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Shopping Mall Economics: A Note on the Value of the Kenya Shilling

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What does a recent spat between the IMF and the Central Bank’s Prof Patrick Njoroge, himself a veteran of the Fund, tell us about the state of the Kenya shilling? By DAVID NDII.

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Shopping Mall Economics: A Note on the Value of the Kenya Shilling
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Is the Kenya shilling overvalued or not? According to the IMF it is currently overvalued by 17 percent. In an unusually combative response to his former employer the Central Bank governor says that is only off-kilter by 5 percent and accuses the IMF of making Kenya a “guinea pig in its new approach.” The offensive claim, contained in the IMF’s latest report on the country dated October 2018, states as follows:

“The EBA-lite methodology for the exchange rate suggests that the external position is weaker than fundamentals. The current account approach shows that the current account deficit (both actual and cyclically adjusted) are above the norm (the CA gap is -2.5 percent), suggesting an overvaluation of about 17.5 percent of the real exchange rate. This can only marginally be explained by the policy gap. The REER approach also shows a similar-size of overvaluation, equivalent to about 18.0 percent. Again, the policy gap is marginal. Given the continued appreciation of the real exchange rate, the external position is assessed to be weaker than fundamentals. Regarding the last approach, the external sustainability approach, it was not possible to use it as the international investment position data is not yet produced by the authorities.”

This needs a fair amount of disambiguation. EBA is a needless acronym that stands for external balance approach for exchange rate assessment. The methodology is described in an IMF paper published in 2013 as an update of a previous methodology known as CGER. CGER is another needless acronym for consultative group for exchange rate assessment. This EBA thing appears to be what the CBK governor is referring to as a new approach.

The methodological spat is a red herring. Economic models are tools, not oracles. What we have here is workmen quarrelling over tools. Our top three economic mandarins are former IMF staffers. Surely, as former colleagues, they can sit together with their colleagues and their models and converge on an assessment as to whether the shilling is overvalued or not?

The IMF refers to three methodologies: the Real Effective Exchange Rate (REER), the current account and external sustainability approach. Of the three, the REER is the most intuitively understandable and also the one for which we have data. But what is this animal the REER?

The methodological spat is a red herring. Economic models are tools, not oracles. What we have here is workmen quarrelling over tools. Our top three economic mandarins are former IMF staffers. Surely, they can sit together with their colleagues and their models and converge on an assessment as to whether the shilling is overvalued or not?

Suppose bananas are retailing at KSh 100 shillings a bunch in Kenya. The Kenya/Uganda shilling exchange rate is one to ten. At this exchange rate and banana price, 20 percent of bananas are coming from Uganda. Suppose price of Kenyan bananas goes up to KSh 125 a bunch (e.g. because of increase in taxes), and exchange rate remains the same. Ugandans can continue to sell bananas in Kenya profitably at KSh 100 while many Kenyan producers cannot. In fact, Ugandans are likely to hike their price to let us say KSh.110 making Kenya an even more profitable market than their home market. Uganda bananas will flood the market and put Kenyan producers who are not profitable at Ksh. 110 out of the banana business. For the market to remain at the old equilibrium (i.e. 20/80 Uganda/Kenya market share) requires Kenya shilling to fetch USh. 8.00 so that to get USh. 1000 as before, the Ugandans will also have to sell their bananas at KSh125.

Its readily apparent that if our domestic prices go up faster than those of our trading partners, then foreign goods will keep becoming cheaper. But you cannot tell by just looking at the dollar shilling exchange rate. We need to factor in the price movements with every trading partner. The REER is an index that combines the relative exchange rate and price movements of all our trading partners.

If the REER is rising, our goods are becoming more expensive. We can expect to import more and export less. If this happens our trade deficit will widen. If the trade deficit continues to widen, we run the risk of defaulting on our international obligations in particular debt service and repatriation of profits and capital. This is where the IMF comes in. The IMF’s mandate is to maintain international financial stability. The IMF is a financial cooperative whose job it is to ensure members do not run into external payments difficulties, and to bail them out when they do, in order to keep global finance and commerce going.

The spat between the IMF and the CBK is therefore about our external creditworthiness. The key indicator for this is the current account balance. The current account balance has two components: trade and income. The trade account I have already mentioned. The income account consists of payments for “factor services” such as interest (use of capital), labour (e.g. for services of Kenyan troops abroad) and another component we call unrequited transfers (meaning money we have not earned) such as diaspora remittances, grant aid and such like. The external account in turn, has a third component, the capital account where, as the name suggest, we record investment transactions.

