties, failure to which they face up to KSh5 million in fines, three years imprisonment, or both. This regulation also punishes an unregistered farmer with a one-year imprisonment or KSh500,000 or both, for growing a scheduled crop. It is no coincidence that capitalist-funded organisations like Alliance for a Green Revolution (AGRA) applaud the Irish Potato regulations as a new dawn for Kenyan farmers.

Bee-reaucracyThrough the Seed and Plant Varieties Act 2012, the government once again fails to protect farmers from capitalist exploitation. Part 1 of the Act defines selling as including barter, exchange and offering or exposing for a product for sale, taking away a farmer’s right to sell, share and exchange seed, a right that is recognised in the constitution.

Part 2 section 3 of the Act prohibits the sale of uncertified seed. The good old practice of selling and sharing seeds is further criminalised in section 7(5) which requires only seed appearing in the Variety Index or the National Variety List to be sold. This limits farmers from selling their varieties which they have been sharing, exchanging and selling for generations. Moreover, this automatically means that farmers selling their seed varieties are committing an offence if such varieties are not listed in the index.

Further, section 18 part 4 of this act allows for the discovery of a plant variety whether growing in the wild or occurring as a genetic variant, whether artificially induced or not. This section allows for the discovery of farmers’ indigenous seeds by multinational corporations keen to patent them for profit.

It is no coincidence that capitalist-funded organisations like Alliance for a Green Revolution (AGRA) applaud the Irish Potato regulations as a new dawn for Kenyan farmers.

The implication here is that since farmers’ seed varieties are not registered or owned by anyone, anybody can obtain the seeds of any crop variety, apply for their registration and claim their “discovery”. Farmers who have been conserving and reusing the “discovered” seeds will then lose the right to continue doing so and they will be required to pay royalties to the new “owners” of these seeds.

This act contravenes certain provisions of the constitution, in particular Article 11 (3) (b) of the Kenya Constitution 2010 which states that parliament shall enact legislation to recognise and protect the ownership of indigenous seeds and plant varieties, their genetic and diverse characteristics and their use by the communities of Kenya.

Foreign laws

The parliament has forfeited its obligation to enact laws that protect and enhance our intellectual property rights  over the indigenous knowledge of the biodiversity and the genetic resources of Kenyan communities  as mandated by Article 69 (1) (a) of the Kenyan constitution. It has allowed external actors to pirate local resources and trample indigenous rights.

Patenting indigenous seeds, barring farmers from keeping bees, and regulating the growing and selling of animal feed and potatoes is theft of the commons. The government is in cahoots with large corporations determined to kill the smallholder farmers’ sources of livelihood while singing about food security being part of the Big Four Agenda.

Foreign lawWhat sense does it make to frustrate smallholder farmers who grow 75 per cent of our food to serve the interests of imperialist multinational corporations keen on holding our farmers at ransom through abhorrent fines?

Patenting indigenous seeds, barring farmers from keeping bees, and regulating the growing and selling of animal feed and potatoes is theft of the commons.

It is time to reclaim and protect the commons that our communities have for a very long time thrived on. In her book Reclaiming the commons Dr Vandana Shiva points out that indigenous communities, including farmers, co-create and co-evolve biodiversity with nature, practises that have seen them overcome ecological challenges for generations. Our policies, plans and laws need to protect these practices for posterity.

Our parliamentarians should endeavour to defend our biodiversity, indigenous cultures and national systems – reclaiming the commons. We need policies that will allow farmers to produce food using indigenous seeds that are readily available and that they can be share amongst themselves. We need policies that will allow farmers to produce safer and more healthy food in an environmentally safe way, not punitive policies designed to eliminate farmers and have our food system controlled by corporations out to make profits at the expense of our health and our environment.

Continue Reading

Data Stories

Tech Disruption in the Agricultural Sector

The future of farming in Kenya counties, whether in knowledge sharing, collaborations, funding, or market access primarily lies in the farmer’s abilities to harness the respective strengths of the available and emerging Disruptive Agricultural Technologies. As the tech-platforms become cheaper, more available and affordable farmers yield and fortunes will likely inch upwards.

Published

on

Tech Disruption in the Agricultural Sector
Photo: Tyler Mullins on Unsplash
Download PDFPrint Article

Disruptive technologies in agriculture (DATs) have been in Kenya since the early 1900s and can simply be defined as the digital and technical innovations that enable farmers and agri-firms to increase their productivity, efficiency, and competitive edge.

These platforms essentially help local farmers make more precise decisions about resource use through accurate, timely, and location-specific price, weather predictions. The agronomic data and information that they provide in Kenya is becoming increasingly important in the context of climate change. Besides, leveling the playing field, it can make small-scale or local marginalized farmers in Kenya to be more competitive.

Sophisticated off-line digital agri-tech can provide opportunities even in poorly-connected rural contexts, or with marginalized groups who have lower access to information and markets. In short, Disruptive Agricultural Technologies (DATs) are overturning the sector status quo.

