Rush to buy unga at Sh100 as retailers seek Sh175m refund
There was a mad rush yesterday as Kenyans took advantage of the decree by President Uhuru Kenyatta that the price of a two-kilogramme packet of unga should retail at Sh100 countrywide.
In the latest deal, the government demanded that Cereal Millers Association (CMA) members sell all maize flour brands at subsidised rates to retailers and distributors countrywide. The rush was followed by confusion, as retailers showed mixed reactions to the implementation of the subsidy.
Spot checks by ‘People Daily’ in Nairobi, Siaya, Mombasa, Nakuru, Kisumu and Kitengela at various outlets yesterday morning revealed widespread confusion over the new subsidised price.
Stock up on unga
An advertisement by Naivas Supermarket that the price had dropped to Sh99 set the tone for consumers, who decided to stock up on the precious commodity.
Tabby Odhiambo, a customer at Naivas Supermarket, Moi Avenue branch in Nairobi, said she was relieved by the drop in maize flour prices. “We want it to go down further; if it could fall to Sh80; that would be even better,” she said.
In Siaya, consumers purchased the commodity in bulk as most retailers scrapped the Sh230 price tag. Geoffrey Oguma said lack of unga, coupled with the high cost of cooking oil and fuel, had drained households financially but they are now happy with the government subsidy.
“I have just bought five packets of 2kg maize flour at Sh100 each from Blis Supermarket,” said Oguma. He urged the President to negotiate with petroleum and cooking oil companies to reduce the exorbitant prices of their goods and services.
Oguma noted that certain shops had defied the order and were selling the commodity at a high price (Sh210-Sh230), urging the President to enforce the order.
“As of last night, the commodity in certain shops still retailed at Sh230,” said Oguma, adding that the price reduction ought to be extended to other basic items.
Confusion reigned at A-One Supermarket in Mombasa yesterday after maize flour prices were lowered to Sh95 ... only for the old prices to be reinstated.
A shop attendant said they were advised by their suppliers to reduce the price, and later directed to reverse the decision.
“It is true that prices had gone down from 9 am but, at around 9:20 am, we received a call from our suppliers to revert to the previous prices,” the attendant said.
The supermarket’s management, however, said the government had not issued a Gazette notice to act as legal backing for the price cap; and therefore they were not in a position to reduce the prices.
A spot check yesterday afternoon established that maize flour in most outlets in Mombasa was retailing between Sh99 and Sh211. Chandarana Supermarket in Nyali was among the outlets that implemented the subsidised prices, with all maize flour brands available — Dola, Ajab and Pembe — selling at Sh99.
“This is old stock but we received a directive from our bosses at the headquarters to implement the subsidised prices. We don’t know what our bosses have agreed with the Government. Ours is just to do as they say,” said a customer care attendant.
Very short relief
Early birds at A-One Supermarket experienced relief for 20 minutes — between 9 am and 9.20 am — before the price was again changed from Sh100 to the initial price, depending on the maize flour brand.
Retail shops were yet to implement the subsidy. For instance, Thomas Karuga, a retailer in the Kongowea area, said the only way he would sell maize flour at the recommended price is if the government compensates him for the loss he would incur.
“They don’t know how we pay fees, rent or meet our needs. There’s no way they will just wake up and tell us to sell unga at Sh100, and we abide. I’d rather throw away the flour than sell it for Sh100,” he said.
Explaining the uncertainties in the cost of the commodity, Wambui Mbarire, the chief executive officer of Retail Traders Association of Kenya (Retrak), said in a statement that the agreements came at a time when retailers were already holding about 750 tonnes of unga which were to retail at the previous cost of Sh230.
“While the new price tags are affixed, our analysis indicates that, as at close of business on July 20, retailers affiliated with Retrack were holding unsold stocks amounting to more than 750 tonnes,” she said.
The association notes that fast-moving commodities such as unga are paid for in advance by retailers, or on very thin credit terms which do not exceed 14 days.
Following the unga subsidy, retailers have commenced engagements with their respective suppliers to recover more than Sh175 million, which is a cumulative estimate of the higher price earlier paid by them to facilitate deliveries.
Meanwhile, some maize millers have increased their daily production to meet the increased market demand just one day after the government deal. Kitui Flour Mills, one of those that heeded the government’s directive, said they were happy with the deal.” We are contemplating increasing the production so as to meet high demand. In one day, we produce 650 tonnes of unga, but we may be forced to increase the output,” said Paul Miiri, the chief accountant.
President Kenyatta, however, failed to disclose the amount of money the government would spend, only for the Ministry of Agriculture to say millers would be offered an undisclosed subsidy to bring down the cost of the staple.
To bolster the programme, an oversight committee will be formed with representatives from Cereal Millers Association, the Ministry of Agriculture and the National Treasury.
- Reporting by Jacktone Lawi, Gloria Sande, Reuben Mwambingu, Harrison Kivisu and Eric Juma
