Miraa exporters up in arms over illegal payment to cartel

Kenyan miraa exporters are protesting over an expensive commission they have been paying to a faceless cartel. [David Gichuru, Standard]

Kenyan miraa exporters are fuming over an expensive commission they have been paying to a faceless cartel since the resumption of trade with neighbouring Somalia in July.

The traders are claiming that they were first made to accept the commission under duress to unlock the lucrative market that had been suspended since the outbreak of the Covid-19 pandemic in March of 2020. The commission which is being collected at the point of hiring airfreight is $4.5 (Sh540) per kilo of miraa exported to the Horn of Africa nation.

"It is a draining commission that has driven up the cost of our products in the Somalia market and made it expensive compared to competing stimulants from Ethiopia," said Kimathi Munjuri, chairman of the Nyambene Miraa Traders Association (Nyamita) which is the most vocal lobby in the khat value chain.

Kenyan traders said the faceless cartel that has been benefiting from the commission has also set a maximum daily export limit of 19 tonnes meaning they could be collecting up to Sh8.5 million daily from the value chain. The traders claim the commission has pushed the price of Kenyan khat (miraa) to an average landing cost of $23 a kilo giving it little chance against Ethiopian khat (Herera) which is currently available at $18 a kilo at the Somalia market.

"The quality aspect is no longer working for Kenya," said Munjuri.

Tariffs deal

"Ethiopian producers have since the three years we were out of Somalia market upped their production levels and quality to match ours. So we have no edge unless we create it by negotiating a better deal in tariffs and removal of this commission."

Traders also incur farm gate prices, packaging and loading at production level plus farm to airport transport costs, airport handling and freight charges plus a US$4 (Sh480) a kilo import levy in Somalia. There is also a US$1 (Sh120) incurred in landing, handling, agency and distribution costs meaning that legally miraa land in the Somalia market at US$5 (Sh600) per kilo.

When miraa exports resumed on July 24, traders who resumed trading numbered 16 but have since reduced to seven due to low markups made from the former lucrative market. Only three miraa flights are currently happening between the two countries and Kenyan produce is struggling to fulfil the 19 tonnes limit. In a letter to Agriculture and Food Authority (Afa) Director General Beatrice Nyamwamu, the traders lobby claim the commission is being collected by airlines on behalf of a clique of individuals who are purported to be officials of the Somalia government and also known to some Kenya government officials.

"Since the industry is clearly under the capture of the cabal, we wonder whether this who arrangement is emanating from the bilateral agreement," the traders said in their letter to Ms Nyamwamu dated August 26.

According to Kimathi, the commission arrangement poses a major risk to the industry which was in the past accused by some United Nations (UN) agencies of having links with terrorism financing. Miraa value chain insiders, however, believe some Kenyan officials working with rogue Somalia counterparts are benefiting from the commission.