The spat between the IMF and the CBK is…about our external creditworthiness. The key indicator for this is the current account balance.

This is how it works. Kenya Airways buys an aircraft using a foreign loan. The aircraft is entered in the trade account as an import and simultaneously in the capital account as a capital inflow. The following day it ferries passengers from Lagos to Dubai. The income is recorded in the trade account as a service export. At the end of the month it remits repayment on the loan. The interest is recorded in the income account as a factor service payment and the principal is in the capital account as a capital outflow.

The net of the current account and the capital account are added together to give the overall balance. An increasing overall deficit depletes foreign reserves, while a surplus leads to a build up of reserves. Current account surpluses mean that a country’s savings exceed its investment; it can, therefore, export capital, like China. A current account deficit means that a country is investing more than its savings, in other words, it is importing capital (either debt, FDI, remittances, grants etc).

The country’s creditworthiness thus depends not just on trade but also on other financial flows, that are determined by factors other than trade competitiveness, both economic and non-economic. Complicated stuff.

Both the IMF and CBK agree that the shilling has appreciated, but they disagree on the magnitude. The IMF also implies that the appreciation is a reflection of policy action while the CBK maintains that it is a reflection of market forces. The IMF view translates to accusing the CBK of misleading the public by espousing a monetary policy that claims to target inflation, while in practice it is actually targeting the exchange rate. The IMF’s “smoking gun” is the fact that the NEER has flatlined for the past six years (see Chart).

Recently the IMF re-classified the Kenya shilling from a “floating” (meaning market determined) to “other managed arrangement.” This means the IMF is convinced that the Central Bank is propping up the shilling. What reason would the Central Bank prop up the shilling especially if it undermines the country’s competitiveness and solvency?

Foreign currency debt exposure is one reason. The interest payments on the first Eurobonds issued in 2015 ($185 million a year) has increased by KSh 3 billion, KSh 16 billion to KSh 19 billion on account of the depreciation of the shilling. Translate that to the total interest payments this year which are in the order of $1.4 billion dollars. The shilling has weakened by about three shillings to the dollar since the beginning of the financial year. The total interest payments this year which are in the order of $1.4 billion. This translates to a KSh 4 billion squeeze on a government that is already living way beyond its means. The last thing the Treasury wants to hear is that the shilling should be trading at about 120 to the dollar.

Recently the IMF re-classified the Kenya shilling from a “floating” (meaning market determined) to “other managed arrangement.” This means the IMF is convinced that the Central Bank is propping up the shilling. What reason would the Central Bank prop up the shilling especially if it undermines the country’s competitiveness and solvency?

Another reason is pressure to keep low interest rates. Interest rate is the policy instrument in an inflation-targeting monetary policy regime such as we claim to have. Central Banks are given statutory independence over the conduct of monetary policy to insulate them from such pressure so that they can raise interest rates when they need to, even when it is politically costly for the government of the dayParliament’s capping of interest rates two years ago is ample demonstration that political pressure on Central Banks is real.

Keeping interest rates artificially low puts pressure on the exchange rate. A weakening currency creates inflationary pressures, which is what the Central Banks are mandated to control in the first place. The Central Banks end up trying to meet incompatible objectives, low interest rates, low inflation and a stable currency.

This is precisely what happened from mid-2009 to September 2011. The Central Bank bent over backwards to accommodate the government’s economic stimulus meant to respond to both the post-election violence and the global financial crisis. Interests rate were driven to the floor. From mid-2010 to mid-2011 the benchmark 90-day Treasury bill rate was kept below 3 percent. The IMF’s charts show how this ended— with a very hard landing. The shilling which had been propped up at about 80 to the dollar, started unravelling in April peaking at KSh100 to the dollar in September. The Central Bank was forced to jack up interest rates in a hurry. By the end of 2011, the T-bill rate was heading to 20 percent.

The IMF seems to believe that, left to market forces, the shilling will depreciate in real terms. The IMF’s REER chart covers eight years, from 2010 to 2017. A longer timespan does not necessarily support this contention (see Chart). My chart goes back to the beginning of the liberalized regime in 1994. What do we see? The shilling has been appreciating in real terms since it was liberalized. Overall it has appreciated 157 percent, by 9 percent per year on average. This could mean that the Government has been propping up the shilling all these years, or that market forces are not working the way the IMF expects.

Many Kenyans have observed that we have become an importing country. One also hears policymakers lamenting that we are losing our markets in the region and blaming all manner of things. There is no mystery to it.

