Premium

Ugali politics as prices fall by half

A protestor holds a plate of ugali outside parliament buildings. [File, Standard]

Kenyans will for the first time in weeks enjoy cheap ugali after the government announced the launch of a subsidy programme for maize flour.

In what looks like a political coup by outgoing President Uhuru Kenyatta’s administration, the Ministry of Agriculture, Livestock, Fisheries and Co-operatives (MOALFC) announced that a 2kg packet of maize flour would retail at Sh100 for the next four weeks, a reduction of 60 per cent from the current price of Sh250.

“The MOALFC shall subsidise the price of maize flour being produced/sold by the miller for a period of four (4) weeks from the date of this contract,” said the Principal Secretary for Agriculture in a contract document whose authenticity The Standard could not verify.

However, sources aware of the deal confirmed that indeed the subsidy is in the works, with the government only waiting to tie up the loose ends.

“Yes, it is true. This week the price will come down to Sh100 for a 2kg pack,” said a source familiar with the matter.

Another source only said millers and the government were still engaged in talks.

Attempts to reach officials at the Ministry of Agriculture, including CS Peter Munya, were unsuccessful as their phones went unanswered.

The maize subsidy programme adds to a bag of campaign goodies President Kenyatta, who backs Azimio la Umoja-One Kenya presidential candidate Raila Odinga to replace him, has offered Kenyans to cushion them against the high cost of living.

Already, the government had waived import duty on non-genetically modified organisms (GMOs), yellow maize and animal feeds.

The government has also waived all levies charged on imported maize.

Millers will sell to retailers a 12-pack bale of 2kg maize flour at Sh1,080, which translates to Sh90 for a packet.

The government will in turn compensate them Sh1,120 for the 12 packets of unga, or Sh93 for one.

This is expected to lower the price of 2kg maize flour to Sh100 for the next four weeks, a huge relief for many Kenyan households who were struggling to feed themselves due to the expensive staple.

A calculation by The Standard showed that the government could end up paying Sh140.2 million for the subsidy, considering that Kenyans consume an average of 3.75 million 90kg bags of maize in a month.

A 90kg bag of maize produces, on average, thirty-six 2kg packets of maize flour.

To ensure the millers keep their end of the bargain, the Ministry of Agriculture will deploy its representatives to the premises and depots of the millers to verify the invoices of the customer for the maize flour being sold. They will also authenticate the delivery or dispatch document evidencing the sale of sifted maize flour.

The ministry will verify each of these documents by signing and stamping to confirm proof of sale.

The miller shall, on verification by an officer of the Ministry of Agriculture, raise and submit invoices daily for the subsidy amount together with a copy of the signed dispatch document to the Principal Secretary for the ministry for payment.

The announcement of the subsidy has not been received well by critics, who question where a cash-strapped government that is also struggling to maintain a fuel subsidy, will get the money.

“I don’t know what miracle they will do for maize to retail at Sh100,” said Dr Timothy Njagi, a research fellow at Tegemeo Institute.

Various brands of maize flour in a retail shop. [Courtesy]

“Folks, this season of subsidies is a cruel game of bread and circuses being played by the Jubilee administration,” said Kwame Owino, the chief executive officer of the Kenya Institute of Economic Affairs, in a tweet.

Kwame said the government was too cash-strapped to be offering all these niceties, including fuel subsidy.

Unlike in 2017, when another controversial subsidy programme was implemented, the government has not indicated how much it intends to spend on the current subsidy programme.

It now means the government will not only compensate millers for the foregone revenue but also traders to import the cereal from outside of the East African Community (EAC) duty-free. Imported maize will also not attract levies.

There are striking similarities between the proposed subsidy and the one that was implemented in 2017. The main similarity is that both subsidies are being implemented in the run-up to the General Election.

In both times, the scarcity of maize had been occasioned by poor rains as well as expensive fertiliser, which saw a lot of farmers reduce the acreage of the cereal.

Under the duty-free regime set in motion on April 13, 2017, private individuals and agencies were allowed to import into the country five million bags of non-GMO white maize, while 22 animal feed manufacturers were licensed to import 450,000 tonnes of yellow maize valued at Sh10 billion.

This means under the duty-free regime, the country should have imported by end of September 2017, yellow maize valued at Sh3.6 billion and white maize valued at Sh16 billion (or five million bags), bringing the total value of imported maize to Sh19.6 billion in the third quarter of that year.

But data from the Kenya National Bureau of Statistics (KNBS) showed that maize valued at Sh27.6 billion came into the country, reflecting Sh8 billion more than what was supposed to be imported.

Eastern Africa Grain Council Chief Executive Officer Gerald Masila, in an interview with The Standard, said with the ongoing Russia-Ukraine war and the expected poor harvests this season due to expensive fertiliser that saw some large-scale farmers fail to grow maize, things will only get worse.

This means the pain might get sharper after four weeks when the subsidy comes to an end and a new government takes over.

Due to the high cost of fertiliser, the government has launched a fertiliser subsidy programme and has since released Sh5.8 billion for this input and others.

By Dominic Omondi 36 minutes ago
Business
Kenya a major recipient of green funding in Africa
By Brian Ngugi 36 minutes ago
Business
State auditor: NSSF expenses high, irregular
By John Shilitsa 36 minutes ago
Business
Hit by cash crunch, counties seek to diversify own revenue sources
By Patrick Alushula 36 minutes ago
Business
William Ruto savings drive could cost State up to Sh46bn annually