High taxes, illegal practices killing fish factories in Nyanza

A private fish processing factory in Homa Bay County hired 210 people when it began operations in the region two years ago.

Located about five kilometres from Mbita town at Koguna Beach, Lake Treasure has now reduced its staff to about 100 due to high operational costs and other challenges.

The firm has hired drivers, cleaners and workers involved in filleting fish at the main plant for export to the European market.

Sadly, the fate of these employees hangs in the balance because the plant is going through troubled times.

Several processing firms in the region have gone the same route in the last two years due to dwindling fish stocks, poor infrastructure and perennial power outages.

Capital Fish at Koginga Beach shut down operations nearly a decade ago. Lake Treasure is the only surviving plant in South Nyanza and one of only two in the lake region.

It nearly suffered the same fate as the other competitors but was salvaged by a private investor in 2019, who operates other firms in Uganda. 

The general manager, Surendra Shetty, said the factory was built in 2009 and operated for three months before it was forced to shut down because of challenges related to power outages and poor infrastructure, especially bad roads. 

After some of the issues were addressed, the firm was reopened in 2019.

Fresh challenges 

But there have been fresh challenges, which include illegal fishing practices, reduced supply of raw materials and high taxation, which threaten to halt operations.

In 2019, the factory would process up to 15 tonnes of fish a day. It was operating optimally, processing and packaging fish for export to Europe.

But it now takes up to two weeks for it to process 15 tonnes of fish. “We work three times a week, instead of six days. We get fish from Homa Bay and Siaya, but it’s below processing capacity,” said Mr Shetty.

Sometimes workers are instructed not to report to work when the supply is low.

Despite this, a Sh60 million fish processing plant was commissioned in Kakamega County on July 12 as the devolved unit seeks to mobilise farmers to embrace aquaculture to improve their income.

The county government has signed an agreement with the DAS Group, a firm involved in fish processing, to start operations at the factory. The investor has reportedly injected Sh40 million into the project.

The factory was constructed under the Economic Stimulus Programme (ESP) from 2009-2012 but has been dormant due to lack of funding. 

Kakamega County has 6,976 fish farmers and 9,988 fish ponds. The county can produce 1,798 metric tonnes of fish in six months, which is way below the factory’s capacity. The private investor is targeting the European Union market.

Homa Bay Senator Moses Kajwang said he will make a statement on the floor of the Senate this week on the state of the collapsed fish factories in Nyanza and seek government intervention to revive them.

Dwindling supply of fish

“It’s a shame that fish from the lake region has to be transported hundreds of kilometres for processing. We need to look into ways of reviving factories that were closed years back,” he said.

The senator called on Nyanza governors to take advantage of the factories to create job opportunities for the youth.

“County governments can use the factories to do value addition and transform rural communities. There could be other factors that affect the growth of fish factories in Nyanza. We must address them,” he said.

Mr Shetty said the main problem affecting factories is the dwindling supply of fish.

Homa Bay County fisheries director George Okoth said fish production in Lake Victoria has reduced to 25,000 metric tonnes annually from as high as 100,000 metric tonnes 20 years ago.

Illegal fishing is said to be a major problem. Rogue fishermen have introduced trawling, an illegal practice that has interfered with fish population in the lake.

Homa Bay agriculture and fisheries executive Aguko Juma said they are working with other agencies, including Kenya Maritime Authority and Kenya Coast Guard, to eliminate such practices.

“We have a strict policy on hygiene and do not buy fish that has been handled carelessly. Traders who think this requirement is harsh take their stocks to Uganda and other firms that do not pay much attention to what they are supplied with,” Mr Shetty said.

Lake Treasure deals in Nile perch and does not buy fish when the swim bladder is removed as it compromises quality.

High cost of production

The sale of fish bladders, locally known as mondo, is a booming business. Traders who sell swim bladders separately no longer supply the firm. Mr Juma said many traders focus on selling mondo, reducing fish supply.

In order to operate their machines the right way, Lake Treasure must collect fish until it reaches a certain quantity, before processing. Sometimes it takes two days before the firm has adequate raw material to operate. 

Lake Treasure also decried the high cost of production that affects the sale of processed fish.

"We pay up to Sh3 million on electricity bills monthly. This is besides other expenses like repair of broken machines and vehicles. At the end, our products are taken to the market to compete with others which are cheaper,” Mr Shetty said.

On top of operational costs, it also has to pay taxes both at the county and national level. This has forced some of the investors to relocate to Uganda and Tanzania, where the fish industry gets adequate support and preferential treatment from the government.

About more than 30 years ago, Sabuni Road in Kisumu County was a booming business district with many trucks loaded with fish from the lake, headed to fish processing plants.

There were eight factories, namely Afro Meat, Midas Fish Processors, Peche Foods, Fish Processors 2000, Tijani Fish Factory, J Fish Kenya Factory, Victoria Delight and East Africa Sea Foods. 

They majored in filleting the Nile perch for export. The plants were a major source of employment for thousands of residents. But now, East Africa Sea Foods is the only company still in operation.

Fish Kenya factory was shut down more than 20 years. It was once a vibrant fish factory that had employed many.

Fish business

Ms Judith Akinyi, who has been a fish monger for the last three decades, said J Fish Kenya Factory collapsed after the owner died. 

“Due to mismanagement, bankruptcy and the dynamics in the fish business, the factory collapsed,” she said. 

They used to process the leftovers after filleting, such as the skin, oil and the bones (mgongo wazi). “Back then there were so many fish factories, it was easier to access fish but as the supply dropped, the price of fish increased,” she said.

A kilo of Nile perch now goes for up to Sh330. The factories source for fish from Yimbo, Usenge, Nyandiwa and Luanda Kotieno Beach. 

Ms Pamela Atieno, another fish monger, said the factory bought fish from Uganda to sustain operations. “Once we buy the mgongo wazi, we fry them and sell locally between Sh50 to Sh100, depending with the size,” said Ms Atieno, who usually buys 1000kg of fish parts. 

Mr Michael Otieno, a fisherman at the Dunga Beach, said became tough after the factories stopped operations. 

"They were employing many people. After they closed, we were left jobless. The government should intervene and revive them to save the local economy,” he said.

Kenya Fisheries Service inspector Stanley Tonui said there are only three plants that are still operational in Western region. “The rest collapsed after the Imperial Bank, which was financing them, went into receivership,” said Mr Tonui.
 
“Each had the capacity to process up to 40,000kg of fish daily. All their fish would come from Uganda and Tanzania and had a ready market in Europe,” he said.

Reported by George Odiwuor, Elizabeth Ojina and Benson Amadala