Next Story
You are here  » Home   » Smart Harvest

How mega importers reap billions from hungry Kenyans

By Moses Michira | Published Sun, January 21st 2018 at 09:31, Updated January 21st 2018 at 09:35 GMT +3
The price of dola flour has risen from Sh90 to 110 in different shops in town. [Photo/Duncan Ocholla]

A soaring food crisis that hurt millions of poor households just became a boon for the super rich.

Two Mombasa-based billionaire families have emerged as the biggest winners in the just ended government subsidy on maize. Apart from the mega profits booked from buying cheap and selling expensive, the two families are pocketing the bulk of the Sh9 billion spent by the State on the subsidy programme.

Most of the 6.7 million bags imported into the country were brought in within the subsidy period by three firms associated with billionaire Merali and the Patel family’s Export Trading Company. Both families have been in the trade of commodities for decades, some controversial, making a kill from the hunger crises, including last year’s.

The last importation under the subsidy programme -- 38,500 bags -- was by the Meralis through their firm, The Commodity House, which arrived in Kenya in the Christmas week.

Naushadali Merali and Masumali Merali own The Commodity House, Hydery – another large importer, while a third firm Stuntwave is linked to the billionaire widely known as Naushad Merali. Efforts to ascertain whether Naushadali and Naushad refer to the same person were futile, but the billionaire has previously been tied to Hydery hence the connections.

The Commodity House’s last consignment arrived just in time before January 1 when duty waiver was lifted, translating to a major windfall for the already wealthy importers. Fears are rife that the importers may have rushed to ensure the imported maize landed – but not distributed to millers, before the subsidy window closed to maximize profits.

Grain Bulk Handlers, which owns the only terminal where dry cargo ships are discharged, had several weeks ago raised concerns about the piling maize stocks.

Michael Mwakamba, the general manager of Grain Bulk told reporters in mid-November of a drop in off-take of the maize from his facility, in a plea to his customers - the importers.

“In total, there are about 135,000 metric terms of maize and wheat in our silos awaiting collection,” said the GM.

Since mid-November when Mwakamba granted a media interview, more than 1.2 million bags of maize have been imported by sea and into the GBHL facility – less than a third of the amount by millers.

Capwell Industries Limited, Kitui Flour Mills, Pembe Flour Mills and Mombasa Maize Millers which manufacture Soko, Dola, Pembe and Taifa brands respectively, collectively imported 60,000 tonnes (about 667,000 bags).

Seaboard Corporation, which owns 35 per cent in Unga Group, imported 70,000 bags through its trading subsidiary, sources indicated. The amount of maize imported by the millers is less than a tenth of the cumulative shipments in the May to December period.

Unga Group Managing Director Nick Hutchinson said all millers had finished the stocks imported under the subsidy programme, and that they were already purchasing supplies from the open market.

“Members of the association currently have no subsidized maize left in the stores. They are now buying maize from the open market at market determined prices,” Mr Hutchinson, who also chairs the millers lobby, said on Friday.

In the subsidy plan, importers brought in maize and sold it to the State at Sh3,600 per bag – at a significant mark-up from the original buying price. Millers would then buy the same maize from the National Strategic Reserve at a lower rate of Sh2,300 a bag, meaning they were paid Sh1,300 on every bag if they were own importers.

Most of the importation, which is highly capital intensive, was however done by two major commodity trading families.

Government officials reported that a UK international trading firm known as Holbud, also associated with Mr Merali, would import the maize under the subsidy programme. Little is publicly known about ETC, owned by the Export Trading Group, despite being among the biggest players in commodity trading.

Official information about the maize imports show that ETC brought in maize worth nearly Sh4.2 billion in custom value for the estimated 1.5 million bags.

Its imports alone can sustain the country for at least two weeks at the ordinary consumption rates of 100,000 bags a day. Chief executive Kalpesh Patel could not be reached on phone as we were going to press. Withdrawal of the maize subsidy is already causing a remarked spike on maize prices as the market adjusts to the shock – with an even bigger rally on flour prices that have nearly doubled.

Would you like to get published on Standard Media websites? You can now email us breaking news, story ideas, human interest articles or interesting videos on: [email protected]