My [assessment is that] the shilling has been appreciating in real terms since it was liberalized. Overall it has appreciated 157 percent – by 9 percent per year on average. This could mean that the Government has been propping up the shilling all these years, or that market forces are not working the way the IMF expects.

But is the Central Bank propping up the shilling? That we cannot be able to tell that easily. There are lots of moving parts. It can also be on account of some trading partners manipulating their currencies: China, for example, is regularly accused of maintaining an artificially weak currency. China has a big weight in our REER and it’s been growing over time.

The ultimate question is whether it is sustainable. There are two parts to this, financial and economic. The widening trade deficit has been plugged by remittances and portfolio inflows (money flowing into the stock exchange and government securities), not all of it honest money, and lately, government commercial borrowing, the ubiquitous eurobonds and syndicated loans. As long as these keep flowing, the show can go on.

Why are we told the economy is growing and yet we cannot feel it? This is the shopping mall economy. How long can we keep that going?

The economics is a different story. This is the shopping mall economy. It is not good for employment and equity. It is not good for employment, or equity, or sustainable growth. It is part of the answer to the question that Kenyans keep asking: why they are told the economy is growing and they are not feeling it. This is the shopping mall economy. How long can we keep that going? Your guess is as good as mine. Governments are known to manipulate currencies and to distort financial markets generally. The IMF is known to (a) have more faith in market forces than warranted and (b) get the workings of those market forces wrong. What to do?

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David Ndii is a leading Kenyan economist and public intellectual.

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Why Kenyans Are Not Mourning the Queen

Those who know the psychological, social and economic damage that colonisation caused in their countries have been vocal about Queen Elizabeth’s failure to acknowledge the harm her empire inflicted on colonised subjects, or even to issue an apology.

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The non-stop coverage of Queen Elizabeth’s death on international media for more than a week was met with various levels of disbelief in countries that were once colonised by Britain. The BBC, naturally, covered the Queen’s death and funeral as if it was a global tragedy, while CNN and Al Jazeera devoted hours to the ceremonies preceding the funeral, including interviewing the thousands of people who stood in long lines to pay their respects to the late monarch. The coverage reeked of British exceptionalism, as if what happens to Britain and its royal family is of immense significance to the entire world.

There seems to be a general sense of amnesia surrounding the Queen Elizabeth and her rule, especially the horrors her empire was unleashing in many parts of the world when she ascended to the throne in 1952.  A friend based in Oxford told me that the police are even arresting people in Britain who are publicly protesting the Queen’s legacy. This kind of censorship seems bizarre in a land that describes itself as a champion of democracy and freedom of expression. It has become almost blasphemous to criticise the Queen and the monarchy.

Worse, British colonialism under her rule has been whitewashed and sanitised as if it never happened, or was a good thing. Most British people have also conveniently forgotten that the wealth their country enjoys today was built on the backs of African slaves who worked on the British Empire’s plantations in the Americas and the Caribbean, and through the exploitation of its colonies around the world, including in Africa.

For those who see the British Empire as a sinister force that destroyed communities and plundered people and territories, the extensive coverage of the Queen’s funeral appears like a slap in the face. An outfit called Economic Freedom Fighters in South Africa even issued a statement describing Queen Elizabeth as “the head of an institution built up, sustained, and living off a brutal legacy of dehumanisation of millions of people around the world”.

Kenya stood out as one country where the Queen’s death did not generate mass grief, even though the newly elected president William Ruto made an obligatory trip to London to attend her funeral and the outgoing President Uhuru Kenyatta declared four days of mourning. Kenyans on Twitter and other social media spaces did not send out messages of condolence to the Queen’s family, nor were there special state-led commemorations for the late monarch. This is not because Kenyans disliked the Queen; frankly, most of us view her as a nice – albeit extremely privileged – person who was trapped by her royal duties and did the best she could under the circumstances. But that is not the point. It is not the Queen that we resented but the institution she represented – and her failure to acknowledge the harm that the institution inflicted. As Kenyan journalist Rose Lukalo commented, “The Queen’s death and burial has resurfaced the uneasy truth of Kenya’s unfinished business with colonialism.”

Kenya stood out as one country where the Queen’s death did not generate mass grief, even though the newly elected president William Ruto made an obligatory trip to London to attend her funeral.

Many British people actually believe that the net impact of British colonialism around the world was positive because it established schools and railways and introduced Christianity to people who purportedly had no religion. They are not told that British colonialism in Kenya and other places was brutal and exploitative. It robbed indigenous people of their land, and created a class of landless people and squatters – terms that were virtually unknown in traditional African societies because all land was communally owned.

