Not new to controversies, Mohammed H Jaffer the powerful tycoon who was once linked to the brazen grabbing of riparian land at Kibarani, Mombasa County.
According to the National Land Commission, Jaffer’s Grainbulk Handlers Limited had irregularly grabbed up to 43 acres of the Indian Ocean within Kibarani, disrupting the livelihoods of thousands of fishermen and negatively impacting the ecosystem of the region.
However, President Uhuru Kenyatta directed the National Land Commission to revoke Kibarani dumpsite land allocation to “private developer” which was Grainbulk Handlers Ltd (GBHL).
Multi-billionaire Jaffer is the founder of the MJ Group, East Africa’s largest provider of clearing and forwarding services. His GBHL owns a grain terminal that specializes in the discharge and handling of bulk grain cargo at the Port of Mombasa. For long, he’s been a monopolist and competitors crying foul for being undermined as he uses his influence in the system to tune things to his favor.
GBHL boasts a turnover of $15 million and is the flagship company of MJ Group. Jaffer’s other business interests include Mbaraki Bulk Terminal in Mombasa, which deals in petroleum products; Africa Gas and Oil Company operating an LPG (Liquefied Petroleum Gas) terminal at the port; Great Lakes Port Ltd as well as a container freight station at Changamwe in Mombasa that’s due for implementation. Other projects awaiting implementation include dry ports for Tororo, Uganda and Miritini in Mombasa.
GBHL was listed by NLC as among politically well connected tycoons who have encroached the sea and put up multibillion shillings properties including container freight stations and offices near the port of Mombasa.
Jaffer controversially built his business empire by leveraging on political patronage and was at one time the main benefactor of ODM Party Leader Raila Odinga when he served as Prime Minister.
According to sources, as soon as Jaffer fell out with Raila he struck up a new relationship with DP William Ruto. Jaffer promised the DP political support in exchange of political protection. He is the force behind the defection of most Coast Opposition MPs to Ruto’s Jubilee faction.
Jaffer’s influence is not limited to the executive arm of government. He is reputed to be close to high ranking judges in the judiciary including Court of Appeal judge Alnasir Visram. So strong is his influence that one of his sons is employed at the Court of Appeal.
It is the reason Jaffer wins majority of cases filed against him or any of his firms; be it a demand by KRA for back taxes or against Kenya Railways whose huge tracts of land around the port of Mombasa GBHL has irregularly used to secure bank loans amounting to a staggering Sh45 billion.
Jaffer’s arms are extensive, he also owns the famous Ajab flour, Pro Gas and many others.
Pro Gas Dominance And Gas Yetu’s Murder
When Government announced a subsidized gas project in October 2016, it brought a ray of hope for Kenyans who often relied on firewood and kerosene, two energy sources that are not only inefficient but had them breathing in toxic fumes.
Mwananchi Gas project was to sell under the Gas Yetu brand and was meant to safeguard the poor from respiratory diseases caused by the use of firewood for cooking. It was also meant to contain the rampant destruction of forests.
In 2017 Gas Yetu was allocated Ksh2.2 billion for the period 2017-2019. A further Ksh700 million was allocated through a supplementary budget raising the total cost of the project to Ksh2.9 billion.
The project would have seen millions of households receive subsidized 6kg cooking gas cylinders at a cost of Ksh2,000.
5 million households were targeted with the Gas Yetu cylinders fitted with burners and grills.
The beneficiaries would refill them at a cost of only Ksh840 per cylinder.
This was however not to be. 2 years since it was launched Energy and Mining Principal Secretary Eng. Joseph Njoroge says the government shelved it due to budget issues.
However, an investigation into what led to the collapse of the project reveals a well-calculated plan by Pro Gas owner Mohammed Jaffer to kill Gas Yetu.
It all started with a contract awarded by the Petroleum Ministry and the National Oil Corporation of Kenya (Nock) to a consortium led by Allied East Africa Ltd.
Having gotten the tender, but with no capacity to deliver, the consortium turned to Mohammed Jaffer owner of Africa Gas and Oil (AGOL) which also owns Proto Energy Limited under which Pro Gas is sold.
The company was then just beginning and was virtually unknown in the country.
