Tea companies headed to court as counties push for higher land rates

Sunday March 31 2019

Mr Stephen Sang: Nandi county government will earn more than Sh1.4 billion from the 150,000 tea acre plantations. FILE PHOTO | NMG

The row surrounding expiry of leases for multinationals in tea growing zones in Rift Valley may now be headed to the courts after the firms vowed to block counties from imposing Sh10,000 new land rates per acre yearly.

The multinationals have complained that the new rates will drive them out of the industry and lead to massive job losses.

The firms were dealt a big blow recently after the National Land Commission (NLC) made a radical ruling directing that expired land leases be reduced from 999 years to strictly 99 years in line with the 2010 Constitution.

In their ruling before the end of their terms, NLC commissioners also said the companies must work in consultation with counties and local communities, which suffered historical land injustices.
The companies said the new rates which NLC directed the devolved units to implement will lead to collapse of the sector.

Managers said the tea industry is at the moment facing hard times due to prolonged drought coupled with demands from the Kenya Plantation Workers Union (KPWU) seeking high salaries for tea workers.

“Paying Sh10,000 per acre to county governments per year and paying high power bills and high wages will make new investors to shun Kenya,” five senior managers from multinational tea companies in Rift Valley said in a statement.


The managers who asked for anonymity for fear of victimisation by county governments blamed devolved units for not inviting them for talks before announcing the new rates, terming NLC’s ruling unrealistic.

“Counties in regions where multinationals operate should have consulted first before imposing Sh10,000 per acre land rates. We will move to court to block and challenge the new rates since they are punitive and will discourage investors to Kenya,” the tea managers said.

High costs

Multinationals operating under the Kenya Tea Growers Association (KTGA), which has been warning that the high cost of operations could paralyse companies, says they have suffered due to high labour costs and power tariffs.

The NLC ruling is, however, a big win for counties which have been demanding that they take over expired land leases against the tea companies that have been in Kenya since the British colonial era.
The ruling spells doom for multibillion tea companies which have employed more than 360,000 tea workers in Kenya.

Governors Paul Chepkwony (Kericho) and Stephen Sang (Nandi), and MPs from areas where the multinational operate, have declared that they want uniform new land rents and rates effected as from July.

Mr Chepkwony and Mr Sang have vowed that they were ready to implement the ruling from the NLC which gave powers to counties to decide on how much the tea companies should pay after they presented petitions to the land commission.

“Nandi county government will earn more than Sh1.4 billion from the 150,000 tea acre plantations while in Kericho, Governor Chepkwony says the county would earn more than Sh5 billion through the newly announced land rates,” Governor Sang told the Sunday Nation.

International Labour Court

Cotu secretary-general Francis Atwoli had moved to the International Labour Court to sue the tea companies in Kenya for allegedly frustrating and under paying workers, among other complaints.

Nandi and Kericho counties are seeking compensation from the British government over forcible land eviction and massacre of Kipsigis communities during the colonial period.

British government officials, led by Deputy High Commissioner Susie Kitchen, last year held talks with both Mr Sang and Mr Chepkwony on expired tea leases affecting multinational tea companies.
According to Governor Sang, NLC’s move will help to solve land controversies in the counties.