Opinion: Have the Jubilee forgotten Mumias?

In the recent time, not so long ago, the Mumias Sugar Limited was involved in not only spending big on political campaigns in 2017, but they also got big payouts with funds reviving the company that same year in 2017. Now two years after the previous elections, the KCB Bank put the company in receivership. This means the funds are insolvent and they struggle to raise enough funds to keep it afloat. That means the owners like Evans Kidero, Amos Wako and Henry Rotrich are struggling to keep it alive.

Surely, they didn’t see this coming. In 2000 and in 2001, the turnover records was set for the company. Since then the privatization and the other measures done, has clearly made the company volatile, as well as the opening of the boarders for more sugar imports. This must have all hurt the turnover, the profits and the margins of the company. Like back in 2008 alone, the company was behind over 50% sugar production in the Republic. That means and shows the importance of Mumias and its operations in Kenya.

Therefore, when it falls as hard it does today. It shows that its left behind. That the business-model, the strategic enterprise isn’t working. Maybe even, that the Jubilee haven’t seen it as an priority post-2017 Elections. We know the importance of it, as it is reported that professor Tom Ojienda has also obtained and solicited illegal funds from this company. That is why we know its vital place in the political sphere and in the republic as whole. The elite has been eating of the company and enjoyed it services, to a point that its crashing.

The millers, the sugar-farmers and the workers are the losers, as the receivership means the bank will runs the operations, until they possibly find a buyer. Someone buying its stake, since the company lacks funds to operate properly. This means, the investors and buyers needs to be loaded, to be able to fill the gaps of financial input, which is clearly needed. That is ironic, knowing how many campaigns, how much the company has gotten favours and how it has high-ranking officials whose had shares in the company.

The income statement on FT says it all: “Year on year Mumias Sugar Company Ltd’s revenues fell -34.06% from 2.09bn to 1.38bn. This along with an increase in the cost of goods sold expense has contributed to a reduction in net income from a loss of 6.77bn to a larger loss of 15.14bn”. This shows how its burning funds and not earning at this point.

We can wonder if the Jubilee will bail on this one or if they are planning ahead for 2022 and want the support of Kakamega. This would be a vital investment, not only in the sugar business, but in the region. As they would save a big business, which has been the biggest producer and miller on the market. This is if the Jubilee cares, but if they are reckless, than they let it go. But then expect them to pay a price. As they are destroying an old institution, business and former state owned enterprise, which is now in the mercy of Kenya Commercial Bank (KCB).

This is not a good look. So my question is, have the Jubilee forgotten this company and its role in society? Or do they think there is someone else’s turn to have that place?

I don’t know, but this is shady, letting a company like this fall and one, which process sugar from the farmers. They will be limbo and need to supply other millers, since this one cannot sustain itself and needs new investments to cover the losses. In the end, the sugar-farmers are the losers. Peace.

DPP: Press Statement – Investigation on Allegation of Irregular Payment of Kshs 68,000,000/= made by Nairobi City County to M/S Wachira Mburu, Mwangi & Company Advocates (26.04.2019)

EACC: Press Statement on Investigations into Two Allegations of Irregular Payment of Kshs 68 Million by Nairobi City County Government to Wachira Mwangi and Company Advocates (26.04.2019)

#WeKnowYourSalary: Its about revealing the misuse of their role as a Public Officials!

If you thought the revelations in Kenya on the Social Media was about showing the sky-rocketing pockets and the super-soaked wealth of the highest ranking officials in the Country. Your wrong, this isn’t to show how they went from being petty civil servants, preachers and whatnots a decade ago. No, this is to show how murky the grounds and how they have swindled the state. To become extravagant and wealthy.

This is how key public officials in both the counties, in the ministries and as parliamentarians are using their positions, their knowledge of trade and also creating tenders to secure wealth for themselves and their close-knit family. This is how someone working as procurement manager and also as MCA suddenly has a palace, dozens of cars and owning plenty of land. Just mere a year ago, he couldn’t even splash out on the pub on a round of beers. Now he can buy the bar and build a garage for his SUVs. That is what this is about.

