Kenya must go back to where it was before when real entrepreneurs and authentic risk-takers rather corrupt political capitalists thrived.
I recently came across recent statistics on the government fertiliser subsidy programme and was astonished at just how big a mess we have created all in the name of giving farmers access to affordable fertiliser.
But first, some background information and history about the programme. State-owned National Cereals and Produce Board (NCPB) has been in the fertiliser business as a commercial operation since 2004. I think the NCPB pulled out of the business around the time the government directed it to stop commercial operations of maize and forced it to export all the maize in its stores.
I still remember how former NCPB managing director Major (Rtd) William Koitaba resisted the government directive to export maize and was fired to pave the way for exports.
As it turned out, the government made a whopping Sh2.2 billion loss from exporting that maize. I have digressed.
The fertiliser subsidy programme started on 2009. Fertiliser prices in the international markets had hit the roof and the government decided import the commodity to cushion farmers from the high prices.
Until 2014, the NCPB was in charge of procuring all imported fertiliser. But when Felix Kosgey was appointed Agriculture and Irrigation minister that year, the responsibility of managing this procurement was transferred to Kilimo House- the ministry’s headquarters.
One theory has it that - being a procurement professional himself - Mr Kosgey immediately saw the power and influence around being in charge of procuring this multi-billion shilling programme and decided that the responsibility needed to be located at Kilimo House.
The rain started beating us from this point. In the first place, we ended up with a very opaque system where the power and responsibility to issue tenders, choose and select the names of suppliers became the exclusive responsibility of bureaucrats at Kilimo House.
The NCPB was left with the donkey work of borrowing money from the Kenya Commercial Bank to finance the imports mainly through opening letters of credit. In other words, we have an arrangement whereby the NCPB is compelled to borrow cash for the fertiliser imports and to wait for years on ends for the government to pay it the subsidy money.
In that way, the Ministry of Agriculture and Irrigation has the flexibility to roll out the fertiliser subsidy programme at any time and quickly - without having to wait for Exchequer releases from the National Treasury.
And, as we all know, controlling procurement and dealing with suppliers directly is where opportunity for rent- seeking sits. You get your cut and hand over the financing and handling of the fertiliser to the NCPB.
What comes out clearly as you examine the statistics and numbers on the fertiliser subsidy programme closely is that it has been an unmitigated disaster. First, Kilimo House has not paid NCPB the subsidy money since the 2015/ 2016 season.
As at September, total debts owed to NCPB stood at Sh5.5 billion. Export Trading Company, the entity that supplies the fertiliser to the government on a two- year framework agreement was owed Sh691 million, according to the September statistics.
What lessons have we learnt? State subsidies are supposed to be tools of mercy, meant to cushion the poor and make services more affordable to the disadvantaged. But in this country, subsidies have only served the rich.
In most cases, you will find that shillings are flowing into the bank accounts of the well-heeled than into the pockets of poor farmers. Far from assisting the poor farmer, the fertiliser subsidy programme has enriched the empowered.
To access subsidised fertiliser, you have to present a letter from Kilimo House to the NCPB. Alternatively, you must go through a vetting process conducted by grassroots Ministry of Agriculture and Irrigation officials.
At the end of the day, the real beneficiaries are shadowy intermediaries who make billions by obtaining government fertiliser at cheap prices and reselling at huge mark ups to traders and even back to the NCPB itself when prices are right.
Kenya must go back to where it was before when real entrepreneurs and authentic risk-takers rather corrupt political capitalists thrived. The fertiliser subsidy programme should be discontinued before it bankrupts the NCPB.
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Note: The results are not exact but very close to the actual.
