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Advances in Social Sciences Research Journal – Vol. 8, No. 12

Publication Date: December 25, 2021

DOI:10.14738/assrj.812.11494. Koech, P. K., & Kirui, P. K. (2021). Implication of Multi-National Corporations (MNC’s) and Commercial Tea Plantation Agriculture

on the Small Scale Farmers of Kericho in Kenya, 1963 -2010. Advances in Social Sciences Research Journal, 8(12). 380-393.

Services for Science and Education – United Kingdom

Implication of Multi-National Corporations (MNC’s) and

Commercial Tea Plantation Agriculture on the Small Scale

Farmers of Kericho in Kenya, 1963 -2010

Paulo K. Koech

Adjunct History Lecturer at University of Eldoret and a PhD candidate,

University of Eldoret, Kenya

Peter K. Kirui

Lecturer of History and government at University of Eldoret, Kenya

ABSTRACT

The introduction of tea as a cash crop in Kericho revolutionised farming among the

Kipsigis of Kericho. While the independence of Kenya in 1963 was expected to come

along with economic empowerment and freedom among its people, many still

struggle to meet their daily needs and live below the poverty line. For Kericho

residents, MNC’s continued their domination in plantation tea farming at the

expense of the local communities who are wallowing in poverty. Although MNC’s

contribute in the provision of social services to the local community as part of their

corporate social responsibility, this assistance is a drop in the ocean considering

the massive capital and technology that these corporations wield and which have

been instrumental in relegating the small scale farmers to the periphery and

creating dependency. This study explored the implication of MNC’s engaged in

plantation tea farming in Kericho District (presently Kericho County) on local

peasant farmers.

Key Words: Plantation agriculture, small scale farmers, MNC’s, underdevelopment,

dependency

INTRODUCTION

This paper will attempt to analyse the operations of the Multi-National Corporations (MNCs) in

Kenya and also provide a narrowed down specific study in Kericho. A primary aim of MNC’s

operations in Kenya, or elsewhere in the world, is the generation of profit for company and its

shareholders, however, the government has tried to establish limits on the repatriation of these

profits. Furthermore, the presence of such MNC’s has been important in the shaping of the

agricultural economy of Kericho District during and after the colonial rule in Kenya. MNC’s also

brings significant advantages to the country of their operations in meeting local competition.

This article also looks at the current relationship as to how the post-colonial policies have

shaped the various aspects of the Kipsigis economy with specific emphasis on land tenure and

use, liberalization of the market, labour organization and finally provide an analysis of the role

of cooperatives in the Kipsigis socio-economy.

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Koech, P. K., & Kirui, P. K. (2021). Implication of Multi-National Corporations (MNC’s) and Commercial Tea Plantation Agriculture on the Small Scale

Farmers of Kericho in Kenya, 1963 -2010. Advances in Social Sciences Research Journal, 8(12). 380-393.

URL: http://dx.doi.org/10.14738/assrj.812.11494

Study objective

This study aimed at assessing the origin, evolution and impact of MNCs and commercial tea

plantation agriculture on the local people of Kericho between 1963 and 2010. It explores the

implication of MNC’s on local peasant communities and how their introduction to the world

capitalist system affects their daily economic lives.

Research Puzzle

While the coming of MNC’s engaged in commercial tea production in Kericho was expected to

positively improve the economic prospects of local host communities, this has not been the case

for most Kipsigis populations of Kericho District. This study explored the implication of MNC’s

engaged in plantation tea farming in Kericho District (presently Kericho County) on local

peasant farmers. Even though the local population has benefitted from MNC’s that provides

employment opportunities, provision of social services like education and healthcare, this is a

relationship that tends to entrench dependency between locals and MNC’s even as MNC’s

continue to extract profits that is mostly reinvested in the metropolle to the detriment of the

periphery.

Theoretical Framework

The state of affairs in the ‘underdeveloped countries’ was thought of as being due to a lack of

capital, know-how and other inputs which had led to ‘development’ in the advanced industrial

countries. Critics of this view argued that on the contrary, the predicament of the

‘underdeveloped’ countries was due to the application to them of western capital, know-how

and political power, often over several centuries, in ways which had structured (and continue

to structure) their economies and societies so as to continuously reproduce poverty, inequality

and, above all, political and economic subordination to the interests of western capital.1

Underdevelopment occurs when a dominant capitalist system penetrates into a previously

autonomous pre-capitalist formation, creating a dialectic centre- periphery relation leading to

domination and subordination. This domineering influence eventually effects the

transformation of the pre-capitalist formations so that the existing political, economic, social

and cultural institutions are replaced by alien capitalist structures. At such a point, the weaker

capitalist system becomes watered down to mere peripheral instruments to the industrialized

capitalism. In other words, the starting-point of underdevelopment theory is the period in

which any given region of today’s ‘third world’ began to be progressively incorporated into a

permanent relationship with the expanding capitalist economy.

The dependency model also neatly linked conditions before and after independence through

‘continuity in change’ that is the persistence of the relations of dependency and self- reproducing underdevelopment within the apparently changed forms brought by flag

independence. Thus colonialism and neo-colonialism were considered explicable within the

same theoretical paradigm. The colonial state appeared to be the obvious agent of metropolitan

capital in establishing and maintaining the structures of dependence.