Because this is about how the likes of Deputy President William Ruto can own a mansion complex, dozens of houses, a car-park, choppers and earning measly millions. This is about how the family of Kenyatta can own more and more businesses, while the state is lacking funds. This is how other Cabinet Secretaries goes from being poor to suddenly become billionaires. They are all suddenly well fortunate and able to build houses made of dreams. They can own cars that only are in magazines, they can own local hotels, farms, industry and even media if they have enough cash. This is people that is supposed to represent the people and serve them.

Not take from them and later charge them, not only take the taxes, but they are also eating of the profits in the private sectors. Nothing is holy. The Cabinet Secretaries, the President and DP knows this, the local government politicians knows this. The people deserve to know how the ones humble fellow human beings becomes richer than God. They become so wealthy, they can take the bank on a trip to Dubai and rent Lexus in Las Vegas. This being brothers who couldn’t even afford to share a chicken as students.

That is why this is important. To show the disgrace this officials are, how they are eating of the public and have no scrutiny. How they are emptying the state reserves and taking the public for granted. That is why they run for office. Not to represent anyone, but to pocket the taxpayers money, use the position in the state and also get corporate deals with the state. All of this to enrich themselves on the office, not to serve the community. That is just something they say to look good. But when the measures and the end of the day is shown, the bills and the tab will be on the state, while the public see very little, but the official will have the cake, the coffee and the bride. While the public will have the bread-crumbs. Peace.

Bitter-Sweet Sugar: Cartels total control and inaction of Jubilee – Contaminated imports for profits!

We can wonder and think, who in their right mind orders contaminated agricultural products, rebrand it and sell it on the open with a clear conscious. That is what should bugle us right now. That the Kenyan Authorities together with the Sugar Cartels are accepting this and profiting on it. If they hadn’t, they wouldn’t have ordered, imported and tried to sell it on the market to the consumers. That is what is up and happen as the minor stops of it. The people should be worried about the authorities and what they are exposed too on the daily basis. When they cannot even trust the white sugar they are consuming.

The Kenyan people should worry, that the illegal imports through Kismaayo of Somalia, the illegal cartels of Mombasa and other places are highly-connected has pocketed key figures of industry, ports and in the ministries. If it wasn’t so, they would have had more trouble with the law. They wouldn’t just take a load of contaminated sugar, they would have ceased more and banned this trade. However, the government are doing little except tough talk. Even Cabinet Secretary Fred Matiang’i is supposed to die over this, but he will not stand-by his side-dish. So I doubt it.

It is like the Jubilee knows about the ill they are getting in, thinking of the profits and of the friendly owners of the millers. Without thinking about the citizens who possible consuming it and how it might hurt them. If it is contaminated, it might damage the body and even cause fatal ills for someone. Then someone dies over something as petty as illegal and deadly sugar. Has that even been considered? Wouldn’t that been an avoidable tragedy?

That the government, the agencies and the authorities in general haven’t delivered is obvious, while this is not only hurting the average citizen. Who could be worried about going to the market and supermarket to pick a kilo of sugar. But also the farmers who produce for the millers. They don’t know if the millers and the authorities is helping to sell second-level or third-level products from afar. While rebranding it with their labels, like the ones that comes from the local producers. Then the public will loose trust with the millers who makes this sugar.

This here is the proof of how not to run, how not to delegate and not to use the oversight role as government, as they are misusing power, being in bed with the cartels and not giving a fig about the population. Because if they know they are illegally importing through Mombasa and Kismaayo, the authorities should stop it and get rid of it. Not let it go, let it be rebranded and made ready for the market. Because then the suppliers, the supermarkets and the consumers all loose on it. Only the Sugar Cartels and the Importers earns on it.

