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Finlays' exit to hit county economy hard

FINANCIAL STANDARD
By Nikko Tanui | October 29th 2019
Finlays Flowers Managing Director Steve Scott addresses workers in Lemotit flower farm in Kipkelion East constituency at a past event. [Nikko Tanui, Standard]

The Kericho County economy will lose an estimated Sh1.8 billion annually from the closure of two farms owned by Finlays Flowers Company. 

“Kericho town and other urban centres will take a hard hit from the lay-off of workers. The employees often spend at least 70 per cent of their salaries within the county,” said Kericho Chamber of Commerce branch chairman Simeon Koech.

He said multinational firms employ at least seven per cent of the local workforce, and the termination of the services of 1,700 workers at Chemerei and Tarakwet flower firms will deal a big blow to the local economy. 

Finlays Flowers Managing Director Steve Scott in a letter dated October 19 said the company’s directors had decided to close the two flower farms by December 25. 

The decision to close shop is partially due to a decision by Kericho Governor Paul Chepkwony to hike land rates.

The governor targets to raise at least Sh1 billion annually from multinationals operating in the county through land rates, with the firms estimated to hold about 800,000 acres under 99-year leases. 

Multinational tea companies, according to Chepkwony, currently pay Sh300 per acre of land per annum.  

Real reason

“There is a huge difference between what ordinary residents pay to lease an acre of land in the villages. That is why we have decided to hike the land rates. Going forward, they must pay at least Sh10,000 to lease an acre of land,” he said. 

Belgut MP Nelson Koech, in whose constituency Chemirei and Tarakwet farms fall, accused the flower company of taking unilateral decisions without involving area leaders.  

“The management have been ignoring my calls for a discussion of pertinent issues. I will drive to the company headquarters within the week to let the management understand that they must learn to consult,” he said.  

But even as Mr Scott blamed oversupply of flowers in the European market and decreasing demand for the closure of Chemerei and Tarakwet farms, addressing Lemotit flower workers in April last year,  he let the real reasons slip. 

“The labour costs in Kericho are significantly higher than other locations in the flower industry in Kenya. This has caused Kericho to become uneconomic and non-competitive,” he said. 

But Mr Koech claimed that the real reason the flower firm is phasing out human labour is in preparation for mechanisation.    

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