The history of slavery and Britain’s role in it is similarly whitewashed. Britain is often lauded for abolishing slavery in 1883, but what is not widely known is that when the Slavery Abolition Act was passed, there were more than 40,000 slave owners in Britain. What is also not talked about often enough is that one year after slavery was abolished, Britain and other European powers embarked on colonising Africa at the infamous Berlin Conference of 1884-1885, thereby unleashing another form of slavery on Africans.

The British Empire’s establishment of a “settler colony” in Kenya was particularly pernicious. In 1923, Britain forcibly possessed the most fertile parts of the Rift Valley – the so-called “White Highlands”, an area comprising 5.2 million acres.  The locals were moved to “reserves” where they were expected to pay taxes to a government that basically stole their land from them.

When the locals rebelled, the Empire’s lackeys tortured them and put them in concentration camps. Caroline Elkins’ book, Britain’s Gulag, documents these atrocities in detail, including the rape of women deemed sympathetic to Mau Mau freedom fighters that had taken hold in Central Kenya, and whose members were jailed and tortured by the colonial regime. It is worth noting that the places where these Mau Mau revolutionaries were arrested, detained and tortured in the 1950s was not far from the Kenyan Aberdares mountain range where the young Elizabeth and her husband found out that her father, King George VI, had died and she was the new British queen.  It is also worth noting that it took some 5,000 former Mau Mau members more than 60 years to receive compensation from the British government, a legal battle that has been lauded for its tenacity and boldness.

Colonialism’s lingering impact

Societies that have experienced the trauma of colonisation often become dysfunctional. Forced to abandon their traditional values and social security systems, uprooted from their ancestral lands and natural resources, and brainwashed to believe that they are inferior beings, these societies begin to manifest all the symptoms of a sick society. Colonisation separated families and introduced an economy based on exploitation, which changed the nature of African societies and economies.

Post-colonial governments did not reverse this sad state of affairs. On the contrary, post-independence Kenyan elites benefitted from colonial policies that alienated Africans from their own land and became the biggest beneficiaries of post-independence land grabs disguised as land redistribution or adjudication. It is believed that one of the main reasons Jomo Kenyatta was selected to lead the country’s transition to independence was because he had made a secret pact with the British colonial government not to hurt British and white settler interests in the country.

It took some 5,000 former Mau Mau members more than 60 years to receive compensation from the British government, a legal battle that has been lauded for its tenacity and boldness.

According to Kenya’s Truth, Justice and Reconciliation Commission report, “rich businessmen and businesswomen, rich and powerful politicians who were loyal to the colonial administration, managed to acquire thousands of acres at the expense of the poor and the landless.” Hence, “instead of redressing land-related injustices perpetrated by the colonialists on Africans, the resettlement process created a privileged class of African elites, leaving those who had suffered land alienation either on tiny unproductive pieces of land or landless.” Even today in Kenya, members of freedom fighting movements remain landless and poverty-stricken while those who sided with the colonialists are among the richest people in the land.

No royal apology 

People who know the psychological, social and economic damage that colonisation caused in their countries have been vocal about Queen Elizabeth’s failure to acknowledge the harm her empire inflicted on colonised subjects, or even to issue an apology. Many royalists have insinuated that perhaps the Queen was not aware or had not been informed of the atrocities committed by British colonial officers in places like Kenya. But as Elkins stated in a recent article published in TIME magazine, this argument is highly implausible. She wrote: “Beginning with her first prime minister Winston Churchill, the queen’s ministers not only knew of systematic British-directed violence in the empire, they also participated in its crafting, diffusion and cover-up, which was as routinised as the violence itself. They repeatedly lied to Parliament and the media and, when decolonization was imminent, ordered the widespread removal and burning of incriminating evidence.”

Shashi Tharoor, the Indian author and politician, has a similar view. He believes that even if the Queen was not in charge when the Empire committed the most violent atrocities, she had a duty to at least acknowledge that these atrocities took place. “We do know that much of colonialism’s horrors over the centuries were perpetrated in the name of the Royal Family but when she and her consort visited Jallianwallah Bagh, she could only bring herself to leave her name in the visitors’ book, without even an expression of regret, let alone of contrition or apology, for that vile British act of deliberate mass murder,” he said. (Jallianwallah Bagh was a site in the city of Amritsar where hundreds of pro-independence activists were killed or injured in April 1919. Although Elizabeth was not queen then, the scale of the massacre was so shocking that it has been viewed as one of the worst atrocities that the British Empire committed against civilians.)

