Aid and Inequality in Kenya

British Development Assistance to Kenya

Gerald Holtham, Arthur Hazelwood

• Publisher: Routledge
• Year: 2010
• Print ISBN: 9780415845984
• eBook ISBN: 9781136889707
• Topic: Economics
• Subtopic: Business General
• Index: Economics

This reissue, first published in 1976, considers the rapid rate of economic growth in Kenya, combined with its apparent political stability, to determine whether or not this is indeed a case of 'growth without development' and, if so, where the responsibility for aid lies in this situation.

The book concludes that while Kenyan growth has not been to an ideal pattern, accompanied by an increase in inequality, there is little or no reason to believe that living standards have not improved. It examines the impact of aid on Kenya's progress at both the microeconomic and macroeconomic level and provides an institutional study of the impact of aid on Kenyan Government policy formation and administration and a discussion of British aid's political purposes and influence in Kenya.

The authors conclude that some of the effects predicted by the critics of aid are visible, but that the net effect on general living standards has been strongly positive, concluding that the problems constitute a case for improving aid procedures, but not against aid itself.

1
THE BACKGROUND¹

Kenya is no longer White Man’s Country² but its economic structure, its economic and social policies, and the form and function of the international aid it has received and is receiving are deeply affected by its history as a land of European and Asian settlement. Before Kenya achieved national independence in December 1963, a fundamental determinant of the nature of its economy and of the policies of its government was the existence of wealthy and—by tropical African standards— relatively large non-African communities.

By the time of independence, changes had been in progress for several years, and 1959 and 1960 were the last years in which the situation had not been deeply influenced by the approach of majority rule.³ In 1960 the total population was estimated to be 8.1m. of which 7.8m. were Africans and 169,000 Asians. The European population numbered 61,000. There are no adequate data of the racial distribution of money income, but from all the evidence it is clear that, despite the overwhelming numerical preponderance of Africans, non-Africans received a high proportion of the total. Tax returns show 92 per cent of Europeans receiving incomes of over £400 p.a. while only 0.5 per cent of Africans were in this income group.⁴ Eighty per cent of the value of the marketed produce of agriculture came from the European-owned farms and estates; 55 per cent of the total wage-bill accrued to non-Africans, though they amounted to only 10 per cent of the labour force; profits from manufacturing and trade were received almost entirely by non-African individuals or companies.

Pre-independence agriculture was characterised above all by the division of the land between Europeans and Africans. Asians were largely excluded from the ownership of agricultural land, and Africans were prohibited from acquiring land in the ‘White Highlands’, which by the Agricultural Ordinance of 1955 became officially invested with the more neutral title of the Scheduled Areas. These European-owned Scheduled Areas occupied some 7½m. acres, about half of which was suitable for arable farming, the remainder being limited to pastoral use by lack of rainfall. The African lands—the Reserves, or Native Trust Lands—totalled about 130m. acres, but only about 18m. were suitable for agriculture. Low rainfall restricted the use of the remainder of the non-scheduled areas to grazing, nine-tenths of it being classed as ‘suited only to poor quality ranching or wild life exploitation’.⁵

Farming in the Scheduled Areas included estate production of permanent crops for export—coffee, tea, sisal—and livestock ranching, as well as mixed farming. European mixed farming had at one time concentrated on cereals, but by 1960 efforts made after the Second World War to develop and diversify mixed farming had achieved considerable success. Farming in the African areas was overwhelmingly for the household consumption of the farmers, not for sale, and although cash-cropping was increasing in importance, perhaps only about 15 per cent of total output was marketed. In consequence, some 80 per cent of the total marketed output of agriculture came from the European areas. Livestock and dairy produce accounted, roughly equally, for about one-quarter of total sales from the scheduled areas; coffee, tea and sisal contributed 45 per cent; cereals, mainly wheat, and to a lesser extent maize, provided another 15 per cent of the total, and the remainder of total sales was made up of a number of crops, including cotton, tobacco, pyrethrum, sugar and oilseeds.

Livestock, together with a very small value of dairy produce, also accounted for about one-quarter of sales from the non-scheduled areas, and coffee, a crop which Africans had only recently been permitted to cultivate on any scale,⁶ accounted for another one-quarter; 14 per cent was produced by cereals, mainly maize, and a number of minor crops accounted for the remainder of sales, of which the most important was cotton.

The limited extent of the shift that had taken place in African agriculture towards cash-cropping by 1960 was to an important degree caused by the administrative and legal restraints on such development, notably those on the cultivation of coffee. It was also partly the result of the limited development of transport in the African areas, and of the fact that Kenya’s highly developed and controlled structure of marketing and credit focused on the Scheduled Areas, as did the research and other agricultural services. Although the government agricultural service dealt with both African and European farmers, the statutory boards, committees and organisations concerned with marketing, mainly administered by the farmers themselves, were primarily concerned with the Scheduled Areas. It was natural for European settlers to establish European-type institutions to serve European settler interests. Until late in the colonial period, the possibility of radical developments in African agriculture and of African participation in the modern economy, except as employees of Europeans, cannot have seemed to most Europeans to be matters of any practical importance. A great divide between the European and African economies was an inevitable consequence of settlement by Europeans concerned to create and maintain their own particular standards and way of life.

