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  • Kenya: Nut smuggling posing threat for registered exporters

    Jul 25th, 2012

    <p></p><p>A Kenyan businessman, Patrick Wainaina, who founded a nut sales company, was forced to take a second job to make ends meet and keep his business afloat. However, business is now booming and is now making over $6 million a year.The company exports 100% of its nuts, mainly to the US, EU Japan and China.</p> <p>The Kenya Nut Packers Association (KnutPAK) estimates that Kenya exports 3,750 tonnes of nuts every year, and it is this demand, which remained relatively unhampered by the global economic downturn, that has allowed Wainaina to build his Thika-based business to its current level. Sourcing macadamia, cashew and peanuts from small scale farmers in the Mt. Kenya region, Jungle Nuts manually cracks macadamias and semi-automatically cracks cashews. The company now employs 800 workers, 500 of them on a seasonal basis. </p><p>Wainaina struggled to get the business off the ground to begin with, no-one would lend him the money he needed. To get around this he poured his own savings into it and took on his second job."I went looking for money," he said. "I approached banks but no credit was forthcoming. I struggled here and there and when ends refused to meet, I went back to the job market."By this time he had turned things around and had created an enterprise that now boasts an annual turnover of more than $6 million. This growth has even defied the global financial crisis of 2008/09."Nuts have gained popularity in these markets because they are healthy snacks that carry no cholesterol," he said. </p><p>Wainaina cannot, however, rest on his laurels, as problems still remain to be surmounted to allow Jungle Nuts to continue posting such impressive figures. Though demand for the nuts remains high, production has fallen due to lack of raw materials. Last season’s produce – 6000 tonnes – was the lowest for decades, and was attributed to crop neglect and drought. Processors announced that they might need to close down factories in future.During the last three years the production of cashew nuts alone has fallen by 50%, and the cash crop has declined from $3.5 million to $3 million. Export of raw nuts was banned in 2009, yet loopholes remain which have been exploited by smugglers, primarily to China, one of Kenya's biggest markets."The smugglers use brokers to acquire nuts on their behalf and transport the consignment to stores in Thika and Nairobi which are later taken for containerisation and then to Mombasa port," said NutPAK’s consultant Charles Mungai. </p><p>Wainaina says the government is not doing enough to stop such actions, but is grateful for the ten-year tax break that his company is entitled to because of its export processing status. With the domestic market small and already well-saturated by his competitors, he sees exports as more advantageous. Yet he is determined to give back to his country in any way he can and wants an end to the problems that are hindering the industry. </p><p>"Our vision is to see a Kenya that produces Kenyan, buys Kenyan and exports Kenyan," he said. "The dumping going on from the east, especially China and India is quite alarming. We are importing eggs, oranges, wheelbarrows, spades, match boxes, you name it. But is it necessary? The Chinese are taking away our raw nuts, pyrethrum, scrap metal, and re-export it back. Who suffers at the end of the end of the day? Kenyans!"<br></p><p></p>


    Source: ventures-africa.com
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