Now that the Queen is dead, will her son King Charles take the responsibility of confessing to the sins of his mother and the Empire she presided over? Not likely, given that the idea that the British monarchy is above reproach has become even more entrenched since her death.

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Dandora Dumpsite: Where the Recycling Dream Goes to Die

While recycling is the preferred solution of plastic producing corporations, it is not environmentally sustainable as recycled plastic eventually returns to the environment leaving the original problem intact.

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Dandora Dumpsite: Where the Recycling Dream Goes to Die
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“Less plastic is fantastic,” says James Wakibia, an environmental activist who was instrumental to the 2017 ban on single-use plastic carrier bags in Kenya. And the world agrees with him. In fact, nations came together at the United Nations Environment Assembly (UNEA 5.2) in March 2022 and agreed to deal with the plastic problem by concluding a binding plastic treaty by 2024. Plastic pollution has become a pressing problem that affects every ecosystem in the world.

In Kenya, 4,400 tonnes of plastic waste are generated every single day. Of this waste, 73 per cent remains uncollected while 27 per cent ends up in dumpsites such as Dandora and other unsanitary landfills. The collected waste is mostly from urban centres that are the major polluters compared to rural areas. In urban centres such as Nairobi, Mombasa, Kisumu and Nakuru, the waste is only collected in the formal settlements; slums and other informal settlements, such as Kibera in Nairobi, have no waste collection services. Their waste is either dumped by the roadside, in rivers or burnt.

It is this glaring lack of solid waste management and the untethered use of plastics that has prompted the National Environment Management Authority (NEMA) to develop the draft Plastic Management Regulations 2018 that are yet to pass into law. David Ongare, Director in charge of compliance at NEMA, explains that plastic pollution in Nairobi has led to clogged drainage that causes flooding in the city each time it rains. Ongare further explains that microplastics from disintegrating plastic waste dumped in the environment are now being found in the human body. The toxins and particulate matter released when city dwellers burn plastics cause ill health among Kenyans and contribute to climate change.

The ill effects of plastics on human health and their long-lasting impact on the environment have led to calls from some quarters for a ban on nonessential plastics such as single-use plastic bottles. Some sectors have taken action, such as the tourism industry in Kenya where the Kenya Wildlife Service has banned single-use bottles in Kenyan parks. However, the call to ban single-use plastic bottles such as soda and water bottles has been fought vigorously by corporations in the business; they claim that there is no need to ban nonessential plastics since they can be recycled.

Stanley Didi, project coordinator at Nairobi Recyclers, says that recycling of plastic had stopped for a time due to the high cost of electricity in the country and the low prices that recycled plastic fetches on the Kenyan market. Didi explains that before Nairobi Recyclers advocated for a price increase to between US$0.13 and US$0.20 per kilogramme, recycled plastic was trading at US$0.034 per kilogramme. A hard-working waste picker could barely collect 10 kilogrammes in a day, earning the equivalent of just US$0.34, an amount that was not enough to buy one meal, let alone three.

Nairobi’s waste pickers work at the Dandora dumpsite, Kenya’s largest dumpsite that opened in 1975 and was declared full by public health officials in 2001. It is still in use over two decades later despite a June 16th 2021 court ruling ordering its closure within six months. The Dandora dumpsite receives over 2,000 tons of waste a day, making it the most viable working site for waste pickers to find plastics and other items that can be recycled.

Waste pickers at the Dandora dumpsite have no Personal Protective Equipment (PPE), which exposes them to toxins such as lead, dioxin and mercury. Moreover, poor pay that barely covers food means that most waste pickers sleep rough on the streets and are undocumented as they lack the means to access government services. The kind of life they lead also takes a toll on their mental health, causing them to use and abuse marijuana, glue, jet fuel and other drugs that are said to turn them into zombies.

Four waste pickers died of unknown causes even as the UNEA 5.2 convention was ongoing. They had been feeling ill but had no money to visit the hospital, Didi explains. Poor health is common among waste pickers who are exposed to toxins from burning plastic. Neurological impairment, kidney failure, lung and prostate cancer, irritation of the lungs and gastrointestinal tract, kidney damage, abnormalities of the skeletal system and suppression of the haematological system are some of the health complications suffered by waste pickers and recyclers because of the pollutants to be found in the waste.