They are spiking, they are playing and coming with a dangerous product that shouldn’t be consumed by people. It should be used for matters, if not just confiscated and destroyed at arrival. Than ask for reparation of damages and possible breaches of contract, as they we’re not given edible sugar. But dangerous ones, that shouldn’t be produced in the first place. Peace.

A Working Paper reveals the political stakes in the Kenya-Somali Illegal Sugar Trade!

The Danish Institute for International Studies (DIIS) have had a study into the border trade and sugar exports through Somalia into Kenya. How it is used and how it gets to the market. Clearly, the market for sugar is there in Kenya. As the Sugar Industry is struggling to deliver enough sugar and the state has embargoed imports. Still, the same actors and the same politicians are doing behind closed doors agreements that put the sugar in stores through the porous borders of the Kenyan-Somalian border.

The paper itself paint the picture very well and show the importance of the export, since the magnitude on both economies are affected by it. It is also implicating big names and their organizations. As the politicians has another black-market cartel item to sell to the public. What was striking was that the importers together with local merchants are repacking the sugar into bags of the State Owned Entity (SOE) of Mumias. The Company that has been saved the state after devastating corruption and also lacking investment into the mills. Therefore, the politicians has used this name to trade illegal sugar with name. That they even used the stickers to prove it was of Kenyan quality while selling it to the public.

The quotes I have taken, is what see as important. But its compelling to show the this illegal imports into Kenya affects the politicians and the economy in general. Take a look!

The Amount of Money:

“Raw sugar accounts for 10% of total Somali imports rated at US $188 billion (Observatory of Economic Complexity 2016). In other words, sugar importing is enormously lucrative and important for the local economy on both sides of the border. The sugar imported from Somalia is central for covering the production and import deficit in Kenya. Most sugar enters through Kismayu port where it is manually loaded onto trucks and driven to the Kenyan border. There it is re-loaded onto other trucks, four-wheel drive vehicles and even donkey carts to cross the border on the so-called ‘rat routes’ that circumvent the border posts to avoid the payment of bribes, random checks by the Kenyan Revenue Authority (KRA), and the occasional confiscation. Based on interviews and observation JFJ estimates that 150,000 tons of illegal sugar entered Kenya from Kismayu in 2014 (JFJ 2015). This amounts to US $400 million worth of annual revenue divided between KDF, Al-Shabaab, local businessmen and politicians, as well as local police and border patrols, including the KRA (though this is not formal revenue) (JFJ 2015)” (DIIS Working Paper, P: 10, 2017).

KRA:

“The investigator explained how his unit, in collaboration with the Kenyan Revenue Authorities (KRA) and the Kenya Bureau of Standards (KEBS), had planned the raid of a warehouse in an industrial area of Nairobi. They had found tons of processed Brazilian sugar allegedly smuggled into Kenya via Somalia, and it was now being repackaged from 50 kilo sacks into 500 gram and 1 kilo bags bearing the Kenyan brand Mumias Sugar and with added stickers from KEBS showing that the product meets Kenyan standards of production and quality. The repackaged sugar is – when not confiscated by the authorities – sold to retailers as refined Kenyan sugar at a huge profit. In 2014 a one kilo sugar bag sold for KES 133 in Nairobi supermarkets, and by May 2017 prices had gone up to KES 170 with some supermarkets rationing it to one package per customer” (DIIS Working Paper, P: 12, 2017).

