Cartels dealing in lucrative imports killed fertiliser factory dream

When a proposal to set up a fertliser factory in Bamburi reached the desk of James Gichuru in 1965, he thought that Kenya would finally solve the soil fertility crisis – and become an agricultural economy. It would also support the millions of Kenyans who had been given land in the former settler farms.

But when proposals and viability studies were conducted, Mr Gichuru was told that such a factory might not be viable and the idea was dropped. A chance to build a factory two years after independence was thus shelved.

KEN-REN

Following the oil shock of 1973 and 1974, in the wake of the 1973 Arab–Israeli war, the popular petroleum-based fertiliser prices jumped by more than 75 per cent and hitherto cheap products such as ammonia, urea, and ammonium nitrate turned expensive for struggling farmers.

Kenya was also in serious balance of payments difficulties and depended heavily on International Monetary Fund facilities to cover its payments gap.

Amidst the uncertainties in 1975, the Minister for Agriculture Jeremiah Nyagah signed a contract with American company N-Ren Corporation to form a local firm costing Sh480 million and to produce 240,000 tonnes of fertiliser locally – then enough for the country. The Kenya government stake was put at 65 per cent while N-Ren’s contribution was 35 per cent.

As the construction commenced, the government started importing fertiliser through Ken-Ren but after the Kenya National Federation of Cooperatives (KNFC), which was nominated to distribute these supplies through cooperative unions and societies, was unable to do so the government gave fertiliser import licences for the 1976 and 1977 period to four companies – which had no prior knowledge of the market – and ignored the established importers.

By then, a Dutch fertiliser company, Windmill Holland BV, had started a blending and bulk bagging fertiliser at its Nakuru plant, commissioned in 1966 as a joint venture comprised of Windmill Fertilisers (East Africa) Ltd and Mackenzie Dalgety (East Africa) Ltd where the Kenyatta family had interests.

POLITICAL INTERESTS

After this fertiliser import was restricted to only seven agreed companies and the prices were controlled by the government until 1990.

The demise of the Ken-Ren project came in 1978 when the government, which was a major shareholder, recalled its loan of Sh14 million in a letter written by Treasury PS Leonard Kibinge to N-Ren International representative in Kenya George Van Nostrand. It also demanded Sh12 million from the 1976 import of fertiliser and which had been used in the construction.

At the same time, the Ministry of Lands and Settlement withdrew its allotment letter for the Mombasa site – meaning that Ken-Ren factory had no place to stand. It was this manoeuvre that pushed Ken-Ren to bankruptcy and in a confidential report filed by the US embassy, fingers were pointed to various political interests.

“It would seem at the moment that the highly placed Kenyans who are heavily involved in fertiliser import business, among them the President’s son and nephew, have carried the day against those who desire Kenya to have its own fertiliser capacity,” wrote the US Ambassador, Wilbert John Lemelle. It remained a puzzle why the government sabotaged a company where it had 65 per cent interest.

But that Ken-Ren would have a guaranteed monopoly to import fertiliser for 10 years left it vulnerable. On September 19, 1978, the High Court issued a wind up order. Few people noticed since the country was mourning the August 22, 1978 death of Mzee Kenyatta.

Ever since, the country’s import of fertiliser has always been at the hands of a small coterie.