As the dust settles in Eldoret from the jostling of politicians who accompanied President Uhuru Kenyatta to unveil the Sh400 million milk production line at the New KCC factory, history is still repeating itself.
The firm associated its past as a breeding and nourishment ground for politicians. The company, then known as Kenya Co-operative Creameries (KCC), is a study of how politicians can “milk” a corporation for political success and at the end, to death.
Before it went under receivership in 1999 with an over Sh1 billion debt to the Kenya Commercial Bank (KCB), there had been calls to overhaul the company with the consensus being that current and former directors were the cause of its woes.
Well, most of the directors were politicians and a special report by the East African Standard (now The Standard) in 1998 attempting to understand KCC’s troubles concluded that KCC’s headquarters were the “centre for power politics and politicians” judging by the composition of current and past directors.
“It is instructive to note that although KCC is wholly a business concern, nearly all its directors are actually politicians,” wrote the paper.
KCC had been founded in 1925 by a group of rich white settlers with an aim to promote milk production, processing and marketing and primarily catered for white farmers led by Lord Delamare.
In August 1991, the World Bank and the Food and Agriculture Organisation who were major financiers of KCC, termed it as a “money guzzler” and told the Government to dissolve it or they would stop giving money to the Government to help the dairy industry. However, the Minister for Livestock Development Jeremiah Nyagah had a terse reply: “Kenya is an independent country and would not sell the interests of its citizens because of aid conditions.”
Later that year in November top farming authorities led by the former Kenya Farmers Association Chairman the late Mark Too called for a “total overhaul” of the debt plagued corporation and demanded that it be decentralised. However, the political script telling the story of KCC begins with Davidson Kuguru, (the father of Peter Kuguru, boss of Cateress Milling Company and the now defunct Softa Soda) who was the first African to head the organisation after he was elected chairman by the board of directors in 1967 to replace D.H.M Dempster, a colonial settler who had been at the helm for 12 years.
Mr Kuguru had joined the KCC board in 1962 as one of the company’s first African directors. He was representing co-operative societies in the Nanyuki/Thompson falls area.
According to the East African Standard Mr Kuguru was encouraged by the late President Jomo Kenyatta to fight for KCC’s leadership because the Government had started the Artificial Insemination programme to improve local livestock breeds and encourage Africans to venture into dairy farming.
For decades the AI programme saw the Government lose billions until a cost sharing element was introduced in the early 90s following the liberalisation of the industry. After his stint as chairman, Mr Kuguru joined politics and became a long-serving Mathira MP and Cabinet Minister in former President Daniel Arap Moi’s Government. Years later, KCC continued grooming politicians and by 1998 the company had ten directors who were all politicians. Five were drawn from the Central region and the other five represented the Rift Valley region, the two major milk producing areas in Kenya.
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Two of the directors were elected Councillors (now Members of County Assembly).
John Matheri represented Ndaragwa Constituency, Nyandarua County and was also the chairman of the Nyandarua County Council while John K. Chumo represented Kipkelion Constituency in Kericho County and was also the chairman of Kipkelion Town Council.
The company’s vice chairman, Thirikwa Kamau was the MP for Ndaragwa while Patrick Kariuki Muiruri was MP for Gatundu North. Another director, J.M. Kariuki (no relation to former assassinated minister) was a former MP for Nyandarua North, and an ex-assistant minister until 1983. Still in 1998, the long-serving MP for Mosop Stanley Metto had just quit as chairman of the organisation after a two-year turbulent stewardship.
He cited health reasons and was replaced by the vice chairman Kibiwott arap Koross. Former chairman Jackson Kamau (1977-1988) had left to become a nominated MP. Gitahi Ngaruro, a former managing director quit the company in 1987 to contest for the Nakuru East MP seat in 1988. He was later appointed assistant minister.
The Government continued pumping money into KCC helping the company set up cooling plants and depots across milk producing areas. “This probably explains why many people today still believe KCC was a state corporation,” wrote the paper in the special report. The paper went on to say that despite Government’s commitment to see KCC grow the state only had minimal shares at KCC (3 per cent), and the organisation largely remained a private company owned by individual farmers. But, the special report concluded that politicians had led to the demise of a firm that had been the backbone of Kenya’s dairy industry for 70 years. “With a long list of politicians associated with KCC, one is tempted to conclude that politics may have infiltrated the farmers’ firm, and is possibly the reason why KCC is in a mess,” wrote the paper.
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In 2000, KCB advertised for the sale of KCC. A company called KCC Holdings was formed by a group of politicians who bought it for Sh400 million.
“Political patronage played a part in contributing to the collapse of the company. Ruling party elites appointed directors to represent their interests rather than farmers,” says a paper titled, The Revitilisation of Kenya Cooperative Creameries: The Politics of Policy Reforms in the Dairy Sector in Kenya by The University of Nairobi professors Rosemary Atieno and Karuti Kanyinga.
What followed was the battle by the Narc Government to take back KCC and after spending millions, the New KCC was registered in 2003. Up to now, at face value, the most visible whiff of a politician is the New KCC Chairman Matu Wamae who was once the Mathira MP.