Category Archives: inflation trend in Kenya

Food Imports to Kenya

While there have been several discussions about maize and other food imports to Kenya  such as where the maize came from, who is selling it, and at what price, more is on the way to deal a national disaster situation, partly attributed to delayed rains and prolonged drought.

Writing in a recent opinion piece in the Standard, James Nyoro, government advisor (who was previously the Rockefeller Foundation’s Managing Director, Africa, and probably the next Deputy Governor of Kiambu), wrote that food imports are normal for Kenya… in normal years, Kenya imports 30% of maize, 75% of wheat, 45% of sugar and 80% of its rice needs.

This comes at a time when all of Africa is talking about embracing agri-business and getting more people and more value out of agriculture. Kenya is probably in a very good place, as it  produces lots of foods, does a lot of local consumption and international exports, and has good networks and communications tools for farmers and government, but still, there is little finance to agriculture, and a lot of prime agricultural lands is being converted to real estate or commercial uses.

The Cabinet Secretary for Treasury recently gazetted and listed companies that were allowed to import duty free, non-GMO, yellow maize to be used for animal feed including Unga Farmcare 36,000 metric tonnes, Pembe Feeds 20,000, Isinya Feeds 50,000, Sigma Feeds 50,000, Milele Feeds 20,000, Mombasa Maize Millers 36,000, Chania Feeds 4,000, Farmers Choice 30,000, Naku Modern Feeds 2,000, Pioneer Feeds 3,000, Empire Feeds 10,000, Tosha Feeds 90,000, Turbo Feeds 1,000, Treasure Feeds 3,000, Economy Farm Feeds 1,000, Prosper Properties 2,000, Legorn Feeds 3,000 , Huduma Feeds 6,000, Eden Millers 5,000, Ohami Feeds 1,000, Tarime Feeds 1,000, and Thika Farmers Group 36,000 metric tonnes

He also set published temporary rules for white maize, sugar, milk, and dates: The ones for white maize included Any person may import white maize if it meets the following conditions—

• The white maize shall not be genetically modified in accordance with the standards applicable in the European Union; i.e it shall not be genetically modified (GMO) maize.
• It shall have a moisture content not exceeding 14.5%;
• It’s aflatoxin levels shall not exceed 10 parts per million;
• It shall be accompanied by a certificate of conformity issued by a company appointed by the Kenya Bureau of Standards; and
• It shall have been imported on or before the 31st July, 2017.
• Any person may import dates during the month of Ramadhan.

In a separate notice, he authorized there be no duty on sugar imported between May 11 and 31 July 2017 and as well as on 9,000 tonnes of milk powder imported by milk processors authorized by the Kenya Dairy Board.

Milk Pricing in Kenya

Most supermarkets in Nairobi now have ATM’s/’bars’ which are machines where customers can bring their own containers and buy their own quantities of unbranded milk. Today at one ATM, milk was Kshs 80 compared to about Kshs 110-120 per litre (sold in half litre packs for 55/= or 60/=) for branded milk packs.

Branded milk sachets

But how does milk pricing work? M-Farm tracked a milk trader called Wangondu,  who sells 1 litre of milk at 70/- at his milk bar.

  • Farmers usually use donkeys to transport milk. The wholesaler is introduced into the supply chain at the point which motorbikes transport milk to a center. When there was Mid March scarcity – majority of the milk was sourced from Kinangop at 35 to 37/= per litre.
  • Boda boda people who bring 100 litres to the main road are paid 250/- meaning, the milk bar trader has to add 2.50 per litre bringing the total cost to 40/- per litre. The road is bad; lot’s of push and pull which adds another cost to the milk.
  • Milk is very sensitive and has to be moved quickly. If one is collecting 1,000 litres, it means there will be 20 motorbikes from different sourcing points and have a vehicle using a particular route to collect aggregated milk. At end of day of the day, milk per litre costs a trader about 40/- to 50/- given the circumstances.
  • Pasteurization costs 6/- per litre bringing the total cost thus far to 56/- per litre.
  • Each vehicle collecting aggregated milk has to have 3 people; a driver and 2 loaders. At this point, transport cost of the milk is charged at 6/- per litre. A wholesaler trader calculates his/her profit margin at 3/-.
  • If milk is being sold to a retailer at 65/- they add 5/- margin to retail the milk to 70/- litre. When there’s surplus milk, a trader reduces 5/- per litre by demanding that the farmer delivers the milk to the aggregation center and bears the cost.   Were it not for the rains, the wholesalers had an agreement that on the Saturday before the start of April rains, milk pricing would have retailed from 80/- per litre.
  • When the rains come, they hire an escort to help with the pushing of vehicles who are paid 2/-. “We as traders, take advantage, don’t see the reason why we should sell the milk at 80/- and we see the way farmer and consumers suffer and we have to be neutral. When we have mercy on both the farmer and consumer, the consumer ends up claiming that my milk is cheap because it has been tampered with and therefore, of poor quality.”
  • Bars have lower milk pricing at some supermarkets

