New Year clouded by famine fears

Kenyans welcomed 2009 with joyous celebrations across the country amidst worries over drought and famine.

Concerns for the country’s political stability took a back bench as fireworks, shouts and song filled the atmosphere. For many, this was the first New Year feast in two years.

Last year began with political and ethnic clashes following disputed electoral results. The violence was to last till March 2008 when a peace agreement was signed between President Mwai Kibaki and his rival, Prime Minister Raila Odinga.

Amidst the ups and downs of coalition building, little attention was paid to the failure of seasonal rains. Most parts of Kenya, especially east of the Rift Valley, had very little rain in the second half of 2008. This is expected to worsen food shortages that have widely eroded the ratings of the Giant Coalition of Kibaki and Raila.

Just a few weeks ago, rumblings of discontent forced the government to take the unprecedented step of creating to different types of maize flour: one for the well-to-do and the other for the poor. By offering low-priced maize for the poor, Kenya was effectively getting into the food subsidy business which is currently the preserve of wealthier countries.

With clear signs of drought and the famine that goes with it, the government’s food subsidy bill is bound to rise astronomically. Already, the Treasury has ordered government ministries to shelve construction projects.

In their New Year speeches, President Kibaki and Prime Minister Odinga vowed to tackle high food prices. It remains to be seen how this will be accomplished without either running a gigantic debt or squeezing the earnings of farmers. The second option – lowering farm gate prices – is already running into problems.

While launching its subsidized brand of maize, the government banned millers from buying directly from farmers. Instead, farmers were to sell maize to the state-owned National Cereals and Produce Board (NCPB) at a fixed price. Maize farmers oppose the directive while wheat growers accuse the government of favouring maize farmers.

2008 food production was hurt by political violence. When the peace deal was signed in March, it was too late for the 2008 crop. Fertilizer stores had been looted and fresh supplies became extremely expensive. Those farmers not affected by violence could not afford fertilizer either, resulting in poor yields.

2009 food production will be affected by lack of rain and continued insecurity in the highly productive farmlands of the Rift Valley where ethnic clashes continue intermittently. Many farmers have not returned to their farms for fear of future attacks. All it takes is fallout between the president and prime minister before full scale violence resumes.

Meanwhile, the continued destruction of Kenya’s forest cover is negatively impacting food production. Once mighty rivers have become seasonal, many have dried altogether. Rainfall in former forest areas has declined dramatically and when it does rain, massive soil erosion is a consequence due to the lack of protective vegetative cover.

With clear evidence of food shortages, the government must import food but like everything else in Kenya, the importation process is mired in corruption and political intrigues.

It’s far from being a fair, transparent process.

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Price controls, subsidies to worsen food supply (previous article)
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Price controls, subsidies to worsen food supply

It’s a slippery path that many governments have taken to their ever-lasting regret. It usually starts off as a temporary measure to tackle rising prices for food, fuel and other basic commodities.

Prime Minister Raila Odinga and his Agriculture Minister, William Ruto, did not say it openly but the Kenyan government is now subsidizing foodstuffs.

Subsidies and price controls are used to calm a restive population from engaging in food riots. In some countries, food riots have toppled governments, hence the Kenyan leadership’s rush to re-introduce price controls and food subsidies.

Economists say that subsidizing food is the worst decision any government can make. It is not sustainable because food prices always rise as a growing population demands more food.

The Kenya government has announced two different prices for maize: one for the poor, the other for the middle class. The government will sell ‘government branded maize meal’ to the poor using a chain of government regulated retail outlets.

If there ever was a way of creating Zimbabwe-style shortages, this is it.

It gets worse: The government has instructed the National Cereals and Produce Board (NCPB) to buy maize at Kshs1,950 (US$25) a bag from farmers then sell to millers at lower rates. This means the government has to pay NCPB the difference. The decision was made after maize millers argued that they could not lower prices due to tight margins. With annual consumption of maize in Kenya in the millions of bags, the treasury must find hundreds of millions of dollars for the new subsidy.

The Kenyan government’s intervention will distort the food market to such an extent that the poor will be the biggest losers. There is no guarantee that only the poor will by the cheap, ‘government-branded’ maize. The nature of economics is such that entrepreneurs will strive to obtain the cheap maize at Shs52, then supply it to upper-income retail outlets at Shs72, thereby making a huge profit.