Jaffer had however managed to obtain a lease for use of a cylinder pressing machine from KPA in a shady deal that seems to have been orchestrated by officials from the Energy Ministry.
The fraudulent suppliers, in the first batch, delivered faulty cylinders raising questions about quality assurance and monitoring of the manufacturing process.
A total of 67,251 cylinders were found to be leaking posing a serious safety hazard had they gone into circulation.
This, however, seemed to be part of the grand plan to kill the project as then PS Andrew Kamau canceled the tender purchase order of 357,000 cylinders despite money having been paid out to East Africa Allied and Mohammed Jaffer.
The PS also canceled another purchase order of 700,000 cylinders with little explanation as to how the total budgetary allocation that had risen to Ksh2.9 billion had been spent.
This necessitated Consumers Federation of Kenya (COFEK) to sue Government in October 2018.
COFEK told court the Government’s ambitious program to buy and supply 5 million subsidized gas cylinders to low- and middle-income households by end of 2019 were in jeopardy as 60% of the cylinders delivered were faulty.
As Kenyans continued wondering why the Gas Yetu project is not taking off despite the immense benefits it would have afforded them, a new player in the market was beginning to emerge.
With its bright pink colored cylinders, Jaffer’s Pro Gas was starting to penetrate into the market offering gas cylinders at cheaper rates than competitors.
Pro Gas with the help of Energy CS Charles Keter, PS Njoroge and other corrupt government officials at the Energy and Petroleum Regulatory Authority (EPRA) and Kenya Revenue Authority (KRA) continue to engage in illegal and unfair trade practices to gain an edge over competitors.
Through use of intimidation tactics and sabotage, Pro Gas has been hiring thieves in hoods to steal cylinders from competitors resulting in millions of shillings in losses.
On June 20, 2019 at Southernsun, Mayfair Hotel in Nairobi, members of the LPG Cylinder Exchange Pool lamented the unfair practices by Pro Gas. Minutes of the meeting also indicate that members voted for pricing formulas with majority preferring cylinder cost minus validation cost to remain competitive.
However, EPRA went against the norm and published new rates. In a public notice issued July 25, 2019, EPRA announced a new deposit rate of Ksh2,170.03 for the 6kg cylinder and Ksh 3,588.86 for the 13kg cylinder.
These rates according to members of the exchange pool are in bad faith and are bound to resort in massive losses.
Despite numerous complaints to EPRA, no action is taken against Pro Gas.
Exchange Pool members now say they have evidence that PS Njoroge has been receiving Ksh30 million monthly in bribes while other officials at EPRA led by the Director-General Robert Oimeke pocket not less than Ksh10 million each month.
This is also the case at KRA with senior officials receiving millions of shillings monthly to turn a blind eye to Jaffer’s indiscretions.
The tycoon has also pocketed a significant number of MPs ensuring that any parliamentary committee investigations go his way.
To date, there have been more than five investigations on the unfair monopoly by his companies including Grain Bulk Handling Limited (GBHL) but no action has been taken.
Through bribery, Jaffer has now completely taken over the imports, distribution and retail business in the LPG sector undercutting other companies and driving them out of business altogether.
Suits filed in Court against Pro Gas, Energy Ministry and EPRA are often thrown out as he bribes witnesses and threatens anyone who comes in his way.
Photos taken at the main Pro Gas yard in Kabati shows they have been stockpiling the stolen cylinders there from where they are washed, repainted and rebranded into the signature bright pink color. They are then refilled and distributed to Kenyans at very low prices dealing a huge blow to competitors.
In October 2018, at the height of the Gas Yetu scandal, DCI George Kinoti said he will begin investigations into the loss of billions.
“We will initiate a probe. We cannot allow a program that is funded by taxpayers to put Kenyan citizens at risk,” said Mr Kinoti.
Almost one year later though, no investigations have been done and no one has been taken to court over the scam raising questions about how many agencies are on the take from Mohammed Jaffer.
This as 80% of Kenyans who use firewood and kerosene continue to suffer at the hands of cartels at the Energy Ministry.
GBHL Monopoly Concerns Parliament
Alarmed Members of Parliament (MPs) gave a directive to end the dominance of GBHL. The National Assembly’s Transport committee had issued a go-ahead on the licensing of a second grain bulk handling company challenging the monopoly of businessman Mohamed Jaffer’s company.
