Experts Split on State Plan to Sell Food in Shops

The plan of Kenya National Trading Corporation (KNTC) to import and distribute inexpensive food through a few carefully chosen stores across the nation has split experts.

While some regard the action as a positive step toward addressing the nation’s food shortfall, others see it as the government becoming involved in business, which they fear may choke out participants in the private sector.

The firm, which is wholly controlled by the government, has a guarantee from KCB Bank to import low-cost food items worth Sh24 billion and distribute them to 120,000 stores across the nation for final consumer sales.

10,000 tonnes of home products will be duty-free imported and distributed. Instead of the corporation having to pay the suppliers up front, the State will do so after recovering money from the corner stores.

KCB has provided a letter of credit as a guarantee that sellers will get paid on schedule by the buyer.

Samuel Nyandemo, a senior lecturer in economics at the University of Nairobi, praised the decision but expressed uncertainty about KNTC’s ability to carry it out successfully.

“These are very trying moments. Any opportunity which the government is trying to seize will go towards cushioning the disadvantaged in society. But honestly, there should be a better avenue of doing that because this is an outfit that has no credibility,” he said.

Nevertheless, Timothy Njagi, a senior researcher with the food security think tank Tegemeo Institute, warned that the KNTC’s action would have a severe impact on commercial participants in the food sector. 

He claimed that given the government’s poor track record in business, the intervention would probably encounter difficulties.

“This is the government going into business. Don’t you think they are going to displace some private-sector people? If we start having a direct competition with the private sector, that is not good,” Njagi said. 

“Why couldn’t they work with the private sector? The idea is not to punish them. They are in business and have to make some margins,” he added. 

Due to different geopolitical considerations, he pointed out that food remained expensive outside of Kenya. He added that the high cost of living was a complicated issue that required in-depth analysis. The Corporation, however, disputes the notion that the intervention will harm the market in any way and asserts that it will rather help to stabilize prices.

“The recommended retail price will be managed by supply and demand forces. This will not collapse the market but increase competition. It will also ensure other traders manage their pricing achieving the overall objective of price stabilisation,” Pamela Mutua, managing director at KNTC, told a local daily.

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, the Kenya Revenue Authority granted KNTC a tariff exemption. 

This is in addition to the prior tariff exemptions that were granted in November of last year for 100,000 tonnes of sugar, 100,000 tonnes of rice, and 900,000 tonnes of maize.

The KNTC plan comes as Azimio leader Raila Odinga has started a movement to pressure President William Ruto’s administration to address a number of concerns, including the nation’s food scarcity. It’s unclear at this time whether KNTC’s intervention will have any bearing on Azimio’s planned mass action.