The poor will eventually realize that, while their shops are empty, the supermarkets of the upperclasses will be fully stocked. This is exactly the case in Zimbabwe, where government price controls have twisted the market into epic proportions. It is not that goods are not available in Zimbabwe, but nobody is willing to sell at the state-sanctioned rates. The black market has pushed inflation to world record levels.

With time, the Kenya government will find it impossible to sustain food subsidies. The millers will find it difficult to operate in a restricted market. Yesterday, the government banned millers from buying directly from farmers. Several millers may close shop under such a stifling business environment.

The supply of maize will get worse because a government-controlled distribution chain inevitably breeds corruption. Unlike a free market situation which is dictated by forces of supply and demand, a state-controlled supply chain will create opportunities for kickbacks, horse trading and extortion.

Creating two sets of prices for the same commodity is ill-informed decision making. Why should a supplier sell maize to the poor at Shs52 yet the same commodity can fetch Shs72 a couple of hundred meters away?

The government’s plans to launch ‘branded’ packets of cheap maize are likely to draw the wrath of the World Bank and IMF. In the early 1990s, the Kenyan government implemented the two institution’s recommendations to open up the economy following rampant inflation, shortages and corruption by officials who were supposed to supply the commodities. Since then, supply has been constant even though prices have risen.

In the 1980s, Kenyans had to walk long distances looking for maize, wheat and milk because price controls encouraged hoarding. A similar situation is in store for a population already used to the abundance of liberalization.

There are fears that a black market in maize and other food stuffs may emerge. A black market will fuel inflation and put food prices outside the reach of the majority.

Black markets are controlled by criminal organizations and groups like Mungiki will have a new source of income. At the same time, black markets are not subjected to quality standards and consumers will be exposed to poor quality and dangerous food stuffs.

Jamhuri Day mass action looming

Fed up with a cruel and corrupt leadership, Kenyans across the social divide are planning to express discontent during Jamhuri Day (Independence) celebrations on December 12th.

A past demonstration along Nairobi's Moi Avenue.

A past demonstration along Nairobi's Moi Avenue.

The plans are as varied as the number of groups in the country. There are those calling for a White Ribbon campaign, where everybody attending Jamhuri Day rallies puts on a black shirt and white ribbon as a silent protest.

Then there are those calling for a total boycott of Jamhuri celebrations so that Kenya’s big-mouth politicians face empty stadiums. Debate is raging on whether to advance the boycott to include shunning voting come the next General Elections.

One thing is certain though: a major showdown looms between the politicians and the concerted power of the people. Indeed, the kind of discontent being witnessed in Kenya today has resulted in the toppling of governments elsewhere in the world.

The Kenyan government can take solace in the fact that a uniting personality, such as South Africa’s Nelson Mandela, Russia’s Boris Yeltsin or Poland’s Lech Walesa is yet to emerge into focusing the people’s anger towards tangible action.

The White Ribbon campaign is championed by the Mars Group, an anti-corruption body associated with Mr. Mwalimu Mati. Mars wants peaceful mass action as opposed to revolutionary tactics. Mars Group is urging all Kenyans to attend Jamhuri Day celebrations dressed in black T-shirts and white arm bands as a show of solidarity against a thieving political class.

Kenyan legislators, judges, diplomats and other office holders have flatly refused to pay tax, even as they enjoy exaggerated pay. The President of Kenya earns almost as much as the United States president or the British Prime Minister even though Kenya is at the bottom of the development ranks.

Furthermore, Mars Group is mobilizing Kenyans to boycott paying taxes, considering that 85% of the national budget is used to fund a bloated cabinet, paying entertainment allowances, buying luxury cars and building offices. Only 15% of Kenya’s budget is left for roads, water, electricity and health care systems.

To add to the pain, Kenyan politicians have been implicated in the worsening shortages of maize, wheat and sugar. Prices have risen dramatically in the past couple of weeks after politicians took up all the supplies at the National Cereals and Produce Board (NCPB) in order to sell to millers at 26% profit. Prices of maize are getting outside the reach of Kenyan families. Consequently, hunger looms as the Christmas festivities draw nearer.

