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Presidency  · Kenya

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Why more free trade won't help Africa - Through the lens of Kenya

Kenya: From Hope To Decline

"During the past two decades, we have seen Kenya slide systematically in to the abyss of underdevelopment and hopelessness." - Kenya government paper, June 2003

"We liberalised excessively in the 1990s because of the IMF and World Bank. But it de-developed us. The levels of education collapsed. The generation of the 1990s is the lost generation."- Dr Mukhisa Kituyi, Kenya Minister for Trade, June 2005

In the 1970s Kenya's future looked bright. The economy was growing and industry starting to thrive. But the country's fortunes reversed when it was forced to follow the rigid economic regime imposed by rich nations. During the 1980s, in return for aid Kenya was put on a strict diet of 'liberalisation'. This involved reducing government support for farmers, cutting tariffs and de-regulating markets. Then in the 1990s as a condition of joining the WTO Kenya liberalised even further. Cheap, sometimes subsidized goods have flooded the markets - everything from clothes to shoes, sugar to steel.

The result has been a generation without education, massive unemployment and shattered industries. Thrown in to competition with powerful companies and countries, Kenya's fledgling industries and vulnerable farmers didn't stand a chance. Many went under. The government lost income and was prevented from stepping in to help. The human cost of the liberalisation experiment has been enormous. 56% of people live in poverty (48% in 1990); under 30% of people are in formal employment (78% in 1988); 48% of children are not vaccinated (31% in 1993), there are less children in school and an increase in child deaths.

More of the same

"A good government must be able protect the local industry. If it is not able to protect local industry it is killing its own people." - Tom Owuor, Trade Union Secretary, Kenya

Despite the evidence from countries like Kenya that unfettered trade liberalisation does not reduce poverty, rich nations continue to prescribe the same medicine. Conditions attached to aid and debt relief and WTO rules all force poor countries in to an economic straight-jacket.

Added to the table now are Economic Partnership Agreements. These are free trade deals that the European Union (EU) is negotiating with 77 of its former colonies (including Kenya) in Africa, the Caribbean and Pacific (ACP). The EU is demanding access to ACP markets for its goods. EPA negotiations started in 2002 and are due to come in to force in 2008.

From the start the ACP have voiced their objections. They say they are not strong enough to be thrown in to open competition with mighty EU industries. They've seen what liberalisation has done in the past. And they're not ready for more. But the EU isn't listening.

Many ACP countries rely on aid from the EU which makes it difficult for them to play hard ball. And with no alternatives on offer they have little choice. They may also have just one person negotiating several detailed aspects of trade on their behalf - they simply can't keep pace with the battery of EU negotiators.

Case studies from Kenya

Kenya has set out its own plan for cutting poverty. Traidcraft's studies reveal that an EPA will not help Kenya to hit its targets but would put millions of people at risk. And it's not just Traidcraft saying this. Even the EU's own independent study by Price Waterhouse Coopers says EPAs could cost Kenya dearly.

Slim pickings for cotton farmers

Meshack Oonje knows his cotton. He was once a wealthy cotton farmer and proud of his achievements. But now he struggles to get by. "We've seen a big change," says the elderly man, speaking from 30 years experience of farming.

Oonje remembers the three decades from independence to the 1980s when huge sums of money were spent developing cotton farming, ginneries, spinning and textile manufacturing industries. It was also a time when cooperatives were strong. "I farmed my 5 acres alone. From that I was able to raise money and pay dowry of 14 cows," says Oonje.

The profit from his small cotton farm provided enough for his 13 children. He bought another 11/2 acres of land, more cows and built two permanent houses with iron sheet roofing. "Everything I have has been built on cotton. But now there is no profit," he says, adding that farmers are paid less than half the suggested government price.

Oonje is amazed that cotton farmers do not get more support: "This cotton can turn our lives around in a couple of years. It's not one of those crops you wait for years to harvest. Cotton is the crop we know. We cannot abandon it," he says.

The industry is again in disarray as cheap goods flood the market and foreign direct investment relocates to cheaper destinations like China. Further liberalisation under free trade deals like EPAs threatens to destroy the investment in training and other initiatives that were meant to re-launch Kenya's cotton and textile industry.

The sector supports 140,000 people (compared to 200,000 in the 1980s). Production is currently at 20% of 1980s level despite the fact that increased production could benefit millions.

Free market 'madness' hurts dairy industry

John Njogu Wahome is earning a decent income for the first time in almost a decade. And he hopes the investment made in his cows will continue to pay off. Not so long ago a desperate Wahome fed fresh milk to the neighbourhood dogs. "Processors told us our milk was bad. What could we do? We gave it to the dogs," he says.

It's been a difficult few years for the Kenyan dairy industry. Cheap powdered milk imports glutted the market in the late 1990s and in 2001, putting local dairy farmers out of business. Unable to earn an income some farmers were forced to resort to extreme measures in a last-ditch effort to draw attention to their situation.

