The man who brought East Africa’s roadside chapatis
In Kenya, chapati used to be considered an exclusive dish, typically reserved for Christmas celebrations and special occasions. This was partly due to its cost and availability. Today, chapati has evolved into a popular roadside snack in Kenya, available for as little as Kes30. In Uganda, it is often enjoyed alongside an egg roll known as a Rolex and kikomando, which involves folding it with beans.
The starch has become an everyday meal partly because the global trade made it easy to import wheat. Kenya imports nearly nine times the wheat it produces both for local consumption and for supplying the region. While the country produced 181,900 tonnes, Kenya imported 1.6 million tonnes valued at Kes78 billion.
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Chapati and other wheat-based products
Imports have facilitated the rise of wheat based meals in the country making products such as bread, maandazi and chapatti affordable everyday meal. And no one has facilitated these imports more than Mr Jaffer Mohamed.
The wealthy Mombasa tycoon changed the way wheat comes into East Africa taking the sacks from the backs of work gangs into mechanized handling facility and in the process bringing down the price and increasing the volumes.
Before Mohamed Jaffer’s Grain Bulk Handlers’ Limited (GBHL), 25,000-ton shipping vessels arriving in the port of Mombasa would take four days to berth and 12 days to unload using mechanical grabs and manual bagging systems.
The outdated facilities caused congestion at general cargo berths and at the port where long truck queues waited for grain cargoes for days on end.
In 1998 the shipping merchant was watching ships dock at the port of Mombasa bringing in 523,000 metric tonnes of wheat and dust, most of which was lost in the process of unloading. Quick math in his head, he figured bagging could be done at the silos for a reduced cost and with reduced waste instead of at the quayside.
He thought he could bring in wheat in bulk, bag and haul it at a fraction of the cost that would not only reduce inefficiencies but also bring down the price of the grain.
The man behind the empire
Just over two decades Jaffer Mohamed has built, the region’s largest dry grain handling infrastructure with a vessel handling capacity of 600 metric tonnes per hour, bulk transit and storage terminals as well as local transport logistics that has changed what east Africans eat.
It brought efficiency at the port cutting down time for offloading and limiting spillage as it grew its storage capacity of 200,000 metric tonnes with the additional 125,000 metric tonnes at the 33 large silos at the Inland Container Depot in Nairobi, giving it control of offshore maize import channels.
In my quest for knowledge, I delved into the methods employed by developed nations and noticed their advanced, mechanized handling systems, which required substantial capital investment. This convinced me that Kenyans have the potential to adopt technology and utilize technical expertise to establish a state-of-the-art terminal at the port of Mombasa, Mr. Jaffer stated in a past interview with Forbes Africa.
I have never met the businessman myself. The journalists who I know have interacted with him, say his demeanor is guarded, a man ‘who is hard to get a word out of’. When at ease he easily weaves his family heirloom, perhaps as an explanation for why he is larger than life. He is a man whose mystery and history have traversed East Africa and who will continue to be influential for a long time to come.
Last year, the Managing Editor for Africa at Nation Media Group tasked me to do his story when he wanted a regional piece on Mr Jaffer. I was surprised my boss even had my contact. I had his, so I rushed out of to the washrooms of the tunnel away from the night club noise and listened eagerly.
Mohammed Jaffer’s oil business
He wanted to know if I could do a story on the Mombasa tycoon. Then it hit me why he had called, I was one of the very few people who have written about the businessman in recent times and actually got my story published.
The businessman who controls East Africa’s grain imports and a sizable chunk of liquid petroleum gas market rarely gives interviews and stories on his business sometimes gets lost in translation. There is very little there on the reclusive billionaire and he features on Forbes among Africa’s wealthy you have never heard of.
The editor must have been doing his research on the scanty information about him when he came upon a 2021 story; a tax dispute that had seen Kenya Revenue Authority raid Mr Jaffer’s extensive oil and liquid petroleum business. Much to his disappointment I was not that well versed about the businessman having done the story solely on court documents.
But I promised to do my best to crack this difficult story, reaching out to people who I know are close to the businessman including an aide. I came up with nothing, they simply weren’t interested in media coverage, good or bad. So like my editor I went back to the internet.
A man as wealthy as him cannot stay long in the shadows. In an ‘I started off with a penny’ narrative, he sat for an interview with Forbes. The photo accompanying the story has him sitting calmly like an immovable ship in the tempest of the large portrait behind him. Siting calm and solemn on brown leather there is regal confidence in his demeanor. It tells the story of a man who has been transformed and has transformed his world.
Kenya’s largest cargo handling facility
Mr Jaffer is now aged 74. And is running Kenya’s largest cargo handling business. He oversees several cargo handling terminals and container freight stations in Kenya, Uganda and the United States. Mr Jaffer has LPG Terminals and a grain terminal at the port of Lake Charles in Louisiana, USA. His company built for transit and long term storage is one of the biggest private investments in the region beating most listed companies at the Nairobi Securities Exchange.