Political Influence:

“Like the former Nairobi governor Evans Kidero, the Garissa governor Nathif Jama Adam, and the Garissa-born majority speaker of parliament Aden Duale are rumoured to be implicated in the sugar trade (Rawlence 2016: 236). These rumours reach all the way to Nairobi where they can be voiced more freely than in the north. The power of the people implicated by the rumours is more distant in Nairobi, whereas in the northern parts of Kenya the secrecy associated with the rumours points to the importance and power of those involved” (…) “With devolution, local government has become more powerful and more is at stake for locally elected officials due to their increased budget responsibilities and decision-making powers. Concomitantly, local government has become more vulnerable to pressures from local stakeholders like strong businessmen, militias and other state actors. The porous border, the circumvention of border patrols, and the implication of government officials ranging from KDF to KRA means that much of the sugar is not declared to Kenyan customs officials, making Garissa county one of the largest illicit markets in the country. The flow of goods across the border and further into Kenya formally falls under the responsibility of KRA and the national government. Yet the county government is responsible for local revenue collection and enforcement at local markets and car parks, and they also issue licenses for traders. In that sense the warehouses in the region fall under county administration. The latter thus plays an important role in the possibilities for the redistribution of smuggled goods” (DIIS Working Paper, P: 15, 18, 2017).

This here is evidence of cartels, illegal trade that is benefiting the political elites in Kenya and in Somalia. They are both having knowledge of it and its undermining the embargoes and also the activity itself. Since the politicians are the ones that has put in the provisions and the laws to stop imports to secure the local sugar industry.

This paper shows how much money that is involved. It is big business and the cartels are earning fortunes on lie, where they take foreign cheap sugar and trade it as Kenyan sugar with stickers of authenticity of KEBS. That is clearly a violation in itself, but combined with the illegal sugar, they are even using sophisticated methods to trade it to the public. To make the sugar seem like Kenya, when it isn’t.

That this money is shared by many different part of government officials was implicated int the trade from Kenya Defense Force Officials, Kenya Revenue Authority Officials, Border Patrol, Politicians and even Somali terrorist organization Al-Shabab. So the Kenyan are sending military to Somali to fight Al-Shabab, but at the same time giving them revenue with illegal sugar trade. That is a striking a fact considering the use of military to secure safety for Kenyans. Therefore, the cartels are also making sure the reason they are fighting inside Somalia are funded by the stakes into the illegal sugar industry. That should put some alarm bells on. That the politicians are playing with matches and should know that this cartel plus funding of Al-Shabab might hurt them in the long-run. Instead of being just a profitable business.

This is eye-opening and also a tale of corruption and sugar-cartels using the porous borders between the republics in favor of those dealing illegal sugar and selling it on the Kenyan market. Certainly, this sort of thing will implicate bigger names, than the ones mentioned in the paper. If investigated and looked through. You could certainly also find many bigger names who has created massive wealth within short amount of time. Peace.

Reference:

Rasmussen, Jacob – ‘SWEET SECRETS: SUGAR SMUGGLING AND STATE FORMATION IN THE KENYA–SOMALIA BORDERLANDS’ (December 2017) – DIIS Working Paper 2017:11

President Kenyatta orders that imports of Sugar and Milk Powder to be tariff free until August 2017, who in the Jubilee will eat the spoils?

President Uhuru Kenyatta finally found a solution to the rising the prices and inflation on basic foods. Therefore on the day there is 30,000 tons Sugar coming in at Mombasa this morning.

This after the first Executive Order of Kenyatta this year said: “That the drought and the famine in parts of Kenya is a national disaster, duty shall not be payable for the following items- 

(a) Sugar imported by any person, with effect from the date of Notice to the 31^st August, 2017; and

(b) nine thousand tonnes of milk powder imported by milk processors, with the authority of the Kenya Dairy Board, with effect from the date of this Notice to the 31^st August, 2017 Dated the 11^th May 2017” (The Kenya Gazette, Vol. CXIX – No. 62, Nairobi, 12^th May 2017).

So as this happens, you can wonder if the Sugar millers and Sugar exporters are connected with the government. Since the 30,000 tons just appear on the day after the gazette. That means, someone knew about the plans of the government and let it happen. It isn’t just appearing from the sky, that a holy angel sends 30,000 tons of sugar to Kenya and the Port of Mombasa on the day after the Executive Order was signed and than relieved to the public by Cabinet Secretary for the National Treasury Henry Rotich. He is just a useful CS, who certainly will have his pieces of deliverance of all the duty free goods.