But the recycling challenges are not confined to waste pickers at dumpsites. Wakibia explains that the manner in which the recycling process is handled in the various plastic recycling plants that he has visited across the country leaves a lot to be desired. Workers at these plants also lack PPEs, which exposes them to dangerous toxins while the plastics themselves are mixed and smelted without regard to classification which results in a recycled plastic product of low quality. After use, the recycled plastic product returns to the environment and as it can no longer be recycled, the original problem of plastic pollution remains unsolved. Moreover, recycling plants pollute the air and release untreated wastewater directly into the environment. A process that seeks to mitigate the effects of plastic pollution ends up creating more pollution.

“The problem is that Kenya operates in a linear economy where the producer’s responsibility ends once the goods are placed in the market and takes no concern on the post-consumer stage”, says Ongare. The “polluter pays” principle should be in use in Kenya where the corporations responsible for polluting pay for the cost of clean-up and compensate those that have been negatively affected by their actions.

But this has been difficult to put into practice. With its 41.7 per cent share of the PET plastics category, Coca Cola has been named as the leading plastic polluter in Kenya. The company has consistently preached recycling. Dandora HipHop City is a group that exchanges plastic bottles for food for the children of Dandora who would otherwise sleep hungry. The group depends on donations as the low income from recycling plastics cannot sustain its activities. When the group sought support for their recycling programmes from Coca Cola, they were offered a fridge full of plastic bottles of soda. Following a similar request, Nairobi Recyclers received a donation of plastic gurney bags. And nor did Clean Up Kenya fare any better; when the group organised cleaning events in conjunction with Coca Cola, the corporation provided only soda in plastic bottles  at the end of the gruelling day.

Corporations such as Coca Cola prefer to deal with Kenya PET Recycling Company Limited (PETCO), an organisation bringing together plastic dealers in Kenya that was created in 2018 when calls to ban single-use plastics in the country began to gain momentum. The organisation, which is housed within Coca Cola’s premises, has done little to contribute to recycling efforts in the country, says Didi. As of this year, recycling in Kenya was still at a bare 8 per cent.

The government also sings the praises of recycling while leaving it to waste pickers, volunteers and nongovernmental organisations. In fact, waste pickers and recyclers have to pay NEMA and county governments approximately US$259 annually for permission to pick or recycle waste. 

Kenyans thus find themselves in a plastic quagmire. Plastics are choking their cities, their homes, their streets, their rivers and parks. Nairobi’s only dumpsite is full and can no longer handle the 4,400 tons of plastic waste that Nairobians dump each day. Recycling, the preferred solution of plastic producing corporations, is not only environmentally unsustainable but it releases long-lasting toxins into the air Kenyans breathe and the water they use. Devolution of waste management to the counties has not led to an improvement of the situation and the government continues to face a growing solid waste management problem.

For how long will plastic pollution continue to cause harm before the country says enough is enough? It is time to pull the plug on all nonessential plastics in the country. Kenya has done this before with the 2017 ban on single-use plastic carrier bags. Not producing and not using plastics is the only formula that will work in the fight against nonessential plastics.

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Kericho County: Tea, Foods and Shifting Weather Patterns

Kericho County has experienced a gradual change in climatic conditions over the past three decades, with rainfall becoming irregular and unpredictable and drought more frequent. As a result, the region’s agricultural output is deteriorating.

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Kericho County: Tea, Foods and Shifting Weather Patterns
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Climate change has become a central topic in recent conversations. And however much we may wish to bury our heads in the sand and act like the implications aren’t dire, we must acknowledge that the impact is profound. From the inconsistencies in the weather patterns and the rise in temperatures among many other indicators, we are now seeing the effects of neglecting our environment.

Kericho County lies within the bread basket zone that is Kenya’s Rift Valley, enjoying adequate rainfall, a cool climate, and fertile soils that have made it a food hub and a cog in the wheel of Kenya’s urban food supplies. According to the 2014 Agricultural Sector Development Support Programme (ASDSP), agriculture was the primary occupation and a direct and indirect source of livelihood for over 50 per cent of Kericho’s the residents.

However, a worrying trend highlighted by climate experts points to a gradual change in the region’s climatic conditions over the past three decades. With rainfall becoming irregular and unpredictable and drought more frequent, the region’s agricultural output is deteriorating.

