Why Sh418 billion cashew deal has yet to be executed

Thursday February 21 2019


By Zephania Ubwani @ubwanizg3 news@tz.nationmedia.com

Arusha. The Kenyan firm that won the tender to buy 100,000 tonnes of Tanzanian cashew nuts is still processing the required legal documents before effecting payments, the government said yesterday.

Tanzania expects to earn Sh418 billion (about $180.2 million) following the agreement signed on January 30 between Indo Power and the Cereals and Other Produce Board.

Indo Power chief executive Brian Mutembei said last month that hauling of the cashews would commence any time from next week.

But Industry and Trade minister Joseph Kakunda said yesterday that the Kenyan firm was still working on some legal documents related to the agreement.

“It is still finalising some legal and business procedures. Once this is done, we will hand over the 100,000 tonnes without delay,” he said.

Mr Kakunda called for more firms and individuals to come forward and buy the 221,060 tonnes which the government had purchased from farmers by early this week.


“The government will enter into an agreement with any local or foreign company or individual provided they can buy the produce at the price set by the government,” he told journalists.

Hundreds of tonnes of the crop are currently lying in warehouses in cashew nut producing regions, awaiting exporters and buyers for local processing.

Mr Kakunda said prospective buyers should contact the Industry and Trade permanent secretary, indicating the price they are ready to offer.

“When I say anybody, I mean owners of processing plants, malls, direct exporters or those who can buy, store and later process the nuts for their business needs,” he said.

The minister added that the government was ready to accept offers from new buyers for consignments that are as low as ten tonnes, “provided we agree on the price”.

He reiterated, however, that the government would not sell raw cashew nuts for under Sh3,300 per kilogramme, which is the minimum price farmers were offered.

“New buyers should take into account costs the government incurred in transporting the crop from primary societies to warehouses,” Mr Kakunda said.

Other costs include various levies paid to local authorities, cooperative societies in cashew nut growing areas and mandatory contributions.

Mr Kakunda added that another firm, Bi-Southern, was expected to sign an agreement with the government yesterday for the purchase of 15,000 tonnes of raw cashew nuts.

According to the Ministry of Agriculture, cashew nut production in 2017/2018 is estimated to reach 240,000 tonnes.

The latest developments came in the wake of fears that Indo Power could be too small for the deal, with some pundits pointing out that the Kenyan firm may have merely acted as a broker for a third party.

Reports on the shadowy nature of Indo Power Solutions were revealed last week by the Nairobi-based The EastAfrican weekly newspaper.

The newspaper raised questions regarding the company’s registration as well as the ability and authenticity of the officials behind the lucrative deal.

It carried a background check following the announcement that the firm had won the contract and revealed that Indo Power Solutions was “virtually unknown”.