Currently, the country is solely served by Grain Bulk Handlers Limited (GBHL) owned by Mr Jaffer.
The committee gave the Ministry of Transport the green light to construct the second grain bulk handling company at the Mombasa port. GBHL has been providing services to customers importing bulk grain into the region making it a very lucrative business.
Its work begins at the Kenya Ports Authority (KPA) berth, where it removes the bulk grain from vessels.
The grain is transferred by a conveyor-belt system directly to a grain terminal immediately adjacent to the port and from the terminal, the customer can collect the grain using either road or rail systems.
The committee’s move sparked industry war as Mr Jaffer who has arguably been reported to always emerge ahead of anyone who has tried to challenge his monopoly in the past.
To date, there have been more than five investigations on grain bulk handling at the port of Mombasa.
While the Coast economy has been suffering due to the SGR interruptions, Jaffer and others have been benefiting at the cost of many.
Coast Economy
Before the Coronavirus pandemic, there were sustained Protests in Mombasa against a directive that all cargo passing through the Port of Mombasa should be transported via the Standard Gauge Railway (SGR), and cleared at the Inland Container Depot (ICD) in Nairobi, this continued despite meetings between the political leadership of Mombasa County and the national government where – the public was told – the directive had been suspended. At the heart of the debacle, of course, lay the question of the high cost that was involved in building the SGR, and the fact that since it was launched in January 2018, the SGR freight service has not been able to compete favourably with trucks plying the Mombasa-Nairobi highway.
The protestors argued that they are protecting jobs. A study commissioned by the County Government of Mombasa showed that 2, 987 employees working in Mombasa for Container Freight Stations (CFSs), fuel stations, and as truck drivers had been laid off since the SGR began its freight operations, and that over 8,000 more jobs were under threat following the directive.
Granted, the fear of economic exclusion and the loss of jobs is bound to be a politically explosive issue anywhere in Kenya. But experts questioned if the protestors in Mombasa were just a gullible participants in a larger battle between entrenched business interests for private control of cargo storage facilities? The evidence suggested that the protestors in Mombasa were actually crying for the scraps of what was already a broken system that benefitted the elite few.
It is notable that the leading protagonists in the SGR drama, and the politics surrounding the establishment of inland storage facilities at Nairobi and Naivasha – especially before the March 9 handshake – were President Uhuru Kenyatta and the County Governor of Mombasa, Hassan Joho, a powerful businessman with interests in freight stations at the Coast. Both Kenyatta and Joho are members of families that own huge tracts of land in the country. The Kenyatta family is known to own massive acreage up-country, especially in the Central highlands and in Naivasha, and modestly less along the Coast, where Arab, Indian and some Swahili families (the Johos consider themselves Swahili) have dominated land ownership since long before Kenya’s independence.
History is replete with examples of struggles over the location, and therefore the control of commerce and collection of rent for port storage all over the world. With the expansion of its capacity in recent years the Port of Mombasa has become increasingly important to powerful economic players with control over land, and with influence over the country’s politics.
In fact, the nexus between political influence, land ownership and port business became clearer when services at the port almost ground to a halt in 2008 following the post-election violence that broke out that year. Business interests Due to lack of container storage space, ships were forced to queue out at sea for indefinite periods of time while importers paid high ship delay surcharges.
In fact, matters got so bad – cargo entering Mombasa could take up to 10 days to clear – that the then Managing Director, Abdallah Mwaruwa, was sacked two years into his appointment. It was in this context that a group of private investors proposed to the Kenya Ports Authority (KPA) that they provide storage units in order to ease the burden on the container terminal. Soon thereafter, Container Freight Stations (CFSs) – managed privately but licensed as sites for customs clearance by the Kenya Revenue Authority (KRA) – rapidly spread in and around Mombasa. There are now more than 20 CFSs scattered throughout the town around which operates a ring of local powerbrokers and owners of extensive and commercially viable pieces of land in and around Mombasa.