Here’s an excerpt from the Mars website:

Each month Kenya Shillings 102 million (US$1.3 million) will be spent on household and press services for President Kibaki, Prime Minister Raila and Vice President Kalonzo, which is more than the funding for roads nationwide. Kalonzo will get 100 million shillings ($1.2 million) for travel this year while people are starving in Ukambani. Raila’s household funding is more than the money allocated for slum-upgrading.

The Kenyan government is not likely to take the prospects of people power lightly and there’s a strong possibility of riot police being unleashed to cause disruption. Due to these fears, there are voices calling for a total boycott of Jamhuri Day celebrations. According to one blogger, walking into stadiums wearing black T-shirts and white ribbons would mark oneself as a target by riot police, with the prospects for arrest.

A boycott of the celebrations would certainly send a wake-up call to the government to change its ways. Considering that Jamhuri celebrations are usually covered by the international media, the spectacle of an empty stadium will be too embarrassing for the government.

It will show the politicians that Kenyans can chart their own destiny and are no longer willing to be used as sacrificial lambs to advance political careers. As Kenyans have been asking, what was the point the violence witnessed after elections, yet the politicians are quick to unite when oppressing the people?

There is bitterness among the Kikuyu ethnic group with President Kibaki for urging forgiveness for the perpetrators of ethnic cleansing. The Kalenjin are disillusioned with Prime Minister Raila Odinga for not appreciating the community’s role in forcing Kibaki to the negotiating table.

At least 1,000 people died in political and ethnic clashes between January and March this year. Hundreds of thousands of others are still living in refugee camps as its too dangerous to return home. Peace talks that ended the post election violence resulted in the current coalition government with Kibaki retaining the presidency and the new post of Prime Minister created for Raila.

Though Raila enjoys fanatical backing amongst his Luo tribe, many are of the opinion that he is not fulfilling his campaign promises. Last week, residents of Raila’s constituency in Langata ambushed a visiting United Nations delegation to protest rising food prices.

Such is the sense of helplessness among Kenyans that the turnout in the next elections will be the lowest in history. It would be interesting because the voter turnout in the 2007 polls was the highest ever recorded since independence in 1963. However, the 2007 polls were messed up so badly that the actual winner will never be known. For this, the government, the Electoral Commission of Kenya and politicians are to blame. None of the competing parties had any intention of conceding defeat.

One woman who lost her home in election violence told a TV station that she will never vote again. “I exercised my democratic rights but I was punished for electing a leader of my choice. Then what is the point of elections if you cannot vote freely?”

An election boycott would be a sign of frustration with Kenya’s politicians. Whoever becomes President, or Prime Minister, will only manage a few thousand votes.

There’s growing realization that only concerted action by Kenya’s citizens will save the country from destruction. Unless action is taken, the next General Elections scheduled for 2012 could be the end of Kenya as we know it.

Discontent on the rise as greedy politicians steal state maize

Kenyan politicians have lost all shame as they out-do each other in squeezing the last drop of blood from the country’s long-suffering citizens.

It is now emerging that politicians and their allies are putting pressure on the state-owned National Cereals and Produce Board (NCPB) to stop selling staple grains to milling companies.

Instead, the NCPB is forced to sell to the politicians at low prices so that they can demand hefty profit margins from millers.

As a result, consumer prices for maize meal have risen from Kshs85 (US1.1) to Kshs120 ($1.5) within a week. The price increase is disastrous in a country where more than half the population is surviving on less than $1 per day.

Kenya’s supermarket shelves are empty, an eerie resemblance to the situation in Zimbabwe. As a result of this unprecedented state of affairs, massive discontent is brewing among the Kenyan populace, as a greedy ruling elite plots the next orgy of rape, murder and ethnic cleansing.

In recent weeks, Kenyan legislators and judges have resisted paying taxes even as manual labourers earning a few dollars a day bear the burden of financing a bloated 42 member cabinet.

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Below are excerpts of the story from the Daily Nation (click here for the full story).
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A racket involving senior politicians and businessmen has been blamed for the artificial shortage of maize and maize flour that has hit many parts of the country.

Investigations by the Nation indicate that the politicians have been buying maize from the cereals board and selling it to millers at exorbitant prices.

