Coffee smuggling turned scores into millionaires

They called it “Black Gold” – and every night, especially between 1974 and 1978, trucks weighed down by thousands of bags of smuggled coffee rumbled along the narrow village roads of Chepkube on Kenya-Uganda border under the cover of darkness.

The coffee markets usually opened at midnight to the wee hours of the morning. By sunrise, it was over. As the illicit trade boomed, a new breed of carefree millionaires emerged in Kenya. It was a bonanza.

The smugglers – a coterie of senior politicians, administrators, traders, and prostitutes - all hooked together by the cash-minting thrill, and at night, turned the once-sleepy village of Chepkube in Bungoma into a paradise - or simply: Black Gold City, as one newspaper called it.

WILD-GROWING ROBUSTA

It gave Ugandans, pushed to the limit by Idi Amin’s destruction of the once vibrant economy, a small window to barter their only remaining source of revenue – the highly priced Arabica coffee from Mt Elgon’s Bugisu District and the indigenous wild-growing Robusta.

Two events had informed this trade at the border. On a cold night in July 1975, temperatures in Brazil’s southern coffee-growing state of Parana had plummeted to below freezing point destroying more than 70 per cent of the coffee crop.

In just these few hours, the world’s largest coffee growing region had been destroyed by the worst frost in recent history.

This not only caused panic in the global coffee markets but the prices rose to double digit figures. Instantly, Kenya was at the centre of attention.

On the Ugandan side, Idi Amin, who had taken power in a military coup had brought down the economy and squeezed the country of foreign currency.

In July 1977, following the killing of Archbishop Janani Luwum, and the rounding up of all Americans living in Uganda, President Jimmy Carter imposed a trade embargo on Uganda’s $250 million annual coffee trade with the United States.

It meant Uganda’s coffee could only be sold through Kenya. Kenya’s sophisticated elite and traders took full advantage of Uganda’s troubles.

With Amin’s soldiers always on the lookout, smuggling brought with it a new mode of transporting the cargo in small packages.

It was the bicycle which moved from border to border across the no-man’s land evading customs and the soldiers. The word boda-boda arose from this trade.

The impact was huge. The years 1975 to 1977 the Kenyan economy boomed. In 1977, for instance the balance of payments recorded a surplus for the first time and it was a large one - Sh2.2 billion while the foreign exchange reserves reached a record level of Sh2.7 billion.

The gross domestic product increased by 7.3 per cent in real terms while the number of people in paid employment increased by 5.3per cent. On the other hand, the supply of money went up sharply by 47 per cent!

The new coffee millionaires were not taxed after President Kenyatta personally refused to tax the incomes of the smallholder coffee producers during the boom period, leaving the windfall to the farmers.

The decision made against the advice of both the IMF and the World Bank saw authorities receive nothing directly from the farmers.

ARMED WITH GUNS

The trade was risky and the coffee traders always went to Chepkube armed with guns. Take the case of Joseph Mararu.

He was arrested in 1977 with eight bags at Chepkube and charged with driving an unregistered vehicle, disobeying the local chief, dealing with coffee without a licence and keeping a firearm in an unsafe place.

One reporter who travelled to Chepkube recalled that at the height of the coffee boom, prostitutes charged Sh500 from a low of Sh50.

(A bag of coffee cost between Sh400 and Sh500.) A bush doctor had also opened shop at the centre where he treated venereal diseases to first timers at Chepkube. “The old-timers have learnt to stay away”, wrote the reporter.

Mudwalled coffee stores where the contraband was hidden had mushroomed at the centre guarded by men armed with simis and hidden pistols.

One Saturday, December 18, 1976 things went badly wrong at Chepkube at about 4p.m. Some people reportedly broke into one of these mudwalled stores where coffee worth millions of shillings was hidden.

The owners of the coffee arrived with armed hoodlums and a fight with simis and pangas ensued. When calm was restored 10 people lay dead and more than 40 injured.

The local District Commissioner, Mr George Mwangi, gave all non-resident traders along the border in the Mt Elgon Division 24 hours to leave. They refused.

That is how Joseph Mararu was arrested and charged with disobeying the local chief!

The gravity of the smuggling was exposed when Labour Minister, Ngala Mwendwa told a meeting that the smugglers were senior government officials.

“They do it in Government vehicles and, by virtue of their positions, no one can question them. You just salute and let them pass…I am sure President Kenyatta is not aware of such people.

“He is just being told that certain commodities are missing, but it is not explained to him why and how they are missing. Otherwise, he would have fired such people on the spot.”

Those who managed to smuggle their produce past the police roadblocks eventually used their Coffee Board licences to pass the beans as genuine Kenya produce or export it on their own.

But this was worrying Agriculture minister, Jeremiah Nyagah after he found that a coffee cargo that had been sold as from Kenya was found to have contained stones!

“Kenyan farmers must keep the world famous coffee quality standard to capture and retain competitive world markets,” said Mr Nyagah.

In Nairobi bars and hotels the smugglers washed down their “hard work”. They abandoned taking ordinary beers and at worst they were at home taking Johnnie Walkers in upmarket Nairobi where they were acquiring properties or down in the coast where beach plots were snapped on offer.

It is today estimated that between 1976 and 1977 over 30 per cent of Uganda’s coffee production about 70,000 metric tonnes was smuggled into Kenya turning paupers into instant millionaires.

Kenya had a liberalised market – meaning traders could purchase coffee from across the border. The coffee smuggling routes had been known for many years.

Some Lake Victoria ports changed overnight fom small fishing villages to entreports manned by heavily armed cartels.

Trading in Amin’s Uganda had been risky since his soldiers loathed Kenya traders. It was in this confusion in 1974 that Kenya’s politician Kungu Karumba disappeared in Uganda – never to be traced again.

Mr Karumba, a tycoon who owned a fleet of buses and lorries, was one of the Kapenguria Six who had been jailed together with Jomo Kenyatta.

He was involved in the cross-border trade and had gone to Uganda on a business trip. But this did not dampen other traders when the coffee boom season commenced.

It is estimated that of the 200,000 tonnes of coffee grown in Uganda in the three years, about 70,000 tonnes was smuggled into Kenya.

In 1978 two MPs, Muhuri Muchiri of Embakasi and Makuyu’s Jesse Mwangi Gachago were jailed for five years after they were found guilty of stealing coffee worth Sh1.2 million while in transit from Malaba to Mombasa.

Then came the crunch. The coffee and tea prices fell in 1978. The heavy rains of that year reduced the coffee crop by 13 per cent. In just three years, the bubble burst. At the national level, Kenya used the boom to built a solid postal service, an airline, and railways.