The CFSs have persisted and multiplied with the expansion of the port itself but ironically, they are threatened by the expansion in port infrastructure, in particular the SGR and its inland dry ports. The nexus between political influence, land ownership and port business became clearer when services at the port almost ground to a halt in 2008 following the post-election violence that broke out that year. From their inception, CFSs have been a source of aggravation for importers, shipping lines and the residents of Mombasa.
The decentralisation of customs clearance to these facilities has caused problems of oversight, with accusations of corruption, including malpractice and smuggling. Many CFSs are also known for their incompetence, mishandling of cargo, overloading and fraudulent documentation. Containers have been damaged and cargo has disappeared. Clearing is deliberately delayed in order to extract higher fees from importers, which increases consumer prices. Since 2012, powerful players, including major shipping lines and the governments of Uganda and Rwanda, have successfully lobbied to circumvent the facilities altogether, removing themselves from the CFS conversation long before the SGR was launched.
In this way, some goods bound for Uganda are cheaper than those destined for Kenya. Less powerful importers have continued to operate at the mercy of CFSs whose owners have accrued greater profits, even as the cost of clearing cargo at the port has increased. For Mombasa residents, CFSs have increased congestion, as cargo is moved around twice – from the port to the CFS, and then again out of the CFS to final destinations – worsening traffic, causing accidents and damaging roads.
The threat that the SGR and its inland container depots posed to the CFSs in Mombasa was clear even before the SGR began its operations. The tussle between Uhuru Kenyatta and Hassan Joho between 2013 and 2017, while touching on various issues around the fate of devolution, was, in reality, deeply personal. To transfer cargo handling to Nairobi, and then to Naivasha, is to not only transfer the problems that CFSs have caused in Mombasa to other towns, but it is also to provide ample business opportunities to other large landowners there – members of families such as the Kenyattas – moving it away from the hands of families such as the Johos.
This was a major contribution to Joho’s opposition to Jubilee before the 2018 handshake. Amid claims that the SGR is threatening the Coast economy, companies associated with Hassan Joho and Mohammed Jaffer – both key financiers of Raila Odinga’s campaign for the presidency since at least 2007– are reported to have acquired lucrative deals with the SGR and the ICD in Nairobi under unclear circumstances; if you can’t beat the system, do business with it! The tussle between Uhuru Kenyatta and Hassan Joho, while touching on various issues around the fate of devolution, was, in reality, deeply personal.
In sum, if the protests against the directive to transport all cargo on the SGR are successful (an unlikely outcome), this will result in the protection of businesses that have long enjoyed near-monopoly advantages at the expense of the wider public interest in Mombasa. On the other hand, the state is likely to respond – as it did – with more violence, as such protests threaten entrenched business interests with influence on public policy that are located away from the Coast. My argument is that the “protection” of CFS businesses in Mombasa from the noose of the SGR will not go a long way in fixing the economic problems afflicting the county in particular, and the Coast region in general. Someone should impress it upon the protestors that scraps from a broken system benefitting the elite few will not end the region’s long-felt sense of exclusion.
As Coast continues to burn down, Jaffer and other opportunistic investors are already looking the other way.
Jaffer has steadily been moving some of his cargo off-loading operations closer to Nairobi. The move is put more jobs at risk in the coastal town.
Grain Bulk Handlers Ltd (GBHL) owned by the billinaire had sought approvals to put up a terminal whose major operations will occupy in excess of 50 acres.
This was to resemble a facility near Mombasa Port, which handles grains, coal and fertilizer. Projections indicated that the terminal would cost over Sh2 billion. That means it is a project with massive cargo handling capacity in the labor-intensive operations.
Bilionaire Jaffer a big employer in Mombasa as a result of his cargo handling operations and lately, the off-loading and packaging of cooking gas. He also owns African Oil and Gas Ltd, and he is the only importer of the product in Kenya.
Thanks to the Standard Gauge Railway, the new facility puts into focus the relocation of other businesses from Mombasa, a city that is witnessing alarming scale down of businesses and closure. This has resulted to mass retrenchments and frequent protests.
Many Container Freight Stations (CFSs) including Autoport owned by Governor Hassan Joho of Mombasa, Multiple and Mombasa Inland have been at advanced stages of relocation.
