The Economy of Webuye: the Pan Paper Fallacy

Current Attempts to Resurrect Pan Paper

The dead Webuye Pan Paper Factory that had long been forgotten and turned into a ghost since February 2009 has a new lease of life.

President Uhuru Kenyatta has assured employees, investors and stakeholders of the Paper factory would be revived as part of Jubilee Administration’s promise to improve the lives of Kenyans.

“Today is a great day marking the start of the revival of this Mill. This mill has for the last decade been plagued by massive debt, and improper management, all of which have conspired to deprive Bungoma, and Western Kenya more widely, of the jobs and prosperity it deserves.

The handover of the Mill to the new investor is scheduled to happen next week; and plans are to re-start its operations within the next three months.

The investor has also pledged to inject over the next few years 60 million US dollar, which, at the current exchange rate, is about 6 billion Kenya shillings,” announced Uhuru.

This will be the fifth time the government – The President Mwai Kibaki and Prime Minister Raila Odinga and now the Jubilee Government – after the plant was placed under receivership of the Government amid its bid to revive it and pay off the debts owed to the long term and short term lenders.

Since its closure, more than 1,400 former Pan Paper mill workers, lost their jobs and have been left jobless since then.

However, President Uhuru seems to assure them, “The good news also is that the investor has given an assurance that former employees of Pan Paper Mills will be given priority as the initial employees to be re-absorbed into the business.” Ironically, with 1,400 employees rendered jobless, it will be interesting to know how the plant will, “Yield close to 1,500 jobs for the people of Bungoma and Western Kenya within the next 3 years.

Read: Investing in Agriculture in Bungoma County.

How Webuye went down with Pan Paper

Webuye remained a tale of a true ghost town that long lost its glory with the coming down of the then source of the town’s grace, Webuye Pan Paper. It is now seven years since the factory went into oblivion. Residents were left with only some tattered shreds of hope of either the National Government or the County Government of Bungoma coming out one day and bringing the company back to life. Close to 1500 people who were directly depending on Pan Paper for livelihood lost their jobs, shopping centers that were beaming with life closed down, families broke, education was affected and the town curled its tail, like an elephant, full of potential but slowly rotting from within.

The mills that used to keep the town alive with their unending sound went dead. Even the smell that used to notify any stranger that Pan Paper was alive and kicking is no more. Servant quarters that used to glitter with white wash as families moved here and there are now occupied by monkeys and shrubs with insects checking in with their shrieks every nightfall. Bars closed. Hotels no longer cooked food. Bodaboda operators started living on the hope of other passengers coming by. Even the evening ladies, who use to make their living had nothing to fall back to.

At the moment, for any curious visitor Webuye is a town where a skilled machine operator, an out-of-work shopkeeper as well as hotelier, a worried parent and a scared businessman tell the same story, the story of no money at all.

Read: Investment Opportunities in Bungoma County.

Fallacies surrounding the opening of Pan Paper

The opening of Pan Paper has been surrounded with fallacies since the year 2011.

• In 2011, the government released 1 billion shillings for its revival. The plant started production on a Saturday October 22nd 2011 after a closure of more than two years after its first re-opening in 2010 on July 28 by Former President Mwai Kibaki.
• The factory was grounded to a halt after two weeks when three of the mills failed. Then, it had only managed to produce 40 tonnes of paper through the paper production machine number 3 which was half its average production per day that was normally 80 tonnes.
• With its revival, two of the four mills at the factory were shut again just a few days later leaving more than 400 people who had been recalled jobless

When the factory went down two weeks after taking off, some of the issues that were cited and had not been taken care of were:

• The change of name
• Technology
• The supply of wood.
• The electricity bill of over a 100 million shillings.

The reviving of Pan Paper has often been built on Pipe promises by the politicians.

With its closure, a string of intriguing political promises followed about its reopening but what the Government does not want to admit is that the closure of the plant put it in a catch 22 situation. Even if it was to keep the opportunists at bay, still there are more moral questions that the Government has to contend with.

• Should have the government reopened the plant in total disregard of the scientific evidence showing the dangers that this plant exposes people to?
• Even if we presuppose that the management will be streamlined; would it not be prudent for the Government to minimize the hazardous emissions first, before the plant reopens?
• Will the minimization of pollution levels be cost effective? Third; knowing very well that the plant’s consumption of trees far outpaces the rate at which trees are replanted, shall we not be going against our resolve of conserving our vital water towers?

