Economy

Retailers defy subsidy to sell maize flour at Sh119

retailers

Buyers at a Nyeri supermarket queue to buy Sh90 maize flour last month. PHOTO | JOSEPH KANYI | NMG

Kenyans bought maize flour at an average price of Sh119 for the two-kilo packet, a pointer that retailers made huge profits from the subsidy meant to lower the cost of the staple.

Data collected by the Kenya National Bureau of Statistics (KNBS) reveals that on average retailers sold a packet of flour at above the Sh90 set by the government under the subsidy plan.

Kenya on May 16 announced Sh6 billion subsidies on maize imports to help lower the cost of flour which had shot up due to a regional drought and poor planning.

READ: State seeks to incorporate posho mills for imported maize

But the subsidised maize flour has been in short supply, prompting retailers to ration the commodity and encourage to sell the staple at above the set Sh90 a packet.

The publication of a gazette notice in May criminalising the sale of maize flour above the subsidy price seems not to have dampened greedy retailers keen to cash in on the shortage.

READ: Falling food prices offer little relief from inflation

The subsidy cut the price of a 90-kg bag of maize to Sh2,300 from more than Sh4,000, allowing the two-kg packet of flour to be sold for Sh90 from May 17 against the market price of Sh140.

The flour sold from mid-May was milled from the subsidised cheap maize, which arrived in the country on May 9 from Mexico via South Africa.

The Treasury published a gazette notice last Friday giving legal backing for State control of sifted maize flour prices and marks the first time the order is issued under a law passed in 2011 allowing price control of essential goods.

READ: Kenya in talks with Dar to unblock Zambian maize

This means that those found selling the two-kilogramme packet of subsidised maize flour above Sh90 risk a fine of Sh1 million or a five-year jail term.

“A person who contravenes the provisions of this Act commits an offence and is liable on conviction to a fine not exceeding Sh1 million or to imprisonment for a term not exceeding five years or both,” states the law.

President Mwai Kibaki signed the Bill into law in September 2011. The law allows the Finance minister to set maximum prices of essential commodities upon consultation with the relevant industry.

READ ALSO: Flour crisis as maize yield to fall 5.1m bags