KENYA – In addressing the high cost-of-living haunting most Kenyans, the government has plans to import cheap foods to be distributed through 120,000 shops after receiving Sh24 billion (US$42.4m) backing from KCB Group.
State-owned Kenya National Trading Corporation (KNTC) said it had secured a letter of credit—a guarantee that a seller will receive a buyer’s payment on time — from the bank to support the importation of 100,000 tonnes of household goods on a duty-free basis.
“We have been financed by KCB 100 percent, and we are still in talks with the other international banks for more support,” said Pamela Mutua, managing director at KNTC, adding it has opened talks with the Egyptian Bank Afreximbank and Trade Development Bank for financing.
The Ministry of Trade said KNTC has already mapped 120,000 retail shops across the country where cheap imported foodstuff will be stocked as the government targets to ease the cost of living that pushed inflation to 9.2 percent in February.
Trade Cabinet Secretary Moses Kuria told the Business Daily that the ministry’s estimates show the cost of basic food commodities will decrease by at least 30 percent under this duty-free import scheme.
He added that KNTC, which is importing the foodstuff, will sell these commodities directly to the shops that have been mapped out, hence reducing the long value chain that eventually makes the goods expensive.
The import scheme intends to force other manufacturers to lower their prices of basic goods, with the government stepping in as the de facto controller of the cost of essential commodities.
The KNTC will set the retail prices of goods which include cooking oil, sugar, rice, and beans, in its quest to lower the cost of basic commodities as it seeks to stabilize the runaway price of goods on the shelf, which has seen a two-kilo packet of sugar retail at Sh312 with maize flour of similar quantity going for Sh200.
Kenya Revenue Authority issued an exemption on duty to KNTC for the importation of 125,000 tonnes of cooking oil, 25,000 tonnes of rice, 80,000 tonnes of beans, 200,000 tonnes of sugar, and 150,000 tonnes of rice.
This is in addition to the previous duty exemption on 100,000 tonnes of sugar, 100,000 tonnes of rice, and 900,000 tonnes of maize issued in November last year.
“Supply and demand forces will manage the RRP (recommended retail price). This will not collapse the market but increase competition. It will also ensure other traders manage their pricing, achieving the overall objective of price stabilization,” Ms. Mutua noted.
Mr. Kuria highlighted that the program will run for a year as the state continues to address the high cost of production through subsidy of key commodities to farmers, such as fertilizer. He hopes that by next year the country shall be self-sufficient.
Conversely, maize millers in Kenya are staring at possible losses following the country’s legislature’s move to reject the disbursement of KES2.9 billion to pay for a government-sponsored maize subsidy scheme rolled out in the second half of 2022.
In addition, the long-awaited relief for farmers grappling with the high cost of animal feeds was cut short after the cabinet failed to discuss the importation of yellow maize amid the closing import window, Business daily has reported.
Therefore, it could mean that farmers will still have to grapple with the high cost of feed in the coming weeks until the cabinet approves the matter.