Millers left holding Sh1bn debt baby in unga subsidy plan
A group of millers who supplied maize flour under the government subsidy programme have been left stranded and with debts estimated to be more than Sh1 billion, two weeks after the scheme closed.
The controversial subsidy, whose intention was to reduce the retail price of maize flour to Sh100 for a 2kg packet from about Sh225, was officially wound up on August 24.
By Thursday, however, an insider told the Nation that invoices valued at about Sh1.1 billion that were delivered by the millers to the Agriculture ministry had not been settled.
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The last invoices were delivered two weeks ago and the millers expected that the ministry would settle them within the five days stated in the subsidy contract.
This has put the millers on a collision course with maize suppliers, who expected to be paid for deliveries on time.
Yet to be paid
“About 45 millers are yet to be paid. In total, about Sh1.1 billion worth of invoices delivered by millers have not been paid,” a source involved in the subsidy programme told the Nation yesterday.
The source indicated Sh4 billion that had been credited to an escrow account that had been opened to run the subsidy was already depleted. Millers who spoke to the Nation yesterday expressed fear that failure to pay the money would wreak havoc on their businesses’ cash flow.
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“I owe my suppliers upwards of Sh4.8 million for the maize they supplied to me three weeks ago. We operate through a model where they deliver grains then I pay them after milling and selling. I have been forced to stop milling as I wait for payment from the ministry since they are not supplying more grains,” said Mr Peter Ndungu, a miller in Nakuru.
Debts to suppliers and banks
Mr Ndungu feared that his business assets were on the line due to debts he owes suppliers and banks. He, however, hopes the ministry will settle his invoices by next week.
Mr Robert Kimani of Kiwa Millers said the company is owed Sh20 million and had to run to banks to get credit to keep its machines running.
“We were told that the money was depleted and that the ministry wanted to do all the calculations first before requesting for additional funds to clear all invoices,” he said.
Most of the millers fear the government may refuse to pay them, as it did in 2017, when more than Sh500 million that was owed to some millers was not settled until this year, when the government needed them.
Out of town
Efforts to get the ministry to clarify the status of the subsidy programme, including what is owed to millers and plans to settle the invoices did not yield any fruit Thursday, with Crop Development Principal Secretary Francis Owino’s office indicating that “he was out of town”.
Millers are questioning the usage of the Sh4 billion that had been set aside for the four-week programme, claiming that the ministry had used part of the money to settle millers’ 2017 debts, causing the shortfall.
Under the 2022 subsidy programme, the government catered for Sh105 for a 2kg packet of maize flour, meaning that the Sh4 billion would have subsidised at least 38 million 2kg packets. However, controversy stalked the programme since its launch on July 22, with many Kenyans complaining that distributors hoarded the commodity, only to release it after the programme period ended two weeks ago.
“It was unscrupulous wholesalers and distributors who hoarded unga in large quantities, which they are now releasing to the market to make huge profits. The Kenya Revenue Authority can find out when they purchased the maize flour they have flooded the market with,” said Mr Antony Wambugu, a miller.