A June 2020 report by the Kenya Meteorological Department, and a March 2020 report by the Kenya Agricultural and Livestock Research Organization (KALRO), show growing disparities in how the climatic shifts affect different regions. Kericho’s daytime temperatures have gone up by 11 per cent while night-time temperatures have increased by 24 per cent. The changes have brought with them their fair share of problems and challenges to the region. For instance, the county is now witnessing crop diseases that were previously unheard of. Moreover, failures and reduced yields are forcing farmers to look for alternatives to crops like tea and coffee that used to do well in the county.

An estimated 79 per cent of the land in Kericho is arable and a majority of residents live in the county’s outlying rural areas such as Cheborge, Soin, Londiani, Chepseon and Buret where farming thrives. The county has four agro-ecological zones: Upper Highlands, Lower Highlands, Upper Midlands, and Lower Midlands. The main crops farmed in the county include tea, coffee, maize, and beans. Potatoes, wheat, flowers, and pineapples are also grown in parts of the county while dairy farming also does well in the region. Data from Kericho’s Second Generation County Integrated Development Plan 2018- 2022 indicates that on-farm employment accounts for over 50 per cent of all the jobs in the county, while the Tea Agricultural Authority affirms that tea farming supports over 5 million people directly and indirectly nationally. Kericho, Bomet and Nandi counties produce 46 per cent of all the tea grown in Kenya, an indication of the significance of tea to Kericho’s economy.

Tea farming in Kericho involves both smallholder farmers and large-scale multinational companies such as Finlays, Kaisugu, and Unilever.  However, available reports show that incomes from the cash crop have been dwindling over the years, mainly due to the changing weather patterns that have contributed to low yields, while the crop is fetching less in the international markets. Some tea farmers in the region are now uprooting their tea plantations that have been adversely affected by prolonged dry spells, hailstorms, frost, and crop diseases, opting instead to venture into real estate, dairy farming, and farming of crops that can withstand the changing climate. While the shift is important in ensuring food security and sustainability of livelihoods, it also to a significant degree puts a dent in the county’s revenues owing to reduced tea exports.

Besides providing food to the country, agriculture also contributes to improved livelihoods. Managed well, it spurs economic growth, drives national short and long-term goals, and contributes to sustainable natural resource use and ecological balance within the farming communities. Agriculture also contributes significantly to household nutrition, savings, and county revenue, and is therefore a crucial sector in terms of investment and innovation. 

However, climate change is making it impossible to sustain high agricultural production in a county where residents rely on rain-fed agriculture for their livelihoods, with poor yields translating to loss of income for those who rely on agriculture both directly and indirectly.

Crop failure means reduced incomes for farmers and other key players in the production value-chain, leading to a lower purchasing power and lower yields for other businesses that rely on farming. Low purchasing power means that the farmer cannot purchase farm inputs, which leads to poor yields in subsequent seasons. Moreover, low purchasing power affects education in the county, as farmers become unable to keep their children in school, thereby increasing the number of dropouts in the region.

Climate change is making it impossible to sustain high agricultural production in a county where  residents rely on rain-fed agriculture for their livelihoods.

Forty-six-year-old Pauline Kimengich, a teacher in Kericho County, observed that there were cases of students in the region opting for early marriage after their parents were unable to raise money for their high school education, a trend which threatens the literacy levels of the county. Her sentiments are echoed by Enoch Tanui, 52, a small-scale farmer who admits to having his children help him out on the family farm because of lack of school fees.

According to the Agricultural Sector Development Support Programme (ASDSP), most of those involved in the various agricultural activities in the region are the youth and women, although the men do participate in information-sharing and decision-making. For instance, most of the workers in the tea farms are women and youth who work primarily as tea pickers. Given the role a woman plays in the community, loss of income due to dwindling fortunes in the agricultural sector adversely affects the running of households in the region.

Moreover, loss of income forces a change in the eating habits of families. Changes in eating habits pose nutritional challenges to the family which affect, most notably, children’s health, and lead to early marriages and increased levels of crime. According to the National Crime Research Centre’s 2018 report, Kericho’s recorded rate of theft stood at 42 per cent against a national rate of 40.4 per cent. This can be attributed to the loss of income as a result of changes in climatic conditions, as a majority of the county dwellers depend on agriculture. Moreover, the county also recorded high rates of cattle rustling (34.3 per cent), burglary and break-ins (21 per cent) and theft of farm produce (15.5 per cent) which can also be linked to the dwindling fortunes in agriculture.

The changes in farming techniques and the resulting challenges and strain on the food system are a wake-up call for all interested parties to act. When a county such as Kericho, which feeds our national forex basket through exports, feels the impact of climatic changes to such a great extent, one can assume that other cash-crop farming counties have not been spared either.

