A man walks with packets of subsidised maize flour as members of the public queue outside a supermarket on Digo Road in Mombasa on August 5, 2022.
| File | Nation Media GroupNews
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Revealed: How traders conned State of Sh7.2bn Uhuru maize subsidy
Unscrupulous traders took advantage of the fact that subsidised maize flour in former President Uhuru Kenyatta’s Sh7.2 billion plan was not clearly marked as such to hoard and sell it at higher prices to unsuspecting consumers, MPs have said.
The National Assembly Committee on Agriculture, in its report released on Wednesday, revealed how the Jubilee administration failed to put in place stringent regulatory measures to ensure that consumers received the staple at affordable rates following the sky-rocketing of maize prices from Sh3,500 to Sh6,000 per 90-kilogramme bag, caused by an acute shortage of the commodity in the market.
The House team led by Dr John Mutunga said millers capitalised on loopholes to hoard the subsidised maize flour and sell it at above the Sh100 per two-kilogramme packet, resulting in massive loss of funds.
“The sifted maize flour under the programme was not stamped ‘Subsidy’ and this may have reduced the success levels of the programme because the flour could have been hoarded by unscrupulous value chain players and sold at higher profits at the end of the programme,” the report reads.
It reveals how the low-cost maize flour was not distributed through the value chains by the millers since it was not their responsibility to ensure that the affordable unga reached all consumers.
“The programme may not have achieved its intended objective of supplying sifted white maize flour to citizens in all parts of the country at the price of Sh100,” states the report.
The team also faulted State agencies for failing to provide proper documentation on how the payments were made.
“Of the Sh4 billion that was paid to maize millers, Sh500 million was paid to CMA [Cereal Millers Association] to cater for the interest accrued from the debt owed to millers for the Maize Flour Subsidy Programme of FY 2017/18. Neither the ministry nor CMA provided a proper explanation of how the money was distributed to the millers. Despite undertaking to submit documentation on the same, none has been received by the committee so far,” notes the report.
The MPs have, however, recommended that the State allocates Sh500 million owed to members of the Grain Mill Owners Association (GMOA) in the budget estimates for FY 2023/24 and paid as their computations were clear, the membership of the association that participated in the programme was static and they did not participate in the Maize Flour Subsidy Programme for FY 2017/18.
“Sh814 million that was paid to GMOA under Article 223 of the Constitution be regularised because the committee established that there was value for money on the association’s part. Further, the Ministry of Agriculture and Livestock Development should come up with a policy on how to engage in future subsidy programmes within three months of the adoption of this report and submit a copy of the same to the committee,” said the MPs.
Long-term interventions
The team recommended that to maintain stable production and prices, the government needs to focus on long-term interventions that will improve productivity and lower the production costs per unit.
“These include, among others, water harvesting and stormwater management initiatives to preserve water during the rainy season for sustainable production year-round and climate-smart agriculture. Increase investment in irrigated agriculture by both the national and county governments as in the case of Galana-Kulalu Irrigation Project to increase the area under irrigation,” reads the report.
The country stares at shortages of the commodity as the prices of grain and flour have gone up.
A 90kg bag of maize is retailing at between Sh6,000 and Sh7,500 in the North Rift region.
The planned importation of 10 million duty-free maize meant to lower the cost of unga faced uncertainty after most millers and traders pulled out of the programme due to increased prices of the commodity in the global market, with two months to the expiry of the import window.
Less than two million bags of maize have been brought into the country under the duty-free maize and other cereal product import scheme that was launched in February and is set to come to an end in August.
Most large and small-scale millers said they opted out of the scheme due to the high cost of white maize in the international market after the government set the landing price of the commodity at Sh4,200 against Sh6,200 per 90-kilogramme bag as the cost of unga remains above Sh200 per two-kilo packet.
The United Grain Millers Association Chairman Ken Nyaga recently said none of its members qualified to be issued with import licence to bring into the country the duty-free maize at the proposed government rate of Sh4,200 per bag.
“Most of our members could not afford the high maize prices in the international market, forcing them to opt out of the duty-free import programme,” said Mr Nyaga.
Some members of the Cereal Millers Association, who had applied to participate in the scheme, pulled out following the disagreement on landed prices.
According to Mr Nyaga, the government owes small-scale millers Sh500 million, making it difficult for them to access capital to import the grains.
“Most of our members are faced with financial challenges to import the grains due to delays by the government settling the Sh500 million debt. Some of them were also not issued with import permits,” said Mr Nyaga.
Farmers are calling for more budgetary allocation to boost food production and reduce the importation of foodstuff.
“What farmers require is additional funding, at least 10 per cent of the national budget as per the Maputo declaration, to lower production costs instead of introducing extra indirect taxes,” said Mr Kipkorir Menjo, Kenya Farmers Association director.
