The Moi ‘hustler’ who runs bixa, a lucrative lipstick cash crop

Let us talk of bixa, or what is known as annatto. Perhaps you have never heard about this crop, but you will now. Not because the Daniel arap Moi regime sold a Coast-based bixa parastatal to former State House operative Joshua Kulei’s company but because of yet another opportunity we have missed as a country.

How many people know that Kenya is one of the few producers of this drought-resistant food-colouring plant whose red colour is used in the manufacture of lipstick, shampoo, skin care products, dye and whose oil is used as part of the Caribbean cuisine?

This plant, which also grows in Peru, is used as a coating pigment in medicinal tablets, as a spice and in the shoe polish industry.

Once again, the Kenyan coastal counties are sitting on a potential that could turn around the fortunes of thousands of households.

Unfortunately, their governors do not seem to realise this.

But how did Kenya get here? Initially, we had a parastatal that was to promote the growth of the bixa industry.

But in May 1995, a company associated with Mr Kulei took over – or rather bought – Bixa Company Ltd and in essence, the control of a lucrative cash crop that only grows in the coast of Kenya and a few South American countries. After that, very few people talk about it.

When Bixa Company Ltd was sold, another Kanu operative – Lawi Kiplagat – was the chief executive of the Executive Secretariat and Technical Unit of the Parastatal Reform Programme Committee. Enough said.

The selling of this parastatal happened under the watchful eye of the International Monetary Fund, which was pushing the Moi regime to dispose of “non-strategic” firms to private entities.

Several NGOs protested, saying some of the targeted parastatals were strategic in nature.

They were being offloaded to ruling party Kanu bigwigs and politically-correct individuals. And that was true of Bixa Company Ltd.

In his heydays, Mr Kulei was the closest you could get to Moi as he was the president’s personal assistant.

There was also the razor-thin gap on what belonged to Moi and what Mr Kulei owned. 

For in almost all companies associated with the president, Mr Kulei was the signature identity, operating more like a mask – a mask that later became the face.

In modern-day Kenyan parlance, Mr Kulei was a “hustler” – for before he met President Moi in 1978, or perhaps earlier, he was a lowly-paid warder who used to take and supervise prisoners to work in the Home Affairs minister’s farm and compound.

When Moi became president, Mr Kulei joined the oligarchs as a homeboy – wining and dining with them. The rest, as they say, is history.

Mr Kulei is today the chairman of a multibillion-shilling empire called Sovereign Group and describes himself as “a man who has enjoyed considerable success in the field of business and finance through his astute acumen and ability to identify opportunities and develop them”.

Respected elder

Mr Kulei also describes himself as “a highly respected elder and a member of the Geographical Society”.

Apart from the salary he got, and we cannot doubt the “highly respected elder”, we are left to believe that it was through Mr Kulei’s “astute business acumen” and “ability to identify business opportunities and develop them” that made him a billionaire.

If I were Mr Kulei, I would pen a rags-to-riches frontier tale on how to become a billionaire and rival William C. Rempel’s recent autobiography on billionaire Kirk Kerkorian: The Gambler - How Penniless Dropout Kirk Kerkorian Became the Greatest Deal Maker in Capitalist History.

How else would we as a nation learn to grow wealth?

Enough of Mr Kulei, and now to bixa – the crop that his firm controls through Sovereign Group of Companies.

When the Moi government handed over Bixa Company Ltd to Mr Kulei, it was akin to giving western Kenya’s cotton to a single firm.

But there is little his company can do with bixa apart from contracting a few farmers.

When it existed, Kenya Bixa Company Ltd was a parastatal but was, we were told, run down and earmarked for sale as a non-strategic enterprise.

Interestingly, and Parliament was told as much, the sale was never advertised and the parastatal was “privatised”, or rather sold according to the National Treasury, through pre-emptive rights.

Besides the National Treasury, the other shareholder was Bharat Industries Ltd and which had in 1992 indicated that it was willing to sell its shareholding to Toyota Corporation (TTC) on the basis of an independent valuation that had been carried out by the Ministry of Supplies and Marketing, then under Mr Musalia Mudavadi.

