Approaches and challenges of privatization by Kenya Tea Development Agency (KTDA) Limited

Abstract

Public institutions have recently been faced with multiple challenges arising from increased
\ncompetition from the private sector and public scrutiny. To remain competitive as well as
\nprofitable, some have resulted to privatization. The Kenya Tea Development Authority has faced
\nserious challenges both in the internal operating and external environment which required urgent
\nattention to avoid any serious impact in the local tea industry. This was made worse by global
\ndevelopments in the tea industry, resulting in low returns in the entire tea value chain and the
\nfarm level. KTDA therefore needed to position itself to increase its competitiveness, global
\nmarket share and increase returns. The objectives of the study were to establish the approaches
\nthat KTDA Ltd had used in its privatization process and also, the challenges it encountered in its
\nprivatization.
\nThis was a case study which sampled ten employees thus achieving a 100% response rate. Both
\nprimary and secondary data were collected. Primary data was collected through face to face
\ninterviews and also through self administered semi-structured questionnaires. Data was analyzed
\nusing frequencies, means and standard deviations. These were presented in tabular format.
\nQualitative data was analyzed using content and factor analysis.
\nThe research findings revealed that various approaches implemented by KTDA towards
\nachieving its privatization were not well defined to most stakeholders. It was evident that the
\nneed to plan ahead, pressure from stakeholders and response to customer needs were viewed as
\nthe important factors that necessitated the privatization. The objectives of the privatization
\naccording to those interviewed were to increase competitiveness of KTDA Ltd and reduce costs.
\nIt was evident that privatization changes were largely initiated at the top management level and
\nthe privatization vision was clearly articulated, nor understood by all staff. The privatization
\nprocess faced rather strong resistance from stakeholders, due to issues such as, parochial self
\ninterest, fear of the unknown, fear of inability to develop relevant skills among other factors. In
\nan attempt to react to these factors, training and education, communication, use of local change
\nleaders, promise of reward, coercion and authority, manipulation and use of reward were the
\ncommonly used mechanisms. Other factors that had hindered the privatization process were
\ninterference by factories and politicians. Out of the set out objectives, interviewees agreed that
\nthe privatization had enabled KTDA Ltd to operate on autonomous basis, as well as enhancing
\nefficiency of the organization, while the main key successes factors present included properly
\ntrained staff to manage the privatized institution and who are well equipped to drive the business.
\nIt was however recommended that for an effective privatization of KTDA Ltd to take place, the
\nshareholding structure of the organization and the factory companies should be restructured. The
\ndual role of KTDA Ltd as a management agent and a tea grower's investment issue should be
\naddressed to avoid the current confusion with a subsidiary company being formed to manage the
\nfactories. The organization should further decentralize its function to the regional offices to
\nenhance service delivery to the various factories. Implementation of proper management of the
\nhuman capital and good corporate governance policies are paramount factors for streamlining the
\nprivatization process of KTDA Ltd.