What you need to know:
- This catastrophe in the world’s largest coffee growing country caused acute shortages in the global markets for years as prices hit the roof.
- Kenya’s sophisticated elite and traders took full advantage of the global demand and Uganda’s troubles.
- The new coffee millionaires were not taxed after President Kenyatta refused to tax the incomes of the smallholder coffee producers during the boom period, leaving the windfall to the farmers.
Two events happened in the ’70s that turned scores of politically-connected Kenyans into instant millionaires and sharply increased the country’s foreign exchange reserves. They both involved coffee.
First, in July 1975, temperatures in Brazil plummeted to below freezing point, destroying more than 70 per cent of the South American nation’s crop.
This catastrophe in the world’s largest coffee growing country caused acute shortages in the global markets for years as prices hit the roof.
Then in July 1977, the erratic Idi Amin, who had taken power in a coup, rounded up all Americans living in Uganda. President Jimmy Carter responded by imposing a trade embargo on Uganda’s $250 million annual coffee trade with the United States.
It meant Uganda’s coffee farmers could only beat the embargo by selling through Kenya.
Kenya’s sophisticated elite and traders took full advantage of the global demand and Uganda’s troubles.
The epicentre of their black market trade was a small village in Bungoma on the Uganda border called Chepkube.
Every night, between 1974 and 1978, trucks weighed down by thousands of bags of smuggled coffee rumbled along Chepkube’s narrow roads.
The coffee market usually opened at midnight to the wee hours of the morning. By sunrise, it was over.
As the illicit trade boomed, a new breed of carefree millionaires emerged in Kenya. They snapped up upper class properties in Nairobi and Mombasa, bought brand-new vehicles, flew first class, and uncorked extravagant wines at overnight parties for their friends and smuggler-equals.
The smugglers — a coterie of senior politicians, administrators, and traders — all hooked together by the cash-minting thrill at night, turned the once-sleepy village of Chepkube into a paradise — or simply, Black Gold City, as one newspaper called it.
Chepkube, with an estimated population of 2,400 in 1975, was a relatively easy crossing point for the smugglers. But it was not the only one.
Other black-markets had emerged at Sio Port and Alupe in Busia, creating a smugglers’ basin of fortune.
IMPACT ON ECONOMY
The impact on Kenya’s national economy was huge. In 1977, for instance, the balance of payments recorded a Sh2.2 billion surplus for the first time, while the foreign exchange reserves reached a record level of Sh2.7 billion.
The gross domestic product increased by 7.3 per cent in real terms, while the number of people in paid employment increased by 5.3 per cent.
On the other hand, the supply of money went up sharply by 47 per cent.
Back in Kampala, Amin had given his British military adviser, Bob Astles, permission to shoot all smugglers on sight. But his unpaid soldiers were part of the racket.
They would chase the farmers carrying coffee to snatch it from them and sell to their own agents. At that time, the value of the Ugandan shilling had plummeted, with Ush100 exchanging for Ksh10.
With basic commodities like sugar, soap, fuel, tea, and detergents lacking in Uganda, Kenyans did rolling barter trade at the border.
“If the Ugandan coffee farmer manages to reach the border with his commodity and sells it to either an agent or a dealer, the first thing he does is to buy at least a loaf of bread and eat it there...” wrote one columnist. “The next thing he thinks of is to get hold of a drink… They make sure they do not carry the Kenyan money with them for fear that it may be snatched by the soldiers.”
ORIGIN OF BODA BODA
With Amin’s soldiers always on the lookout, smuggling brought with it a new mode of transporting the cargo in small packages. It was the bicycle which moved from border to border across the no-man’s land, evading customs and the soldiers.
The term boda boda originated from this trade.
The new coffee millionaires were not taxed after President Kenyatta refused to tax the incomes of the smallholder coffee producers during the boom period, leaving the windfall to the farmers.
The trade was risky and the coffee traders always went to Chepkube armed with guns.
Take the case of Joseph Mararu. He was arrested in 1977 with eight bags of coffee and charged with driving an unregistered vehicle, disobeying the local chief, dealing with coffee without a licence, and keeping a firearm in an unsafe place.
One reporter who travelled to Chepkube recalled that at the height of the boom, prostitutes charged Sh500 from a low of Sh50. (A bag of coffee cost between Sh400 and Sh500). A bush doctor had also opened shop at the centre to treat venereal diseases.
MUD WALLED STORES
Mud-walled coffee stores where the contraband was hidden had mushroomed at the centre, guarded by men armed with simis and hidden pistols.
