New regulations for the tea sector

August 11, 2008

, NAIROBI, August 11 – The government is set to put a limit on the number of directors for all KTDA-operated tea factories nationwide, in a raft of new regulations for the multi-billion shilling industry.

Agriculture Minister William Ruto announced on Monday that large factories will from now henceforth be governed by upto five directors, while smaller ones will not have more than three directors.

“Farmers out there feel that there are too many directors running the factories and are proposing a reduction of the numbers,” he said.

Such directors, the Minister added, would be expected to have a minimum of O’ level education, observing that some factories with turnovers exceeding Sh500 million were being run by illiterate people.

The new rules follow recommendations of a task force appointed in August last year to review the management of the tea industry.

Ruto further announced that factory licences would be renewed annually for better monitoring by the Tea Board of Kenya.

“This will ensure better management and no misappropriation issues. The same case will apply to all players in the market where licensing will take place annually and not a one-off license like before,” he emphasised.

Admitting a conflict of interest in the running of the Kenya Tea Development Authority (KTDA), Ruto said his ministry would appoint a consultancy firm to recommend a management, ownership and shareholding structure for the organisation.

“There is a clear conflict of interest when you have a farmer who is a director of his local tea factory, a director of KTDA and a director of the Tea Board,” Ruto noted.

The consultancy firm would be expected to present its report in two months.

At the same time, the Minister said he would set up a technical committee to look at the expansion of market access and value addition, including proposals for the creation of a free port for faster export of Kenyan tea.

The Agriculture Minister will also recommend a waiver of excise tax from tea in a bid to increase local consumption.

The tax is currently at 16 percent.

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