That the government, close connections with the Jubilee government and the Sugar cartels will surely gain profits on these exported foods. This been in a country where the tariffs has been a 100% on Sugar and added VAT 16 %. Therefore, this reactions seem to be a ploy to earn monies on gullible people and think that the people will take it as goodwill. This is happening at the same time, as the prices on sugar is still on a two year low worldwide. President Uhuru Kenyatta and Deputy President William Ruto, might think the Kenyans doesn’t see through this. But they should question the companies, the boats and who orders the duty free goods to Kenya from today and until 31^st August.

Like who earns the profits on the sugar and the milk powder in these months. They are clearly planning it and not only for the famine and drought. But for sole purpose of gaining massive amount of funds in the period of campaigning. This just appearing and ordered in the critical time. The Jubilee government doesn’t know how to be subtle. Can wonder if any of the corporations and importing businesses owned by the Kenyatta’s or Ruto’s would benefit from this. I wouldn’t be shocked, neither if anyone else of the Jubilee government got a payday and huge amount of Bob’s in their accounts. Peace.

The law: 

Kenya: At the moment, Sugar is not sweet for Jubilee!

The prices of Sugar in Kenya is special experiment, as the taxation on imports of sugar is a 100% and also 16% VAT on the sugar imported. Secondly, the industry is controlled by the state, there been talk of privatization of millers owned and the Kenya Sugar Board who regulate the industry. As well as the Ministry of Agriculture is making sure the output of the farmers are corrected.

Therefore, as the prices worldwide is sinking and going-low, the prices of sugar are going up. This is happening in the months right before election time.

The government must know the industry is struggling as the only private miller Mumias are again on a downward spiral:  “Already, the miller has been closed for three months. According to managing director Errol Johnson the closure was meant to fix equipment, which had contributed to the company’s poor performance due to inconsistent maintenance. The closure from April 11 came barely a month after the cash-strapped miller received Sh239 million from the government, as part of the bailout strategy” (BiznaKenya, 2017).

That the Mumias miller proving the big-problems in the Sugar industry, as it has been evident for years. The agricultural output and yields haven’t been the issue alone, it is denial of the state to figure out working changes to the millers, the import and also control it has over it. That the government has the oversight and the insight to the issues, are clearly that the Jubilee haven’t been interested in-changing it, as the benefit of this system. Therefore, President Kenyatta and Deputy President Ruto hasn’t touched it or done anything else than bailing out Mumias on the last dive of the company. Therefore, the reports shown here. Proves the initial factors to the grand issues and why the prices are sky-rocketing, while the international prices are falling. Take a look!

Barriers for Sugar Productions:

“Sugar milling is a high fixed cost business requiring substantial economies of scale in cane crushed to break-even” (…) “Existing relationships of patronage between governments and large milling companies serve to align the incentives of government and millers such that new entrants would find it difficult to compete with incumbents and obtain the same benefits” (Chisanga, Gathiaka, Onyancha & Vilakazi, P: 12, 2014).

“Government ownership in the sector remains large, despite higher relative efficiency in the private sector and long term plans for privatization. While some privatization has taken place over the past decade, government-controlled factories held a 37 percent production share, with additional non-controlling shares in other firms. Part of the argument in favor of privatization is the relative efficiency of production in private mills over those controlled by the government” (…) “The local sugar milling market is quite concentrated, and combined with the barriers to trade this suggests that the largest players have significant power over prices. Mumias, the largest sugar company, had a market share of 38 percent of domestically produced sugar in 2011, lower than its typical market share due to cane shortages. Combined with the government-controlled share of the industry, this implies that essentially two entities control at least 75 percent of local production. The shares of local producers in domestic market sales vary quite widely depending on the period, as the volume of imports fluctuates a great deal. For example, Kenya Sugar Board data from the first two quarters of 2012 show importswere approximately 33% of local production” (Argent & Begazo, P: 5-6, 2015).