Tech Disruption in the Agricultural Sector

Some of the key disruptive technologies in agriculture (DAT’s) include Waterwatch Cooperative in Kenya (Real-time alert system), Tulaa and Farmshine (Digital platform for finding buyers and linking buyers and sellers).

There is also Agri-wallet (platform for input credit/e-wallets/insurance products), dutch-based Agrocares operating in Kenya and Ujuzi Kilimo (portable soil testers, satellite images, remote sensing) as well as SunCulture (solar-powered irrigation pumps)

These platforms have helped to facilitate access to local markets in counties such as Makueni and West Pokot, improve nutritional outcomes, and enhance resilience to climate change. Disruptive agricultural technologies are designed to help stakeholders by reducing the costs of linking various actors of the agri-food system both within and across countries through faster provision, processing, and analyzing of large amounts of data.

The Disruptive Agricultural Technologies Landscape 

Over 75% of Disruptive Agricultural Technologies are digital. The remaining 25% of non-digital are either focused on energy (solar), or producers/suppliers of bio-products for agriculture.

Approximately 32% of the Disruptive Agricultural Technologies aim to enhance agricultural productivity, 26% are working to improve market linkages, 23% are engaged in data analytics, and another 15% are working on financial inclusion.

According to a 2019 World Bank report, Kenya has become a leading agri-tech hub with nearly 60 scalable Disruptive Agricultural Technologies (DATs) operational in the country, followed by South Africa and Nigeria. Kenya is said to have the third largest technology incubation and acceleration hub in the region. Examples of those technologies in Kenya include: Data-connected devices which use ICT to collect, store, and analyze data. This includes GPS, machine learning, and artificial intelligence. The Africa’s Regional Data Cube hosted in Nairobi,Kenya is a tool that helps various countries address issues related to agriculture, water, and sanitation. 

The use of robotics and automation in farming in Kenya has gained widespread acceptance. For instance, drones are used to monitor and improve the efficiency of agricultural operations and its usage is governed by the Civil Aviation Act.

Majority of farmers in Kenya are smallholder farmers and having access to Disruptive agricultural technologies helps even the competition with medium and large scale farmers as tools are created for both low and high connectivity areas.

Over 83 percent of Disruptive agricultural technologies are e-marketplaces that do not require high connectivity. Example is Twiga Foods whose digital platform connects retailers and food manufacturers, delivering a streamlined and efficient supply chain.

Kenya’s financial sector is characterized by a robust mobile money ecosystem (MPESA) with over 70 percent of the population using mobile money regularly which increases its potential for farming for smallholder farmers.

Despite that one of the biggest challenges facing the agriculture sector in Kenya is access to finance. This is largely due to the high risk of loaning to small holder farmers. FinTech apps use alternative data and machine learning to improve the credit scoring of smallholder farmers.

These apps help minimize the gap between the demand for credit and the supply of financing for smallholder farmers. Kenya is a hotspot for agricultural apps. There are numerous organizations working on developing digital solutions that combine precision farming with remote sensing data.

Connectivity and Adoption of DATSs

A significant number of the existing digital tools and technologies can be utilized in areas with low network to improve the productivity of the agriculture sector. Despite the increasing number of mobile phone users in Kenya, the penetration rate among smallholder farmers remains relatively low.

It may be difficult for many of these smallholder farmers to adopt Disruptive agricultural technologies (DATs) due to the high costs, complexity and capabilities required. Meanwhile for large scale farmers, the DATs highly boost their productivity, especially if they have already developed the capabilities in-house to accelerate adoption of these tech platforms. Therefore, from the onset, we need to understand who uses the technology and the implications of this.

Kenya has a well-established start-up ecosystem, made up of mostly young, adaptive and brilliant innovators who are leveraging low-cost digital platforms. This is coupled with funding from international donors and incubation activities address agricultural value-chain issues. There is a mix of actors for Disruptive agricultural technologies depending on the categorization of the technology.

This ranges from DATS that support creation, facilitate adoption and oversee diffusion of innovation.

These actors need strong and cohesive ties, both between, the regulatory bodies, farmers, county leaders, financiers, state agencies, and fellow developers. The nature of the collaborations could be cohesive and cooperative, where all the local actors have shared goals, to fragmented, where not all actors are on board, causing resistance and slowing down the process.

Despite a myriad challenges these radical and innovative (DATs) are revolutionizing and changing the farming landscape in the counties and working with the Ministry of Agriculture using technologies to deliver agricultural services more efficiently and accountable.

The future of farming in Kenya counties whether in knowledge sharing, collaborations, funding, or market access primarily lies in the farmer’s abilities to harness the respective strengths of the available and emerging Disruptive Agricultural Technologies. As the tech-platforms become cheaper, more available and affordable farmers yield and fortunes will likely inch upwards.

This article is part of The Elephant Food Edition Series done in collaboration with Route to Food Initiative (RTFI). Views expressed in the article are not necessarily those of the RTFI.

Continue Reading

Trending