President William Ruto's Kenya Kwanza administration on Thursday, June 8, moved to solve the ravaging food crisis by creating an essential food reserve.
In a bid to lower food prices in the country, Kenya National Trading Corporation (KNTC) announced that the National Essential Food Reserve will buy food products in bulk and resell them to the public at a cheaper cost.
KNTC noted that the initiative was meant to stabilise consumer prices by ensuring a balance between the demand and supply of agricultural inputs and essential household food commodities.
As a result, KNTC called on producers and sellers to submit their bids in order to supply essential food products to the government through National Essential Food Reserve.
"KNTC is now calling on wholesalers, Micro, Small and Medium Enterprises (MSMEs), supermarkets, traders, chamas and cooperative societies and other interested bulk buyers to partner and leverage on its national e-voucher infrastructure and capacity in order to avail rice, edible oils (201), sugar, ndengu, beans and milk powder for sale," read part of the notice.
KNTC explained that ordinary Kenyans will start buying essential food products at a cheaper price as a result of the national food reserve initiative.
"To address the rise in the cost of living. KNTC has supplemented other state initiatives by creating strategic reserves for staple and essential food items and fertiliser to ensure stability in the prices of core goods consumed by Kenyans," added the government notice.
Application Process
KNTC also outlined the procedure for application, asking interested distributors to dial *15328# to register, after which they will receive vouchers.
In order for the government to manage the supply and demand for food products from the National Essential Food Reserve, KNTC introduced an e-voucher distribution, a system that uses electronic vouchers to distribute agricultural inputs to farmers.
The system was first introduced in 2009 by the Government of Kenya in partnership with the World Bank and the International Fund for Agricultural Development (IFAD).
The e-voucher system has several advantages over traditional methods of input distribution. First, it is more transparent and efficient. Second, the system is more targeted.
Farmers can use the vouchers to purchase inputs from any authorised dealer, which eliminates the need for middlemen.
"As part of our mandate to participate in the development and promotion of e-commerce, KNTC has a virtual Route to Market (RTM) for basic food commodities in partnership with (a telecommunication company). This e-voucher Route to Market (RTM) model will enable the nationwide reach of foodstuffs quickly and at affordable prices," read part of the notice.
Farmers who are eligible for the program are identified using a database, which ensures that the inputs reach the intended beneficiaries.
Third, the system is cost-effective. The government saves money on administration costs, and farmers save money on transportation costs.
The e-voucher system has been successful in increasing agricultural productivity in Kenya. A study by the World Bank found that farmers who used the vouchers increased their maize yields by 15 per cent. The system also improves the nutritional status of children in rural areas.
At the same time, KNTC, established in 1965 as a state-owned enterprise (SOE) to promote trade and commerce in Kenya, indicated that it was transforming itself into an export trading entity in order to promote local goods abroad.
The company was initially involved in a wide range of activities, including import and export, wholesale and retail trade as well as manufacturing.
"It is important to note that the food importation window is a short-term intervention measure necessitated by drought in the preceding months.
"The combined effects of the impeding harvests in the next 3 months and increased productivity from the very successful fertliser subsidy market will see KNTC exit the import market and focus on Transformation into an Export Trading Company under an Africa Continental Free Trade Area (AFCFTA) to assist Micro, Small and Medium Enterprises aggregate their exports for the African Market and beyond," read part of the notice.
In the early 2000s, the Kenyan government began a process of privatisation of SOEs, and KNTC was one of the companies earmarked for the project. In 2006, the government sold a majority stake in KNTC to a private investor.
KNTC embarked on a transformation program that aims to reposition the company as a leading export trading company that has expanded to become one of the largest exporters of agricultural products in the country.
The government believes that by transforming KNTC into a more competitive company, it will be able to help Kenya achieve its goal of becoming a middle-income country by 2030.
KNTC faces stiff competition from private sector players, and it needs to invest heavily in new technology and infrastructure in order to remain competitive.