    But all the same, the little margins I make are able to pay licenses and pay my handymen in my milk bars. Even after all deductions, I am able to make 1/- or 2/- per litre as profit.

  • When there’s scarcity of milk, we source from Kikuyu and Limuru dairies. Harvesting, transportation to the milk buyer in town, management of milk at the milk bar – this is my business solely. I have to buy from the joint business source,  make sure there are no additives, and we have to be there to make sure the quality you get from the shamba is what we give the customer.

Milk is also being sourced from other countries in East Africa as and there is a butter shortage (affecting bakers like Sugarpie). 500 grams of butter is retailing at Kshs 1,000/- and this is just ridiculous.

$1 = Kshs 103.

Urban Inflation Index: March 2017

Comparing prices and inflation in Nairobi to four and five years ago.

It’s exactly four years since the last election and we are back into campaign mode for an election on August 8. How has life changed since the Jubilee government came to power? There are many reports about economic growth and food inflation, and the budget speech that was read last week had a planned expenditure of Kshs 2.6 trillion (~$25.2 billion) compared to the government’s first budget  that was Kshs 1.6 trillion for 2013/14.

On to the index comparing prices of basic urban commodities.

Gotten Cheaper

Finance: Bank loans are 14.0% due to the interest capping law of 2016. The Central Bank of Kenya’s bank supervision annual report for 2014 notes that the average lending rate was  16.99%  in December 2013 and 15.98% in December 2014.

Fuel: A liter of petrol is Kshs 101 (~$4.41/gallon) today in Nairobi. It was  Kshs. 111.6 per litre in March 2012 and Kshs 117.6 in March 2013.

Cooking Gas: A cylinder of LPG (cooking gas) is Kshs  2,030 today. It was about Kshs. 3,000 ($37) in 2012 for the 13kg cylinder.

Communications: Safaricom dominates. Prices are coming down and both Safaricom and Airtel have combined packages called Flex and Unliminet respectively . With Unliminet, Airtel customers get free WhatsApp, Facebook & Twitter of up to 100MB per day and at Safaricom, every reload of M-PESA  gets someone 3 free FLEX units. On the money transfer side,  Equitel and Pesalink are driving down the cost of mobile money usage.

About the Same

Beer/Entertainment: A bottle of Tusker beer is Kshs 200 at the local pub. This is the same price it was in March 2013.

Utilities: Pre-paid electricity is about Kshs 2,500 per month which is unchanged from the last review. The calculation of pre-paid tokens remains a complicated exercise.

More Expensive

Staple Food: A 2kg pack of (Unga) Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily, costs Kshs. 147 up from Kshs 97 in March 2012 and Kshs 105 in March 2013. But in his budget speech last week, the Minister proposed to zero-rate bread and maize flour to remove VAT. “ Manufacturers, Wholesalers, and Retailers who sell such goods will be expected to reduce the prices of these basic commodities, failure to which, I will reverse the policy. In addition to further lower the cost to Wananchi, the importation of maize during the next four months will be duty free. I expect, therefore to see a reduction of prices for these basic commodities which enjoyed by majority of our people.”

Other food item: Sugar: A 2 kg. Mumias Sugar pack is now Kshs 292; it was Kshs 245 in March 2012 and Kshs 250 in March 2013. It has hard to find Mumias sugar which is going through some issues, so this is the price of Chemelil sugar at the supermarket.

Foreign Exchange: 1 US$ equals Kshs. about Ksh 103 today compared to Kshs 83 in March 2012 and Kshs 85 in March 2013.

Utility: Water in Nairobi is more expensive.

12 Free Things in Nairobi (Redux)

It’s been a few years since the last list. What can one still get for free in Nairobi?