Letters from the Ministry of Agriculture are being used by the cartel to authorize the purchase of maize from the National Cereals and Produce Board. The cartel later resells the maize to millers at a higher price.

The shortage of maize has seen the price of the staple maize meal shoot from an average Sh85 a week ago to Sh120 for the two-kg packet.

Sources have revealed that those in the cartel, including a number of MPs, have made millions of shillings from the dubious deals.

On Monday, Prime Minister Raila Odinga held a crisis meeting with a Cabinet sub-committee on food security where they decided that middlemen be pushed out of the maize business.

Fears are also emerging that the cartel has been engaging in similar dealings for sugar and fertiliser, whose prices have been on the increase since the beginning of the year.

The politicians and businessmen are said to be buying a 90-kg bag of maize at Sh1,700 ($21.8) and selling it to the millers at between Sh2,200 and Sh2,700 ($28.2 – $34.6).

It is, however, believed that the politicians are not using their money in the shady deals. Instead, they have been acting as brokers. According to one reliable source, several associates of the politicians showed up three weeks ago at the cereals board depots with letters authorizing them to buy 25,000 bags of maize each.

After the dubious deal, each of the politicians earned between Sh12.5 million and Sh25 million ($160,000 – $320,000) depending on the price at which they sold the maize.

The price of maize flour has shot up by up to 50 per cent in the recent past to retail at Sh120. Millers have warned of an acute shortage of the product that was selling at between Sh80 and Sh85 only a week ago.

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What are your comments regarding the conduct of leadership in Kenya?

Food, fuel shortages worsen Kenyan life

As though life for the ordinary Kenyan wasn’t hard enough, inefficiencies in government are causing shortages in maize, petrol and LPG gas.

What makes it painful is that the products are in the country but are unable to reach the shops thanks to political interference intended to create lucrative business opportunities for well-connected personalities.

Unreasonable taxation by the Kenya Revenue Authority has impeded the movement of fuel from the Mombasa port into the interior. The harsh measures are intended to increase government revenue and pay high salaries for the President, Prime Minister, Cabinet ministers and Members of Parliament.

At the moment, President Mwai Kibaki earns almost as much as US President George W. Bush even though Kenya is at the rear end in terms of economic, social and political indicators.

Kenyans will, thus, have to pay more for food and fuel because of an artificial shortage designed to line the pockets of a corrupt ruling elite already wallowing in ill-gotten wealth.

According to the Saturday Nation, maize millers are unable to obtain supplies from the National Cereals and Produce Board (NCPB), which is a state organization. The millers say they are forced to negotiate with brokers, who buy the maize from the NCPB then sell it to millers at 26% commission. The brokers are likely to be people with high level connections.

As a result, consumers are buying a packet of the 2kg Jogoo maize flour at Shs87 (US$1.2). With Christmas holidays just a month away and demand expected to soar, the price of maize flour is bound to break the Shs100 barrier. As always, the poor will be hardest hit. Consumer inflation will exceed the 31% recorded in the middle of this year.

The obvious solution to such a crisis would be to import from regional countries, especially Tanzania and Malawi. However, the Ministry of Agriculture is making it cumbersome to import foodstuffs, arguing that Kenyan farmers need to be protected. The gains of a liberalized market are slowly being reversed for the benefit of a few.

Shortages in LPG gas are inflicting major losses on hotels and restaurants. 5-star restaurants now resemble rural kiosks as they resort to using firewood and charcoal to prepare meals. Of course, the results are nothing to boast about and customers are turning away in droves. The use of firewood and charcoal is extremely expensive on a large scale. The gas shortage has been attributed to inefficiencies at the Changamwe Oil refinery and tax measures.

Interruptions in the supply of petrol have become alarmingly frequent in the past year. A decade ago, Kenya’s oil industry prided itself on its efficient distribution network that made it easier to buy fuel than to find clean water. That is no longer the case. Multinational oil companies, fed up with a short sighted government, are deserting the country.

In a move that only a Kenyan politician can dream of, the government wants to create a new oil monopoly in the form of National Oil Corporation of Kenya (NOCK). The government has 100% shares in NOCK and multinationals leaving the country are being pressured to sell to NOCK. It is feared that, in the next few years, shares in NOCK will be sold to highly placed individuals disguised as “strategic partners.”