Climatic changes that lead to prolonged droughts and low agricultural yields mean that the government must invest heavily in relief programmes and other measures to mitigate their effects. This may imply the government diverting resources meant for development towards curbing the effects of climate change. Through the Ministry of Agriculture, Livestock, and Fisheries (MoALF) and with funding from the World Bank’s International Development Agency, the Kenyan government is implementing the Kenya Climate-Smart Agriculture Project (KCSAP) to build resilience against climate change and increase agricultural productivity.

By establishing Climate Risk Profiles, county governments are made aware of the climate change risks and opportunities in their counties and how to best incorporate these perspectives in their planning and county development projects. The National Climate Change Response Strategy (NCCRS), developed in 2010, recognizes the impact of climate change on a nation’s development. The formation of NCCRS birthed the National Climate Change Action Plan (NCCAP) in 2012, whose core mandate is to provide an implementation strategy for the proposals of the NCCRS. These two bodies have been fundamental to how Kenya responds to climate change and the steps to be taken towards achieving meaningful change.

Climatic changes that lead to prolonged droughts and low agricultural yields mean that the government must invest heavily in relief programmes and other measures to combat the effects.

The creation of county chapters of NCCAP that can work closely with the agriculture dockets in the counties to identify the challenges on the ground would be ideal in combating the effects of climate change as opposed to having an umbrella view of the situation. Farmers at the grassroots need to feel the impact of these programmes and benefit from the extension services if the country is to witness a meaningful impact.

The risks have led both national and international agencies to take action to fix the problem. With the world warming faster than at any time in recorded history, the United Nations Environmental Programme (UNEP) 2020 Emissions Gap Report proposed a solution across six sectors—energy, industry, agriculture, ecological, transport and cities—that member states can adopt. In agriculture, it proposes reducing wastage, adopting more sustainable diets, safe agricultural practices, and cutting back on emissions.

In the case of Kericho County, while the government is encouraging diversification, crops that can do well in the region but are only grown on a small scale need to be considered. For instance, local vegetables, chicken-rearing, and other agricultural produce should be produced on a large scale to reduce the over-reliance on one crop. This will ensure that people in the county have a source of livelihood even when one crop fails. Further, agricultural extension services, especially in the rural areas, need to be given a shot in the arm to ensure that farmers employ safer farming methods and are enlightened on the best ways to maximize yields while being mindful of their environment.

Rivers in Kericho such as Sambula, Chebilat and Tuyiobei have been drying up, reducing the water available for livestock and farming. Encouraging agroforestry, reforestation and afforestation will not only increase the diminishing forest cover but will also ensure water catchment areas are replenished.

Article 11 of the International Covenant on Economic, Social, and Cultural Rights (ICESCR) and Article 25 of the Universal Declaration on Human Rights recognize access to food as a legal right, as does Article 43 of the Constitution of Kenya. The right to food gives rise to three obligations by governments: the obligation to respect this right by not taking measures that deprive people the right to food; the obligation to protect this right by enforcing laws that prevent third parties from infringing on others’ right to food; and the obligation to fulfil this right by facilitating and providing for the empowerment of people to feed themselves.

The reduction in the yields of different crops imperils the right of all Kenyans to live a dignified life, free from hunger and malnourishment. Poor crop yields further reduce the purchasing power of farmers, which has a ripple effect on other sectors that are dependent on agriculture. The effects of climate change and poor agricultural yields also mean that food suppliers have to import or seek alternatives to meet demand in the market. This leads to an increase in rural-urban migration, which creates congestion in the urban centres and puts a strain on the available resources and opportunities in the urban settings. The failure of the tea crop, specifically, means that the nation loses export revenues, shifting the equilibrium in the balance of trade.

The reduction in the yields of different crops imperils the right of all Kenyans to live a dignified life, free from hunger and malnourishment.

Changes in climate also mean that those farmers who previously relied on tea will be forced to look for alternative means of livelihood. In an economy where creation of employment is low, job losses in the agricultural sector aggravate the dire situation in the already flooded job market. Lack of employment leads to crime as those formerly employed in the agricultural sector strive to fend for their families.

These changes underline the importance of environment conservation and working towards combating climate change. Good weather leads to flourishing agriculture. Investing in agriculture opens up employment opportunities in the farms and other industries that depend on agriculture, which reduces unemployment and brings down crime rates. Employment opportunities improve the purchasing power of citizens, enabling them to make informed and better choices in nutrition, education and other areas which translates to improved livelihoods and a more prosperous nation.

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.

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