1 Leys, Underdevelopment, xiv.

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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 12, December-2021

Services for Science and Education – United Kingdom

Research Design

There are many research approaches available for researchers to choose from. However, the

broad distinction between research methods is whether they are qualitative, quantitative or

mixed method approach (Creswell, 2003). Walliman (2007) explained that, qualitative research

usually is to do with people and their activities, and is concerned with variables that cannot be

quantified. Qualitative research includes designs, techniques and measures that do not produce

discretely numerical data (Mugenda and Mugenda, 2003). More often, the data are in a form of

words rather than numbers and these words are often grouped into categories. Creswell (2003)

summarizes the characteristics of qualitative research design to include: qualitative research

taking place in the natural setting where the qualitative researcher often goes to the site of the

participant to conduct research; the use of multiple data collection methods traditionally based

on open ended observations; interviews and documents that are interactive and humanistic

involving active participation by participants and sensitivity to the participants in the study.

Due to the nature of this study, it adopted the qualitative research approach since the targeted

data was not discreetly numerical but in form of words, ideas and explanations.

Data sources for historical research can be taken from either primary sources or secondary

sources. Primary sources are first-person accounts that involve the oral or written testimony

of eyewitnesses and these may include documents, letter, observational notes, photographs,

recordings, diaries, journals, life histories, drawings, mementos and other relics. Primary

sources are usually original artefacts, documents and items related to the direct outcomes of an

event or an experience. In general, primary sources are created at or very near the time of the

historical event that is being described. In contrast, secondary sources are account descriptions

of persons who are not eyewitnesses of the event or who did not personally know the person

being studied. They are from people who were not immediately present at the time of the event

and these are referred to as second-hand accounts of someone, some happenings or some

development. Secondary sources can be in form of biographies, scholarly articles, popular

books, reference books, textbooks, court records, lab information, encyclopedias, newspaper

articles and even obituary notices.2

In this study, a combination of research instruments was used. This combination allowed for

the maintenance of balance between the quality and quantity of the data collected. As a result,

much of the analysis revolved around primary and secondary sources of data. The primary

sources utilized were oral information gathered from small holder tea farmers and the

multinational companies through interviews and questionnaires. Archival sources, which were

accessed at Kenya National Archives (KNA) in Nairobi were also used. The selection of these

methods was guided by the nature of the research carried out. The library research included a

review of both electronic and non-electronic books, journals and dissertations.

MULTI-NATIONAL CORPORATIONS IN KENYA

In most African countries, the absence of an established landlord class or of other elements in

the indigenous population with capital accumulated from other forms of economic activities,

tended to leave no alternative but industrialization through the agency of foreign firms.3 MNC’s

operations in Kenya actually predate the end of World War Two. A few MNC’s, almost all British,

2 Tan, Historical Research

3 Leys, Underdevelopment, 15.

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Koech, P. K., & Kirui, P. K. (2021). Implication of Multi-National Corporations (MNC’s) and Commercial Tea Plantation Agriculture on the Small Scale

Farmers of Kericho in Kenya, 1963 -2010. Advances in Social Sciences Research Journal, 8(12). 380-393.

URL: http://dx.doi.org/10.14738/assrj.812.11494

were involved in the Kenyan economy prior to that time. After World War Two, British firms

begun to invest directly in manufacturing as import-substitution industries were developed.

Through direct investment, mergers and takeover of existing firms, a number of such MNCs

gained a foothold in Kenya. 4 By the end of the 1960s, such foreign firms were strongly

entrenched in Kenya’s manufacturing. Since MNCs have their headquarters abroad, they will

desire to repatriate the largest amount of profits possible from their operations in Kenya.

Omwoyo argues that moreover, the presence of such Multi-national Companies was important

in the shaping of the agricultural economy of Kericho District during and after colonial rule in

Kenya. MNCs bring significant advantages to the country of their operations in meeting local

competition. These include technological innovation and control, marketing skills, extensive

market power and superior management techniques. Not only do these give MNCs an

advantage, they are also able to carry out certain of their activities at lower cost within the firm

rather than through the market. This, and most particularly their managerial experience, gives

the MNCs a considerable advantage, particularly in a developing nation like Kenya.5

The MNCs have continuously amalgamated and consolidated into fewer and fewer oligopolies

which controls the export as well as the import trade and fixes the prices not only of the

imported commodities but also of the exports produced by Africans. The huge profits that

accrues from these activities goes to them and not the Africans. 6 As Rodney points out,

colonialism and its continued influence through foreign capital and investments, has also

virtually put a stop to inter-African trade by either discouraging or banning them altogether.

This has prevented the strengthening of links and the development of new ones that could have

proved of benefit to Africans.

The government however, has tried to establish limits on the repatriation of profits, but the

MNCs have devised ways of maximizing repatriated profits by ‘hiding’ them. Swainson states

that in theory, the government has created mechanisms to control the conditions under which

foreign firms invest in Kenya, although in practice multinational firms are able (through patents

and technical agreements) to take advantage of their technological monopoly. 7 The

Multinational Corporations usually do this through the transfer of prices, and the payment by a

subsidiary of management and technical fees to the parent companies. Prices are commonly

‘transferred’ by the technique of under-pricing the MNCs’ imports thus creating a net flow of

funds to the head office.8

Select Tea Multi-Nationals in Kericho

Located within Kericho are some of the world’s largest tea estates. The vast, well-tended and

lush green tea farms are only interrupted by indigenous and eucalyptus forests, well-marked

tarmac roads and paved foot paths. Kericho is home to the Kenya Tea Development Authority

and headquarters of Kenya’s large-scale tea farming operations that include Finlay, Williamson

4 Ibid, 385.

5 Omwoyo, The Agricultural Changes, 157.

6 Boahen, UNESCO General History, 171.

7 Swainson, The Development, 17.

8 Maxon and Ochieng’, An Economic, 385.