There was a reason Toyota was interested in this crop.

Japan is one of the largest importers of bixa, mainly for the country’s food and beauty industry.

By the time Mr Kiplagat decided to sell this parastatal, it had 100,000 ordinary shares.

Silently, the government asked four companies to calculate the value of the shares.

Price Waterhouse valued the company as Sh125 per share, Githongo and Company Sh658 per share; KPMG Peat Marwick (Sh472) and the Kenya Bixa Company Ltd Management Sh698 per share.

Thus, the parastatal was sold for Sh69.8 million to Mr Kulei.

But the parastatal had not collapsed for lack of market. It had been brought down after farmers were frustrated with payments.

In 1986, Matuga MP Boy Juma Boy told Parliament that the cultivation of bixa was going down as farmers were making a paltry Sh1.80 per kilo of the by-product while the company was selling the same for Sh500.

He said bixa farmers were uprooting the crop and growing maize instead.

Mr Boy added that the factory in Diani would be of no use to the country if the farmers uproot all the bixa grown since colonial days.

He said there were only 1,000 acres of bixa in 1985 but the land had shrunk to 300 acres in a year.

Factory collapsed

The lawmaker told the House to take the matter seriously and predicted the demise of the factory due to lack of raw materials. The factory collapsed and was sold to Mr Kulei.

The story of bixa factory is also connected to the collapse of the cashewnut processor.

We know that because Parliament was later told in 1999 , that Mr Kulei “colluded with Kilifi District Cooperative Union directors to defraud farmers their pre-emptive rights to buy Kenya Cashewnut Company, giving rise to a loss of Sh78 million paid by the society”.

This information is contained in the Eighth Report of the Public Investments Committee tabled in the House by Kipipiri MP Mwangi Githiomi on June 17, 1999.

It claimed that later, the directors of Kenya Bixa Ltd transferred spare parts belonging to Kilifi Cashewnuts to their own company after directors of Kilifi District Cooperative Union signed blank forms purportedly transferring the 65 per cent shareholding of their company to Mr Kulei, V.C Desai, N. Korir, B.K. Rotich, P.K. Shah and W.K. Sambu – who also controlled Kenya Bixa Ltd.

The cooperative society had no such authority from its members, Parliament was told.

The equipment transferred from the cashewnut factory to Kenya Bixa Ltd included weighing scales, computers, vehicles, 21 machines – some of which were “moved to a sister company in Tanzania” – a steam boiler, dryers and steaming unions.

That is why the committee in its report recommended that Attorney General Amos Wako – now Busia senator – prosecutes Kenya Bixa Ltd directors “for conspiring and colluding to defraud Kilifi District Cooperative Union of its rightful shares”.

Privatisation mess

It also recommended the prosecution of Mr Kulei and Lawi Kiplagat and who was blamed for the privatisation mess. Nothing happened. 

Kimilili MP Mukhisa Kituyi described Mr Kiplagat in the House as “the most notorious of them all”.

When prodded to prosecute, Mr Wako later said it was a civil matter and that the government “didn’t know what happened between this union and the ultimate purchasers in whom the shares are registered”.

What we now see is a cash crop that was caught in the privatisation mess and where Kenya has lost an opportunity to progress.

But there is an emerging global window of opportunity since bixa, or rather annatto, is set to replace all chemical origin raw materials as an eco-sustainable natural solution.

As a dye product, it will be in demand by the food dye, fabric and cosmetic industries.

It is estimated that by 2022 the consumption of annatto will be 942 metric tonnes and could grow further.

The question is: shall we be in that market – or it will be in the hands of the Moi-era hustler?

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Editor’s Note: In a previous version of this story, we mistakenly used the photo of Mr Julius Muthuka Kilongosi, a bixa farmer, to illustrate the story. We apologise for any embarrassment caused to Mr Kilongosi and his family due to this error.