He comes from a long line of merchants. His linage traces back to 1860 in Zanzibar to Haji Dewji Jamal, who started the family business. Haji Dewji Jamal was trading across South Asia, the Middle East and East Africa. An account of his family from The Light Magazine in 1999 shows the family is routed in Islamic religion. They are also gifted linguists, who have been instrumental in bringing education and religion to East Africa’s coast.
Mr Jaffer himself speaks and writes in six languages: English, Urdu, Hindi, Gujarati, Cutchi and Swahili. He is deeply religious and trusting according to the account he gave Forbes until a close friend cheated him out of his business.
The story goes that he travelled to Mecca for Haj in 1974 and took a tour visiting religious sites in Iran, Iraq and Pakistan. Back home, he entrusted a friend with the power of attorney over his business but took advantage and defrauding Mr Jaffer.
Rather than let the bitterness sour his soul that had just emerged from religious purification, he said he took it in a stride, as a lesson on trust that has cultivated his guarded demeanor ever since. “I don’t believe in crying; I believe in positivity—negativity does not pay,” he told Forbes.
Family legacy
He sees himself as a legacy of ancient Indian coolies who are deeply rooted with the history of the founding of this country and takes a lot of sentiments in the port business. During interviews discussing the official recognition of Asians as Kenya’s 44th ethnic group in 2017, Mr. Jaffer points out that his community has been in the country for a longer duration than certain communities (like the Luhya, whose term was coined in 1930). As a result, they have faced discrimination from successive regimes due to not being considered indigenous enough.
“I am a fifth generation, my children are sixth and my grandson is the seventh generation. And some of the communities are as old as our forefathers who came to this country,” he said, adding: “We were still considered as Indian or European, excluded from the indigenous Kenyans. And we would never fight.”
He added the community has sought recognition since 1963 when Kenya got independence. And in a twist of fate, he said rather pleasingly, it was the son of the founding president Uhuru Kenyatta who saw their plight and gave the community recognition.
Mr Jaffer is a continuation of his family legacy into business. His family had been in the transport, real estate, and trading business in Mombasa for decades. The young Mr Jaffer started out with a car dealership. And this was after he left insurance brokerage before moving to pallet manufacturing until 1983. He then moved into the container business trading in wood planks and color-mixing boards. Later, he obtained permits from the Kenya Ports Authority to participate in grain bulk handling in Mombasa in 1992.
Loan from the World Bank
To build the facility Mr Jaffer obtained credit lines from the World Bank private arm International Finance Corporation. British development fund Commonwealth Development Corporation (CDC) and Proparco also funded the venture.
The grain and fertiliser terminal at the Port of Mombasa became the first sophisticated purpose built facility. It is dedicated to the discharge of grain and fertiliser between the Suez Canal, and the Cape of Good Hope.
Mr Jaffer took on the grain bulk handling terminal as a regional project. This is because the Port of Mombasa serves Uganda, Rwanda, Burundi, and Sudan. The port is also a drop off point for grains from international donor aid agencies. Somalia, Rwanda, and Burundi have received World Food Programme aid through the port.
The chairman of MJ Group has expanded his grain terminal business to port of Lake Charles, Louisiana, USA. The company is currently working to establish similar projects in Vietnam and India.
Back home, as the business grew, it became too big for the port city of Mombasa. And the billionaire was ready to come to the capital, Nairobi. In 2021, the company set up critical infrastructure allowing cargo from the Port of Mombasa to its facility in Embakasi. Essentially, this eases the last mile journey for his clients and securing marketshare.
Grain Bulk Facilities inland terminals
“We started in 2021 until today we have done over 4 million tonnes. The advantage of this facility is that customers can now collect the cargo next door. Previously they used to send lorries to Mombasa. We spent Ksh36 billion (USD 270 million) to achieve this because we had to put lots of funds into Mombasa, including paying for the railway lines,” Jaffer said during the launch of the facility in April this year.
The company’s early adoption of the Standard Gauge Railway has seen it expand into inland terminals. It has a logistic centre in Nairobi and eyes regional locations in its hinterland expansion.
According to the Northern Corridor Transit and Transport Co-ordination Authority Grain Bulk Facilities have been instrumental in improving railway cargo market share from 5 to 21 percent in just three years.
“The completed projects that supported such tremendous improvement of Madaraka Express Freight Services market share include; the operationalisation of the Naivasha Inland Container Depot, a Grain Bulk Handlers Limited (GBHL) Nairobi Bulk storage facility connected with SGR siding; a GBHL Loading facility at Mombasa Port; modification of types of wagons into load containerised cargo; completion of the Kenya Railway Transit shed, and the refurbishment of the Meter Gauge Rail line Nairobi-Nanyuki to attract more exports cargo,” the authority said.