Transpares, one of the largest logistics operator in East Africa, has relocated its head offices to Nairobi, raising concerns about Mombasa’s continued survival. Transpares’ head offices are now along Mombasa Road near Inland Container Depot (ICD) from where it is picking up cargo for onward transmission to its customers.
Mr James Kitavi, the chief executive of the Mombasa chapter of the Kenya National Chamber of Commerce and Industry (KNCCI), noted that Mombasa has been over-relying on the port and if the that is ‘interrupted’ then everything else suffers.
Mombasa Port was the lifeline of the city, providing several business opportunities from cargo handling, clearing and forwarding and storage which also fed other businesses as eating joints, motels and taxi.
Mombasa’s woes have been traced back to a Government directive requiring that all cargo traffic be transported to Nairobi through rail rather than road. The move has exposed Mombasa’s economy’s underbelly after the ‘dents’ that have been caused by the terrorism which has kept away potential visitors and employers.
The job situation in Mombasa has been seriously affected with imminent collapse of Kaluworks, which is associated with billionaire industrialist Manu Chandaria. Kalu Works has succumbed to pressure of cheap imports of cookware from China.
Other major businesses and employers as Milly Glass Works is also finishing construction of its plant in Ethiopia, where electricity is considered cheaper compared to Kenya.
A developing story of how a Coast based billionaire Mohamed Jaffer is using and manipulating NEMA links to stiffle competition in the gas industry and how he recently managed to kick out competitors in the milling industry when millers were banned over fabricated toxicity claims.
— Kenya Insights (@KenyaInsights) February 5, 2020
Jaffer of grain bulk handlers and Rai of Raiply(representing the kenyatta family) want to create a duopoly in the milling industry. Jaffer has built 1600 tonnes milling factory while Rai is building what is reputed to be the biggest in Nakuru. This aflatoxin is scare mongering.
— JOHNNY (@Ibrahimjohnny) November 10, 2019
Nairobi National Park Encroachment
Grain Bulk Handlers Ltd once again finds themselves in the murky familiar waters. According to confidential documents seen by Kenya Insights, together with Compact FTZ Ltd, the firms are under scope for how they encroached a public land, Nairobi National Park.
According to the document, Grain Bulk Handlers Ltd and Compact FTZ Ltd had encroached on the park by 5.7 acres. GBHL is erecting 24 silos in the park. They’ve also laid down a blueprint for laying a concrete slab which would encroach on the park by three meters this is on top of a 13-meter encroachment of the park.
When the encroachment plot became apparent and determined that Kenya Wildlife Service and the Kenya Railways Corporation were complicit, CS Balala gave a stop order warning of severe consequences. It doesn’t take rocket science how private developers would penetrate the state organs to steal public land and consequently raid the natural inhabitants.
It’s also unsurprising that despite the CS’s threats in August, 2019, the heavily monied Jaffer has been able to continue with his expansion plan of moving his company from Mombasa to Nairobi and beyond.
Compact FTZ is also putting up a container depot despite report of eating into public land space.
It remains a staged puzzle as to how private developers would be allowed to invade public with impunity and without consequences. Jaffer who’s now distancing himself from the DP despite having a close private relationship has also been seen to be courting once again Raila. He has been mentioned in the KPA’s MD appointment saga.
Jaffer has also been in the middle of privatization of the Mombasa Port which has been a point of focus with locals fighting the suggestion. Just recently, demanded for the cancellation of a tender awarded to Mvita MP Abdulswamad Nassir. He had been awarded a tender to conduct verification of goods and cargo at the inland container depot in Nairobi. His firm also has contract to hire labour at the port of Mombasa, the Nairobi ICD and at the Lamu port.
Alternative media reports indicate that the operations at one of the berths within the port have already been privatized and the tender given to Jaffer. The loading and offloading of imported fertiliser at berth numbers 4 and 7 has already been awarded to him.
Jaffer has reportedly come up with structures to centralise imported fertiliser at one place at the port. This would put 75 per cent of the port operations to be in the hands of private investors aka the cartels. KPA board is on the spot over the transfer of 75 per cent of operations at the port of Mombasa to private investors. Three companies which won tenders for the operations are alleged to be associated with state operatives. Firms namely Portside Ltd., Grain Bulk Handlers and Mechantile Company Ltd have illegally acquired the port’s public resources.
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