The management and role of public enterprises in the socio-economic transformation of Kenya the case of the Kenya Tea Development Authority
This study is about the management and role of public enterprises in the socio-economic development of Kenya. Using the Kenya Tea Development Authority as a case study, the study begins with a look at the theory and philisoply of public enterprises in general. The idea that the state should participate in the management of the economy through public enterprises found its major articulation in the wiritings of Karl Marx in the mid nineteenth century. Marx's major arguments in this regard centered on the need for workers to control the major means of production and distribution. This he hoped would lead to the abolition of capitalism. These ideological considerations have, since Marx's writings influenced the establishment of public enterprises in some countries. In other countries, purely practical economic and social factors have had the greater influence in the emergence of these organisations. At the moment almost all the countries of the world use public enterprises for the management of their' economies irrespective of their ideology. The specific social, economic and political factors „ responsible for their creation do, however, vary from one country to another. In Kenya, public enterprises came t:o prominence just before and after the second world war. Their emergence during the colonial period is attributed to the following major factors: 1. The efforts by the European settlers to monopolize the production and marketing of cash crops and to exclude the Africans from these activities. 2. The settlers' efforts to develop into agricultural capitalists and to enjoy a privileged position In the colony. 3„ The settlers' persistent demand for state assistance in the provision of financial credit (loans) on easy terms. The colonial government’s response to the above and other pressures and demands v'as to create public enterprises beginning with the 1931 Land Bank. The dramatic proliferation of public enterprises after independence in 1963 was due mainly to the economic poverty of the country; lack of Indigenous private capital and the reluctance of the little private but foreign owned capital to operate in the remote and comparatively less developed 3re.is of the country; the risk and political danger in relying solely on foreign capital to initiate development; and the need to facilitate the Africanization of the economy by providing them with capital. The more radical members of Kenya African National Union (KANU), at that time, called for Africanisation and the government saw the creation of public enterprises os the solution. In all these developments, one very important participant was international private capital which had began to operate in Kenya in the 1920's. The Kenya Tea Industry for example was dominated by international capital from about 1924 to 1950 when it was brought under statutory control with the establishment of the Tea Board of Kenya. The majority of Kenya's present public enterprises including those created during colonialism are joint ventures between state and international capital, with heavy reliance on international capital, a factor that has a direct, relevance to the management and role of these organisations in the country's development. One such effect, is the fact that these international donors tend to dominate decision making over major issues affecting these institutions and therefore leaving the local management only with powers to implement such decisions. The boards and even the Government have, in other words, very little control over these enterprises as they do not control most of their finances. In the case of the Kenya Tea Development Authority the vital control is exercised by the Commonwealth Development Corporation which has a representative on the Authority's Board. Over centralisation of all other management decisions of the Authority at the head office is in our view not good for this enterprise whose major operations are based in the field. This practice we contend, is targely responsible for the delays in implementing decisions all of which must be communicated from the head office down to the field. Consequently, we recommend that decentralisation and effective delegation of authority should be introduced and practiced by the Kenya Tea Development Authority. The number of the Agricultura-1 extension staff should be increased and the post of other field staff elevated to make this possible. If these were effected in addition to the existing clear cut demarcation of duties and responsibilities and the problem of tribalism and political interference and support eliminated, the Authority will no doubt be more effective than it is at the moment. Our study revealed that tribalism and the intrusion of politics are largely responsible for the running of this enterprise as a family concern. It is the contention throughout the discussion that for the KTDA to effectively serve the interest of the farmers, it must be more fully controlled by the farmers through the Government. An important step towards this direction would be for the Government to eliminate or reduce the degree to which this enterprise depends on international capital. Dependence on international capital has had the effect of impoverishing the farmers and the country, as substantial amounts of the farmer's money is deducted and repatriated to the metropolitan cities as repayment of the loans from the international donors. A lot of money belonging to the farmers is also deducted to repay the local branches of international companies the loans for the farm inputs such as fertilizers, and chemical sprays. It is suggested in the thesis that for the small scale tea farmers to benefit from the operations of the Kenya Tea Development Authority, and for the country in general to benefit from her public enterprises, these organizations must be controlled by the government more fully than is the case now. In economic terms this would require disengagement from the present capitalist domination by the developed world and international capital. In political terms this would mean nationalization of the country's major economic institutions including public enterprises and the restructuring of the country's internal economic policies.