“Kenya National Bureau of Statistics, a government (Jubilee) body, reports that 2.2 million Micro Small and Medium Enterprises (MSME) have closed shop in kenya over the last five years. These are some of the reasons that inform our opposition to Jubilee. Personally, I think Uhuru and Ruto are fine Kenyans; wonderful husband to their spouses; incredible fathers to their children; and great benefactors to their elite friends, but have terribly failed in the duties of the office of the presidency” (…) “All sectors of Kenyan economy has been negatively affected by the floods of cheap imports, brought into kenya by unscrupulous businessmen connected to those in power, having unbridled freedom to import anything of their choice without paying taxes: From sugar industry; to textile; to agriculture, denying kenya the much needed revenue for development. Over the weekends, the leaders behave like Frank Lucas, donating part of the proceeds from these imports to the same societies they are killing by giving out these import certificates” (Sadat, 2017).

That the government haven’t made sure the industry and financial markets been sufficient is proven with the macro problems in Kenya. The import sanctions together with the stronghold control of certain millers and Kenya Sugar Board, there are patronage and cartels that sets the prices and the payments for the yields. Together with the storage and cane production that is initial to the issues that are there today. That President Kenyatta and DP Ruto hasn’t taken charge and paid amends is the reason for the prices at this point. That the Sugar Barons, Sugar Cartels and Sugar Companies are connected with government is understood as the politicians are taking handouts from them as well.

As the COFEK open letter to Kenyatta said so well and I will end with:

“No one in your government can categorically state how much stocks are being held in the strategic grain reserves. Casual talk of wanting quality of the same maize, from the millers lobby, heightens speculation that your government is unwilling to walk the talk on cutting the cost of living. As things stand, it is fair to say that your Government has taken a holiday on consumer protection as cartels take over the all-important food security sector. It follows that your government, is therefore, in breach of Article 46 of the Constitution you swore to protect. Needless to mention, it is a tall order for you to protect and uphold the sovereignty, integrity and dignity of the people of Kenya if they remain hungry – with a single or no meal at all, thanks to the high cost of living. Your government supposedly offers huge subsidies to farmers through farm inputs like fertilizers which do not get to them. It’s the middlemen and cartels who end up smiling to the bank as farmers toil in vain” (COFEK, 2017).

Peace.

Reference:

Argent, Jonathan & Begazo, Tania – ‘Competition in Kenyan Markets and Its Impact on Income and Poverty – A Case Study on Sugar and Maize’ (January 2015)

BiznaKenya – ‘Mumias Sugar to close indefinitely over cash problems’ (08.05.2017) link:https://biznakenya.com/mumias-sugar-close-indefinitely-cash-problems/

Chisanga, Brian; Gathiaka, John; Nguruse, George; Onyancha, Stellah & Vilakazi, Thando – ‘Competition in the regional sugar sector: the case of Kenya, South Africa, Tanzania and Zambia – Draft paper for presentation at pre-ICN conference, (22 April 2014)

Consumers Federation of Kenya (COFEK) – ‘Cofek open letter to Uhuru Kenyatta on high cost of living’ (02.05.2017) link: http://www.cofek.co.ke/index.php/news-and-media/1718-cofek-open-letter-to-uhuru-kenyatta-on-high-cost-of-living?showall=&start=1

Sadat, Anwar – ‘REVEALED: WHY The ECONOMY is Almost COLLAPSING Under Uhuru Jubilee Regime, GoK’s Kenya Bureau of STATISTICS Exposes Shocking Numbers’ (07.05.2017) link: https://www.kenya-today.com/opinion/revealed-economy-almost-collapsing-uhuru-jubilee-regime-government-body-kenya-bureau-statistics-exposes-shocking-numbers

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