Aware of these issues, the Government must not keep the hopes of the residents alive in futility. It must take a bold step and inform them that it is in their own interest and that of the country that the plant be re-established as multi-sectoral.

The sub-sector contributes to poverty reduction, employment and wealth creation in Kenya through effective planning and implementation of multi-sectoral programmes and projects that create meaningful development and wealth creation for the county.

Alternatives to Pan Paper

Is it wise, at the moment the hot cake for any enterprising entity is throwing their feet into distilling homemade whisky otherwise known as local brews like Chang’aa which is popular in the Western region.

If the government is really out to revive the paper factory, then it could consider reconstructing it to fit the manufacture of another product apart from paper. Who still needs paper anyway? With the advent of technology, paper use is going to be minimal, maybe for tissue paper which the government could decree all companies to recycle plastic products and make tissue paper. Even the class one pupils will soon abandon using paper if the digital learning dream comes true.

With the legalizing of local brews, which are ordinarily pure untapped whisky or rather wines and spirits, albeit a precondition they be verified and certified by the Kenya Bureau of Standards (KEBS), it could be important if distilling of the liquor was done at a central place. Constructing a new plant and acquiring a distiller could prove so expensive than just rechanneling an already existing plant and acquiring the distiller.

Consequently, getting the raw materials for large scale distillation that would pass for branding, certifying and shelving could prove a challenge to the brewers but western province stands a greater chance due to the heavy presence of leading sugarcane factories; Mumias, West Kenya and Nzoia sugar companies that are capable of producing molasses. Molasses is a major raw material for high quality whisky popularly known as Chang’aa. To boost and as well as promote business opportunities for our people in line with the vision 2030, it would be wise if the government called for bids to potential investors to take over, revamp and turn the mill into a distiller factory.

Similarly, Kitale and the larger Uasin Gishu region is the grain basket of the country and it is just a stone throw away and thus passes for a good reason why the paper mill should be restructured to be a flour processing factory.

This, will be as beneficial to all western province and North Rift towards the larger maize growing region as they will have a factory to be proud to be associated with. The cost of transporting their maize too far away factories will be reduced thus more money in the pockets of the farmers. Apart from being financial friendly, it will spiral growth of other related industries and with the devolved governmental structure, many people will get job opportunities.

The economy of the region, in this case, Bungoma County, which has already been singled out by experts as being one of the potential resourceful counties in the country, will grow by un-imaginable speed. In addition, being an agricultural region, it will be of great importance to the people of western Kenya if the mill is turned from the over polluting paper factory to a more productive manure factory. With paper, the environment is set to be polluted as many trees will be fell thus no rains, no fresh air hence diseases, hunger and underdevelopment.

Manure is degradable and environmentally friendly and thus passes as most viable investment for the people of Western Kenya, who despite having productive agricultural soil, they lag behind in agricultural productivity due to use of inferior manure. Fertilizer manufacture wouldn’t be as difficult as raw materials are readily available around the region what with sugarcane leaves, peelings and stems that are left to rot while other farmers choose to burn them. This could be the most cheap but productive investment. More so, such raw materials as sugarcane leaves, banana, leaves, maize stalks, cobs and other agricultural waste products could be turned into animal feeds such as hay. With fertilizer from sugarcane leaves and peelings, this is a success story as it has already been tried with sugar factories such as West Kenya and Mumias.

A milk factory also comes in as another potential area of alternative investment now that statistics indicate that there are over 30,000 cane farmers selling their produce to Nzoia Sugar Company.

Now, suppose each farmer was empowered with a capacity to rear 10 dairy cows with each capable of producing 20 liters’ of milk per day retailing at Sh20 per liter. This is a huge income to the farmer. In addition, this will not only be beneficial to the dairy farmers but has the potential to generate surplus capital to engage into other milk products processing.

Further, with proper success skills and innovativeness from experts, new forms of green energy can be utilized for the famers through tapping of biogas energy to use in their own homes however, it requires the political will to do this as well.

Political will that will provide an economic alternative creating another kind of development is imperative. It is feasible, and elements of it exist even in the present political-economic system.

Very briefly, it has to be based on two basic premises: Rely far more on the internal rather than the external market. The biggest driving force of the internal market is the purchasing power of the ordinary people derived from employment growth.

Growth of the internal market through rapid employment growth, requiring a far more selective approach to globalization, is essential rather than repeating the mantra that there is no alternative to this corporate-led globalization.

Is the current announcement that Pan Paper will be revived another fallacy? It is about waiting, watching and folding our hands in hope.

Article by Juma Fred.