Sisal and coffee may be on their sick beds today but the two cash crops were key pillars in supporting the economy during early years of independence.
The government relied on them to finance Kenya’s maiden budget.
On May 1, 1964, The Standard, then called East African Standard, carried a story on the two crops as the government pondered on how to raise funds to pay service men after independence. In addition, the government required money to run the National Youth Service as well as taking over of broadcasting and television.
At such a time when the newspaper was selling at 50 cents, the government announced the move to increase taxes on coffee and sisal to plug the hole in the budget.
Exporting a tonne of coffee was to attract £20 (Sh400) while for every tonne of sisal exported; the government was to get £10 (Sh200). The pound was an equivalent to Sh20.
The then Finance Minister James Gichuru, in a broadcast on the Voice of Kenya, now KBC, said the country was facing a strain on both recurrent and development expenditure.
“I have chosen export taxes as a way of finding some of the additional money and expect them to yield £1.4 million (Sh28 million) in full year. I do not believe that there is any other way in which I could have raised a comparable sum without greater damage to the economy,” said Gichuru.
However, 53 years down the line, the Government still faces the same dilemma. On development, Gichuru told the nation that the 1964/65 budget would have a development gap of £3 million (Sh60 million by then). He said this was to be paid from “our own resources.” This differs from now where most of the development expenditure is borrowed.
Surprisingly, the then Chairman of Kenya Coffee Board Mr N. Solly described the new taxes as ‘fair and reasonable’- a rare thing in modern Kenya where any tax increase is met with opposition and outcry.
“We know we have got to find extra money in Kenya and in the present circumstances, I feel this tax is of the fairest kind as it means all coffee producers will be contributing to the good of the country,” he said.
The taxation plan came at a time when Kenya had just taken over the responsibility of expenditure on the army and police from April 1, 1964. The model of taxing sisal was borrowed from Tanzania, then called Tanganyika, which in June 1963 had put a similar tax on sisal exports.
The prisons servicemen were also to be given salary increment, a clear indicator that the clamour for higher pay is as old as the independent Kenya. Mr Gichuru’s headache on salary increment has however continued to dog modern day Kenya.
Recently, National Treasury Cabinet Secretary Henry Rotich said Sh100 billion has been factored in the 2017-18 budget to cater for salary increase to civil servants. Teachers, lecturers and doctors are among the civil servants that had downed their tool in recent past calling for higher pay.
In 1964, the government had to implement the Pratt Salaries Commission report which Gichuru said would add “substantial amount to our budget.”
The 1963 commission on the Kenya Civil Service and Teaching Services, the East African Posts and Telecommunications, Administration, and the General Fund Services recommended pay increases to employees, especially those in low earning bracket.
This is a complete contrast from the setup of the Salaries and Remuneration Commission to trim the rising wage bill that now eats over half of money in the public coffers.
By 1964, Taita-Taveta County, then a district, had the largest single sisal estates in East Africa. In December, the same year, government held negotiations with Ralli Brothers of England that saw investors pump in £2 million (Sh40 million).
This saw Grogan Estates in Taveta, Jipe and Ziwani sisal estates taken over under joint ownership of the English financiers and the locals. To encourage locals, they were told that they would slowly buy out the financiers as they develop the crop.
Today, sisal is still being planted, though without glorious moments of 1960s. For coffee, it has been choked by myriad of problems including fleecing of farmers by middlemen as well as fall in prices.
Despite agriculture being the backbone of the economy, the government has not been keen to tax it much since it is dominated by small holder farmers.