3. ‘Free burger’: A few restaurants have this on Thursday

4. Free Internet: Most Java, Art Caffee and coffee shops now have free WiFi all day.

5. ‘Free pizza’: (Still around are) buy one get one free on Tuesday at Pizza Inn and buy one get one free on Friday at Debonairs.

7. Free magazines/newspapers: People Daily newspaper has been free for over a year, but you have to be early in traffic or have a spot where you can pick up a copy. There are  lso quality in several free publications like Yummy and Msafiri magazines. free-newspaper

8. ‘Free bank loans’: (Still around are) Use your credit card carefully and pay off the full amount at the end of the month – (some cards give almost two months free).

9. Free money transfer: Equity has said that Equitel money transfer will be free forever. Airtel also has several free payment options, but which it doesn’t really market well. (See how much value Airtel gives away – via Kachwanya)

11. ‘Free calls’: Both Airtel and Safaricom offer you free calls if you reach some threshold of spending in a day, but the messaging is  confusing. Safaricom also offers to reimburse you if a call is dropped.

12. Free investment advice: Now Twitter is the main forum

New

Free Meeting Rooms: Again, coffee shops are pleasant neutral meeting places, You can sit and wait if your guest/host is later. Also it’s much better than visiting anyone’s office where there are hassles of traffic, them being late, having to show your ID, register your laptop, park in inconvenient spaces etc.

Free Parking: The Hub in Karen and Garden City Mall on Thika Road have free parking. At many malls, parking is no longer free, and expect to pay Kshs 50 to Kshs 100 for two hours and it gets punitive if your park for longer than that.

Free Taxi Rides: With all the new taxi hailing apps in Nairobi, there are often free rides for new subscribers, to/from major Nairobi events and for regretting people to the services.

Now Gone

1. ‘Free’ books: at the Book Villa. Become a member and read as many new, best sellers, finbooks, travel non-fiction books etc. No more free books 

2. ‘Free’ breakfast: at Books First/ Nakumatt buy one get one free on Sunday morning no more free breakfast

6. ‘Free movie meal’ (hot dog, soda, popcorn) at Nu Metro on Monday with purchase of a movie ticket

10. Free classified advertising: place a classified ad in the Nairobi Star newspaper; send a text message and it runs on the next day

What other items are free in Nairobi? 

$1 = Kshs 100

Urban Inflation Index September 2015

Tracking changes compared to five years ago

Gotten Cheaper

Utilities: An electricity in June 2015 showed that consumers incurred costs of 251(US) cents per kilowatt hour, and forex adjustment ones of 40 cents per kwh. Five years ago it was 340 cents per kwh while forex was 57 cents per kwh.

Communications: Call rates are between Kshs 2 – 4 per minute, compared to Kshs 8 five years ago, and SMS are now Kshs 1. There has also been a massive drop in the cost of mobile data. That said there’s a bit of turmoil in the industry. Safari com is diversifying into new segments like health and television, as Airtel is threatening to pull out. Meanwhile Orange is apparently for sale, and Essar folded their Yu brand just a few months ago.

About the Same

Beer/Entertainment:  A bottle of Tusker beer is Kshs 200 at the local pub compared to Kshs 170 five years ago. The competition from the introduction of several new beer and alcohol brands  (like Carlsberg) does not seem to have made prices lower.

Carlsberg Nairobi

Other food item

A 2 kg pack of (rare) Mumias sugar is now Kshs 240. Its rare because both Ucumi and Mumias are going through some transitions with financing, suppliers, and even new CEO’s  Meanwhile, there’s also the debate about whether and at what cost Kenya produces sugar compared to other countries like Zambia, Sudan and even Uganda. The same Mumias pack was Kshs 200 five years ago. Mumias troubles has resulted in other brands like Butali Chemelil Nzoia and other store and generic brands now getting space at supermarkets like Ucumi.

More Expensive

Foreign Exchange:  1 US$ equals Kshs 103 compared to 80 fiver years ago (actually today it’s 106) a steep rise that does not seem to have reached its bottom. This may be due to the strength of the dollar but other currencies have also strengthen due to the trade deficit

Staple Food:  Maize flour is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs 113 compared to Kshs 65 five years ago.

Fuel:  A litre of petrol is Kshs 102.6 petrol compared to 94.5 five years ago (but with the weaker shilling, in dollar terms it’s about $4.5 per gallon (down from $5.25 five years ago)