Webuye paper factory goes down with livelihoods in entire town

By Stephen Makabila

Webuye town’s horizon is crystal clear for the first time in a generation.

Standing at the Chimoi highpoint on the Eldoret-Malaba highway, the attractive skyline is a faÁade; the absence of the misty grey the result of factory emissions — a sign that Pan-Paper Mills was alive and well — foretells the agony of its large workforce.

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Pan-Paper Mills, Webuye. The manufacturer suspended operations due to financial crisis.

Last week, more than 2,000 employees of East Africa’s leading paper manufacturer were sent home as the firm closed indefinitely.

Gone with them are the small businesses that provided support services since 1974 when Pan Paper opened its doors, providing a lifeline to the town of 50,000 inhabitants.

"If I have to put it plainly, we have no town called Webuye because it is economically dead and businesses are crushing following the closure of Pan Paper," says Mr Alfred Situma, an employee of the company who also operates a mini supermarket in the town.

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Uncertain future

Ms Joan Juma, a vegetable trader, at Webuye Market.

According to Situma, Pan Paper injects about Sh25 million into Webuye’s economy every month in employees’ salaries, and that sustains businesses there.

"Already my business has dropped by 75 per cent in sales and I cannot imagine what lies ahead. The Government should bail out this company because it has considerable shares in it," adds Situma.

Webuye Mayor Dinah Watima concurs with Situma, noting that unless the company is bailed out, the town will eventually die.

"Pan Paper generates about Sh1.6 million to the council in rates every year, among other benefits. We are going to be affected and the entire town may not thrive as businesses are going to close," says Ms Watima.

The pulp and paper manufacturing company was a joint venture between the Government, International Finance Corporation, a World Bank private sector lending arm, and Orient Paper of India.

Its current board of directors has CK Biria (India) as chairman, ML Pachisia (India), Finance PS Joseph Kinyua, Industrialisation PS John Lonyangapuo, NK Saha (India), Oliver M Fowler, KB Rathi (British), H Vikram (India) and three other corporate bodies.

With a production capacity of 45,000 tonnes of paper annually in 1974, the production had increased to 120,000 tonnes before its current woes.

The factory ceased operations on January 30 following power disconnection by the Kenya Power and Lighting Company (KPLC) over unpaid electricity bills.

KPLC Communication Officer Gregory Ndahu, said Pan-Paper owed the company more than Sh100 million in unpaid bills.

Pay the bill

"Negotiations are on between KPLC, Pan Paper management and the Treasury, but we can only re-connect them if the bill is paid," added Mr Ndahu.

Reality of the closure of the factory dawned on the employees when the management paid them their February salaries in full, but told them to remain at home for the next three months as attempts are made revive the company.

Letters signed by Saha, the company’s executive director and dated February 17, told the employees to go on three-month leave effective February 18.

Saha assured the employees that the company was working closely with the Government to address the situation, adding that those in company houses need not vacate.

While on leave, the employees will be paid 30 per cent of their basic pay. However, some say the amount is too little to make ends meet.

"We have children to pay fees for, our extended families to support, pay rent and budget for our daily up-keep and the 30 per cent pay is therefore a drop in the ocean," says one of the staff who declined to be named for fear of victimisation.

Some employees told The Standard they are sceptical that the company would be revived. They say many companies have collapsed in the same way.

When The Standard visited the factory on Saturday, it was desolate, with armed guards manning the main gate.

"A senior manager in the Human Resource Department is in, but he is inspecting the machines. He cannot see any visitor at the moment," explained one of the guards. Across Webuye, most business people have tales similar to Situma’s. Those affected most are petty traders dealing in clothes, groceries, hotels and bar businesses.

No Buyers

Mr Centric Inziani, who runs the Camp David Bar in the town, says business had dropped by 50 per cent following the factory closure.

"Most of my customers are Pan Paper workers but for the last two weeks, I have not been making any sales because they no longer flock in," said Inziani pointing to empty seats in the main bar and sheds outside.

He says chances are he will close the business if the situation remains the same.

Ms Judith Walubengo, who had invested Sh80,000 in mitumba (second hand) business fears her venture may collapse unless the Government revives Pan Paper. "We in business wonder why the Government is watching as Pan Paper collapses. Does the Government surely have any feelings for its people?" she asks.

Walubengo says there are no buyers since Pan Paper closed because most of her customers were the company’s employees.

Mrs Jackline Dindi, a dealer, says things were no longer rosy for her business.

"I deal in perishable produce and when the stock stays for long, it goes to waste. That way, you cannot surely prosper," laments Dindi.

She says some of those who depended on the factory had moved to rural areas following its closure.

, thus reducing her number of customers.

Landlords and boda-boda (bicycle) taxi operators have not been spared either.

"I had been contracted by three workers at the factory and I used ferry them every day, but my services are no longer needed," says Isaac Juma, a boda-boda taxi operator.

Landlords who talked to The Standard claimed some Pan Paper employees who had rented their houses had not paid rent.

"There are those who never paid rent last month and when you ask them, they cite factory closure as a reason and plead with you to have mercy on them. It’s really a difficult situation," said a landlord who declined to be named.

However, some residents feel the closure of the factory is good riddance.

"This factory was polluting the air and since its closure, we are now breathing fresh air like other Kenyans," said one resident.

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Webuye PanPaper Mills Pan-Paper International Finance Corporation Kenya Power and Lighting Company