Substantial changes in land tenure and in the occupation of land began towards the end of the colonial period. They were a response to a belief in the inability of the African reserves under existing tenure systems and agricultural practices to accommodate the expanding African population. There were two kinds of change. One was the transfer of land from European ownership and the settlement of African farmers on it. The other was the ‘commercialisation’ of African-occupied lands by means of consolidation and adjudication and registration of title. Both kinds of change were advocated in 1955 by the East Africa Royal Commission, the analysis and recommendations of which were described as ‘Adam Smith in East Africa’ and had already become government policy. The Royal Commission proposed the abandonment of the ‘tribal approach’ to land, including the ‘racial approach to the Highlands question’, and prescribed ‘individualisation of land ownership and mobility in the transfer of land’.

The commercialisation of land had been a feature of the Swynnerton Plan⁷ of 1954, which argued that the reform of African land tenure was a prerequisite of agricultural improvement. Consolidation, enclosure and registration of title, it was argued, would make credit obtainable for improvements and enable progressive farmers to acquire more land. The African lands would be enabled to move away from being overwhelmingly devoted to production for subsistence towards a commercial agriculture:

able, energetic or rich Africans will be able to acquire more land and bad or poor farmers less, creating a landed and a landless class. This is a normal step in the evolution of a country.

There had already been some individualisation of land-holding in different parts of the country, even in the absence of machinery to adjudicate and register titles, and landlessness was not unknown in traditional society. The already existing pressures on the African lands in Central Province had been raised by the forced return of Kikuyu to their home areas from other parts of the country (and from elsewhere in East Africa) under the Emergency Regulations introduced in 1952 to combat the Mau Mau rebellion. In the White Highlands a class of landless Africans had become established in the form of squatters on European farms, who provided wage-labour and were allowed to cultivate some land for their own subsistence. The political circumstances were favourable for government action. Under the Emergency Regulations many African politicians who might have used the changes in tenure as a stick to beat the government were in detention; in parts of the country people who had formerly lived scattered on their holdings had been gathered together in villages, making consolidation and redistribution of the land easier; money was available to support policies which might help to defeat and to remove the causes of the rebellion; and the authorities were able, if necessary, to exert force to make people conform.

Consolidation of land and registration of title began in 1955 and by the year before independence about half the land of high potential had been consolidated and enclosed, and about half of that had been registered. Registration had, in fact, been completed in Central Province, but had not proceeded significantly elsewhere, where the pressures from the rebellion were less severe. The land tenure changes were supported by credit and extension services and by the final removal of restrictions on the growth of cash crops. It is probable that the removal of these restrictions, particularly those on the cultivation of coffee, was by far the most important cause of the increase in marketed production by small farmers. The value of produce sold from small holdings increased from £5.1m. in 1955 to £9.5m. in 1960 and to £11.6m. in 1963. The contribution of coffee to total sales increased from 6 per cent to 27 per cent,⁸ as the large-scale investment in coffee in the late 1950s came into full production. However, the large farms retained their dominant position in production for the market. In 1963, the large farms still accounted for as much as 78 per cent of total sales, compared with 86 per cent in 1955. The large farms also remained the source of the bulk of agricultural exports. Nevertheless, by the end of the colonial period Kenya had made decisive progress towards the establishment of a peasant cash-crop agriculture in what had been the African Trust Lands.

In 1959 it was decided by the colonial Kenya government that the racial allocation of land should be abandoned, and this decision paved the way for African ownership of land in the White Highlands. Schemes for transferring European farms to Africans began to be devised in 1960. The new policy marked a sharp change of direction, and seems all the more radical in the light of the fact that the settlement of new European immigrants in the Highlands was among the most important projects of the first post-war development plan. The fundamental principle of the land transfer schemes was that farms were to be purchased from Europeans and sold to Africans. They were not schemes for expropriation— there is a view that farms were over-priced⁹—and were designed as much to reassure the Europeans who remained as to transfer the land of those who departed to African small holders. At the time, the vital importance of largescale farming to the economy of Kenya was accepted doctrine,¹⁰ and the preservation of large-scale farming as a major economic sector was a fundamental consideration in the design of the Land Transfer Programme.

External aid was sought for land purchase and settlement. Funds were raised from the World Bank (IBRD) and the Commonwealth Development Corporation (CDC—Colonial Development Corporation, as it then was) for the purchase of farms and their settlement at a ‘low density’ to provide annual incomes, in addition to subsistence and loan charges, of £100 and more. The following year the UK government agreed to provide funds on loan terms for land purchase, and this programme was expanded at the end of 1962 into what became known as the Million Acre Scheme. ‘High density’ settlement was planned under this scheme with the intention that settlers should be able to obtain a net annual income of between £25 and £70. By the time of independence, 236,000 hectares had been purchased and ten thousand families settled under the Million Acre Scheme, and a further thousand or so families had been settled on low-density schemes. Small-scale African farming had been firmly established in the Highlands. The influx of Africans into large farming had begun, but remained unimportant until after independence.

The existence of the non-African population, both as producers and consumers, provided the initial stimulus for the development of manufacturing and processing in Kenya. The constraints on African monetary agriculture limited the possibility of a manufacturing industry to serve a larg...

Table of contents

• CONTENTS
• LIST OF TABLES
• ACKNOWLEDGEMENTS
• INTRODUCTION
• 1 THE BACKGROUND
• 2 AIMS AND ACHIEVEMENTS SINCE INDEPENDENCE
• 3 THE FACTS OF AID
• 4 BRITISH AID POLICY AND ADMINISTRATION IN KENYA
• 5 AID IN ACTION
• 6 THE INFLUENCE OF AID
• 7 POLICY IMPLICATIONS FOR BRITISH AID
• 9 CONTROVERSIES OVER AID
• INDEX