"Farmers threatened to burn down the processing factories in Nakuru," says Hellen Yego another dairy farmer. "Then they wrote to the government complaining of food dumping in Kenya." Following the protests and representations from farmers the Kenyan government increased tariffs on imported milk products limiting the flood of imports. This along with some internal restructuring has allowed the dairy industry to regain some muscle. "When we got into this free market, that was madness," Wahome says, "it hasn't helped me or any farmer of Kenya." Wahome's son had to miss five months of college in 2001 when the imports of milk were at their height.

Dairy farmers in Kenya understand that the industry has been inefficient in the past. But they believe given the time to regenerate, protected from the full impact of liberalisation the industry can compete internationally.

Stephen Ngososei has many years experience as an agriculturalist and a dairy farmer. He sees EPAs that may come on line in 2008 as a fresh danger coming in through another door. "The opening up of the market is a big threat. Our government must come up and say categorically that we are not ready." Having staggered back from one bout with liberalisation the Kenyan dairy industry may not survive another.

Hostages to free trade in sugar

Stranded hundreds of miles away from his home on the Tanzania border, Richard Omollo feels trapped. "It's as though I'm being held hostage in my own country," says the 34 year old Omollo who now depends on donations to survive.

Omollo worked as a clerk at Miwani Sugar Company until it was closed in 2000 after struggling for years against a flood of cheap imported sugar in the market. The best paying job he can find is casual work on nearby farms where he earns a mere 28p for working a 12-hour day. He needs to make at least #1.20 daily for his family to afford the absolute basics.

Primary education is free, but Omollo's four children do not go to school. "My children walk barefoot, they're nearly naked. So they can't go to school." Farmer Alice Akoth Okongo helps Omollo with food and a little cash when she can. Okongo blames sugar imports for the impossible struggles faced by the community in the area. "They want to kill us, to kill the factory."

Okongo says the way free markets are being handled has created mass poverty where it never existed before. The result is instability and soaring crime rates with prostitution becoming a way of life for women in Miwani who have no other means of earning an income.

Linet Muga is separated from her husband and survives with her five children on a three acre plot given to her by her parents. Linet and Alice are fighting hard to get the voice of the sugar farmers heard. In August 2004 they formed the Kenyan Women Sugar Cane Farmers Network. They are campaigning to their own government and wrote to the G8 ahead of the summit in Edinburgh.

But Linet cannot hide her anger: "The people making these rules should come to the ground and see how we live. We are very bitter. We are sad and we are stranded because we don't know what tomorrow will have for us. Will they come to help us when we are dead?"

The sugar industry directly employs 40,000 people and supports over 2 million people 20,000 jobs were lost during liberalization.

Back to basics for Kenyan leather industry

Peris Njeri sold a lot of leather when she first opened her small shop on the outskirts of Nairobi's central business district three years ago. The single mother bought leather supplies from several tanneries and retailed them to shoemakers for repairs.

Then the leather supplies became harder to find as tanneries across Kenya closed down. Njeri was eventually forced to find a place where she could do the tanning herself. "Business was not good. There was nowhere to get good quality leather," says Njeri who is a trained leather technologist. She turned to the Leather Development Centre in Kenya where she waits her turn for service. It is tiring and the chemicals are expensive, but this is Njeri's livelihood.

The number of people like Peris has swelled with the closure of the tanneries. In early 1990, there were 19 operational tanning companies in the country producing leather most of which was consumed by local leather industries. By 2005 that number was whittled down to 4. Many former employees are now struggling to set themselves up as independent tanners and traders, joining the queue with Njeri.

Closure of the tanneries is partly blamed on second-hand leather goods imports that have flooded the market following liberalisation in the 1990s. Workers like Peris are not blind to the huge changes that must be made locally but they are sure that with the right international policies the leather industry can be turned around. But in the current environment of unplanned and externally driven liberalisation the sector does not stand a chance.

90,000 jobs were lost in the sector after liberalisation of markets and government lost US$15.2 million in revenue. A revived sector could employ 100,000 more people.

Time for change

Further liberalisation under EPAs could devastate the lives of 750 million of the world's poorest people. Countries like Kenya are being forced to negotiate away their future and being wedged in to shoes which don't fit. Developing countries must be given the right to fight poverty using the economic tools that will work best for them. EPAs are up for review in 2006. It's vital we don't lose this chance to change the future of the negotiations.

The UK and EU governments must:

- respond to the concerns of ACP governments about EPAs; - push for changes to the EU's negotiating mandate so that they drop unfair demands for trade liberalisation and negotiations on issues that the ACP have already rejected - propose viable alternatives to EPAs that will help reduce poverty.

This briefing is based on the report 'EPAs: through the lens of Kenya' produced by Traidcraft and EcoNews Africa. For a copy of the full report visit:  


Reprinted with permission.

Posted  December 05, 2005

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