By Elijah Odhiambo
The cost of basic commodities is set to go down in the country following KCB Group’s state backing of Ksh24 billion to aid in importation of cheap food products to be distributed in various shops to lower the cost of living.
The Kenya National Trade Corporation has designated 120,000 retail locations where the low-priced imported items will be stocked.
The effort comes handy even as the government works to reduce the cost of living, which in February drove inflation to 9.2 percent.
In the scheme, the government will act as the sole cost-controller for basic products, a move that the import system seeks to pressure other producers to cut their prices for these items.
Pamela Mutua, Managing Director at the Kenya National Trading Corporation (KNTC) during an interview with Business Daily on March 7, 2023, disclosed that the corporation had secured a letter of credit— a surety 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.
Currently, a two-kilo packet of sugar sells for Ksh312 while the same amount of maize flour costs Ksh200. In the expected programme, KNTC will set the retail pricing of products including cooking oil, sugar, rice, and beans in an effort to cut the cost of essentials and stabilize the escalating prices of goods on the shelf.
“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 stabilization,” Pamela Mutua noted.
She said the corporation is talks with other international banks for more support to help solve the food situation.
“We have been financed by KCB 100 percent and we are still in talks with the other international banks for more support,” Ms. Mutua said, further, adding that it has opened talks with the Egyptian Bank Afreximbank and Trade Development Bank for financing.
With the assistance of three distributors, the State agency will sell these goods straight to the identified stores, cutting off the lengthy value chain that eventually drives up the price of the products.
Twiga Foods, iProcure, and Market Force are three tech companies that will serve as wholesalers. The three businesses were selected, according to Ms. Mutua, based on their extensive distribution network and last-mile delivery expertise.
The 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, which was issued last November.