At the same time, individuals close to the centre of power have their eye on departing multinationals. They took over the operations of Mobil Kenya by creating a new company called Oil-Libya. The deal was sealed following shuttle diplomacy between Kenya and Libya.

What does this mean for Kenyans? More fuel shortages and higher prices for the little that is available.

In addition to supply shortfalls in food and fuel, Kenya is currently experiencing shortages in electricity and water supply. Utility companies – all owned by the state – have failed to keep pace with a growing population. Industries are worst hit and must maintain expensive fuel-powered generators just to keep going. Now, even their generators may grind to a halt because fuel does not arrive on time.

No respite as food, energy prices rise

Kenyans are helpless against increases in food and energy prices caused by rising demand worldwide, supply disturbances and climate change.

With Kenya’s liberalized economy, the government has little leeway in effecting price controls on traders already suffering razor-thin margins. Meanwhile, the Meteorological Department has warned of diminished rains in coming months, raising the prospects of more expensive food, and starvation for the poor.

The prices of maize, wheat and rice have gone up an average of 50% in the past year, the single biggest increase since 1993. Much of the increase is a result of rising food prices globally. The mega-populations of China and India are putting great demand on the world’s food output. Economists say that the growth of the world economy means more people have more money to buy more food. According to the principles of supply and demand, prices must go up.

The Kenyan government is also to blame: last year, an extra tax on plastic bags caused an immediate Shs3 increase in the price of bread with no visible impact on plastic waste disposal. Prices of other foodstuffs packaged with plastic, such as milk, also went up.

Tribal violence in the wake of Kenya’s disputed election worsened the situation by disrupting agricultural activities, causing shortages and pushing up prices. Much of the violence was concentrated in the agriculturally productive areas of the Rift Valley, Western province, Trans Nzoia and Mount Elgon. Granaries were destroyed, farms ransacked and stores looted. One of the more famous newspaper photographs is of armed soldiers walking over heaps of smoldering potatoes.

The violence delayed planting of crops that would have been harvested later this year. In some of the worst cases, planting was never done.

As with everything else, food prices in Kenya have been affected by the worldwide increase in the price of oil due to the transportation element. Fuel is needed to get fertilizers to the farms. Fuel is needed to till the farms using tractors. At the end of the process, fuel is needed to get the produce to consumers. Farm workers, citing current inflation, also demand higher wages and thus push up food prices.

In the Rift Valley, farmers who had escaped post-election violence were unable to plant because they could not afford the costs of fuel and fertilizers. Those who could, only managed halfway before they ran out of funds.

Rising fuel costs have affected electricity rates in Kenya. In June, the Kenya Power and Lighting Company announced a 24% increase in prices. The company says the hike was caused by the use of oil-fired generators at Kipevu, Nairobi East and from Aggreko, an emergency power supplier. Come July, it was evident that the increase in electricity tariffs was in excess of 50%. Consumers made a rush for energy saving bulbs, and cut down on electric heating. Kenyan industry, already paying one of the highest electricity tariffs in the world before the increase, will lose out to Egypt, India and South Africa.

There is renewed interest in alternative energy but it will be a long time before it is commercialized. Biofuels are almost non-existent. Coal mining in Mwingi District has been frustrated by the local political elite. Solar power is still too expensive. Meanwhile, abandoned wind mills at Ngong indicate that authorities gave up on the concept long ago.

Climate change is another factor behind rising food prices. In the past decade, rains have been erratic as a growing population moves into forest areas to create farms and settlements. Periods of drought are interspersed with flooding, all of which destroy crops.

Unlike other countries in Africa, the consumer market in Kenya is completely liberalized. This perhaps explains why food riots have not been witnessed here as most consumers understand free market forces.

During last year’s electoral campaigns, the Orange Democratic Movement (ODM), promised to reduce the price of maize flour from Shs60 (US$0.89) down to Shs30 ($0.44). Since then the price of a packet of maize flour has actually risen to Shs80 ($1.17). There is simply no legal mechanism to enforce price controls.

The outlook for the future is that food and oil prices are unlikely to go down to pre-2007 levels. At best, we can only hope that prices stabilize at current rates. The possibility of a recession in the United States, Europe and Japan will reduce demand, forcing food and oil producers to stabilize prices.