Unga subsidy to cost Kenyans Ksh.8 billion

The unga subsidy program which has sent the cost of a two kilogram packet of maize flour down to Ksh.100 is expected to cost taxpayers at least Ksh.8 billion.

According to Agriculture Cabinet Secretary Peter Munya, the figure represents the initial allocation to the unga subsidy program from the exchequer.

The allocation is expected to cover payments to millers for the difference between the subsidized selling prices and the previously prevailing market rate.

“We will be replenishing the account as we run the program. As of now, we have set aside Ksh.8 billion to run the subsidy. Should the program require more money, Treasury is ready to support,” he said.

The allocation is based on monthly maize and maize flour consumption data from the Ministry which shows that Kenyans consume an average of two million 90 kilogram bags of maize.

Despite President Uhuru Kenyatta ordering that all millers sell a two-kilogram packet of unga at no more than Ksh.100, the Ministry of Agriculture says the subsidy scheme is voluntary.

This means that millers will not be coerced to sell unga at Ksh.100, even as CS Munya says he expects all millers to sign up to the scheme.

“I am trying to imagine a miller who would sell expensive maize flour when there is cheaper unga in the market. It wouldn’t make business sense,” he added.

At the close of business on Wednesday, data from the Ministry of Agriculture indicated that a total of 70 millers representing about 80 per cent of the maize flour retail market had signed up to the scheme.

The list of millers includes Unga Limited, Joy Millers, Capwell Industries, Pembe Flour Mills, Alpha Grain Millers and Vine Food.

CS Munya says the Ksh.100 limit on subsidized unga is a commonly agreed value for cheap unga even as questions remain on how the Ministry of Agriculture reached the estimate.

“Ksh.100 is considered a fair price for that quantity of unga. Remember that even last time (2017) we had a subsidy, the idea was to bring the cost down to Ksh.100. I can’t explain much better than that,” he said.

The cost of a one kilogram unga packet has been capped at Ksh.52, Ksh.30 for 500 grams, and Ksh.250 for a five-kilo bag, and Ksh.490 for a 10 kilogram bag and Ksh.2, 250 for 50 kilograms.

The Ministry of Agriculture says it expects the program to be a success in spite of teething problems at the start.

Further, the Ministry has set up intelligence and counter intelligence measures to ensure millers do not abuse the program.

Checks on the program include a multi-agency taskforce comprising of the parent ministry, the National Treasury, the National Cereals and Produce Board (NCPB), the Cereal Millers Association (CMA), the Kenya Revenue Authority (KRA) and the Agriculture and Food Authority (AFA).