One Saturday, December 18, 1976, things went badly wrong at Chepkube at about 4pm. Some people reportedly broke into one of the stores where coffee worth millions of shillings was hidden.
The owners of the coffee arrived with armed hoodlums and a fight with simis and pangas ensued. When calm was restored, 10 people lay dead and more than 40 injured.
Bungoma District Commissioner George Mwangi gave all non-resident traders in the market 24 hours to leave. They refused. That is how Joseph Mararu was arrested and charged with disobeying the local chief.
The gravity of the smuggling was exposed when Labour Minister, Ngala Mwendwa, told a meeting that the smugglers were senior government officials.
“They do it in government vehicles and, by virtue of their positions, no one can question them. You just salute and let them pass… I am sure President Kenyatta is not aware of such people.
He is just being told that certain commodities are missing, but it is not explained to him why and how they are missing. Otherwise, he would have fired such people on the spot.”
Those who managed to smuggle their produce past the police roadblocks eventually used their Coffee Board licences to pass the beans as genuine Kenyan produce or export it on their own.
BARS AND HOTELS
In Nairobi bars and hotels, the smugglers washed down their “hard work”. They abandoned taking ordinary beers. At worst they were at home taking Johnnie Walkers in upmarket bars or down at the coast, where beach plots were snapped on offer.
It is estimated that between 1976 and 1977, more than 30 per cent of Uganda’s coffee production of about 70,000 tonnes was smuggled into Kenya
The smugglers spread their tentacles to the DR Congo, then known as Zaire. World Bank statistics show that about 40 per cent of Zaire’s produce was smuggled out between 1975 and 1977. Most of it passed through Kenya.
Then there were those who specialised in stealing from fellow smugglers. Others targeted coffee from local farmers.
In 1978, two MPs, Muhuri Muchiri of Embakasi and Makuyu’s Jesse Mwangi Gachago, were jailed for five years after they were found guilty of stealing coffee worth Sh1.2 million while in transit from Malaba to Mombasa. Muchiri had told the court that he had purchased the coffee for Sh380,000.
In an effort to stem the smuggling, the Cabinet announced in February 1977 that all export and marketing of coffee, tea, cotton, and horticultural products must be carried out through statutory bodies.
The bodies were Coffee Board of Kenya, Tea Board, Horticultural Crops Development Authority, and Cotton Lint Marketing Board.
But nothing much changed. In fact, the smugglers started stealing coffee from local farmers.
On May 5, 1977, Kangema MP Joseph Kamotho asked the government to form an anti-coffee theft unit to crack down on the thieves.
Mr Kamotho said he had no quarrel with those who smuggled coffee at the border and sold it through their own ways because they brought the money back to the country.
“But I am worried about our farmers who at present are spending sleepless nights in fear that their hard-earned coffee might be stolen,” he said.
In June 1977, Attorney General Charles Njonjo told Parliament that customs and airport officials must be having deals with the black market racketeers.
Mr Njonjo said that the thriving trade could not survive on such a large scale if the customs officers were strict. “Some of them must be in collusion with the racketeers,” he told Parliament.
Mr Njonjo noted that the black market in coffee was thriving, and that various commodities were being exported “tax free”.
He added: “Mysterious planes have been spotted at the airport. Where they have come from and what they do here nobody knows.
This is a serious matter because one day goods which could endanger the country’s security might be brought in without our knowledge.”
In June 1977, smugglers arrived at the Tanzania border town of Taveta looking for coffee. A report by the Kenya News Agency said that all available rooms in hotels and lodging houses were taken by “people never seen before in the area.”
Tanzania had in February that year closed her border with Kenya, leaving the country’s smugglers to transport the beans across the bush to Kenyan buyers.
“Transportation is done on people’s backs. They take it from Moshi area on the slopes of Mt Kilimanjaro, an area where coffee grows quite well,” the report said.
Kiambu police in November 1978 announced that coffee smugglers were using new routes to avoid roadblocks.
A senior police spokesman told the press that police would continue to deal with people found smuggling coffee from Uganda until smuggling was stamped out.
He said smugglers had been using some of the routes used by Safari Rally drivers by diverting from the Narok road to Kibiku, Kiserian, and Ongata Rongai via Ngong to Nairobi.
Then the bubble burst. Coffee prices fell sharply at the end of 1978. At the national level, Kenya used the boom to build a solid postal service, an airline, and railways.
The coffee boom had cushioned the country from the shock of the 1977 oil crisis.