Grain Bulk’s control over nearly half of the standard gauge railway cargo. The firm has since obtained concessionary rates of haulage. It has also secured locations at the inland container depot, increasing its efficient haulage of grain into the region.
Handling grains at port
A draft document seen by the Daily Nation indicates GBHL and Autoport Freight Terminals Ltd (AFTL) were to enjoy preferential treatment to transport cargo from Mombasa to Nairobi over a 10-year period at up to 80 per cent discount.
Based on the draft documents, the two companies have negotiated with Kenya Railways Corporation (KRC) into granting them a special rate of $450 (equivalent to Sh45,000) to transport a wagon of loose cargo from Mombasa to Nairobi, down from $2,147 (equivalent to Sh214,700).
Over the years, the business has made Mr Jaffer powerful. He grew his network of companies beyond handling grains. The Mombasa billionaire now runs a chain of companies that spur oil, grains and liquid petroleum gas.
Mr Jaffer owns majority stake in GBHL along the Varsani family. He owns One Petroleum Limited, Africa Gas and Oil Company Limited and One Gas Ltd. African Gas Oil Terminal (Agol) with a capacity to handle 30,000 metric tonnes of cooking gas is a dominant player in the sector. The firm feeds into his LPG company Pro Gas that started operations in Kenya in 2017. Pro Gas was initially known as “my gas” before rebranding to Pro Gas.
With his massive wealth Mr Jaffer has outsized influence in Kenya’s most powerful circles. And this helps protect his business interests as it grows beyond just grain.
Monopoly at Mombasa port
His views of politics are practical as his mettle for business. He says politicians always viewed him with suspicion and often tried to frustrate his business.
His grain business has been subject to several parliamentary as parliamentarians sought to cut its monopoly at the Mombasa port. A report by the Finance Committee in November 2020 noted Grain Bulk controls 98 per cent of all grain imports. The company has been in operations since 2002. Under the contract terms with Kenya Ports Authority the firm paid $3.85 per tonne it handled. It also charged $13.5 per tonne in a bag and $16.5 in loose grain to its clients.
It operated exclusively at berth 3 and 4 which expired in 2008. This stepped up a fight to open up the lucrative trade to other players including Kilindini terminals limited, Kapa oil refinery, Africa Ports and terminals, Multiship international and Kipevu inland container EPZA.
MPs in the last parliament again ruled that KPA should authorize other grain handlers by 2022. The lawmakers also challenged KPA to build infrastructure to support competition.
But being Kenyan, he has learned to handle politicians. Mr Jaffer is said to have supported successive regimes since Moi and knows his way around power. He supported former Prime Minister Raila Odinga in 2013. It is, however, reported that he has since fallen out with Raila for his support in local Mombasa politics.
Tanzania billionaire Rostam Aziz
Initially, there were differences between Mr. Jaffer and the current Kenya Kwanza regime. Last year, President William Ruto launched LPG gas plant owned by rival businessman Tanzania billionaire Rostam Aziz. However, things changed as the government sought to lower the cost of basic commodities.
Grain Industries Limited, which is affiliated with Mr. Jaffer, significantly reduced prices of Umi and Ajab maize. The move was in sync with the government’s narrative of lowering unga prices. President Ruto even officiated the launch of Grain Bulk Handlers Limited in Nairobi County. During the event, Mr. Jaffer expressed support for the government’s policies and offered to donate Kes100 million to the President’s Hustler Fund, which would be funded by corporates. Additionally, Mr. Jaffer suggested the idea of creating a Fund and a bond from corporates to empower small-scale entrepreneurs across the country.
“I would like to ask the President to establish a Hustler Fund funded by corporates. They will get some of the profits on a bond of 5 years or 10 years interest-free. Just imagine how many people we can bring to the middle class. No country can progress without the middle class,” he said.
As in politics, Mr Jaffer has demonstrated similar strategic vision when it comes to his business. When Russia walked out of the Black sea grain deal in July, prices of wheat started edging up. Korir Sing’Oei, the permanent secretary at the foreign affairs ministry told Reuters commodities that used to cost say a pound or two will now cost four, the prices will just double.
Kenya skipped the Russia Africa Summit during which President Putin said Russia was expecting a record grain harvest and was ready to replace Ukrainian grain exports to Africa on both a commercial and aid basis to honour what he said was Moscow’s critical role in global food security.
In what was seen as geopolitical ties with the West, President Ruto chose instead to be represented by the African Union, according to Hussein Mohamed, the President’s spokesman. And during that week, Russian affiliated hackers Anonymous Sudan crippled Kenya’s online public service and ubiquitous online mobile banking.
“We will be ready to provide Burkina Faso, Zimbabwe, Mali, Somalia, Central African Re-public and Eritrea with 25-50,000 tonnes of free grain each in the next 3-4 months,” he said. “We will also provide free delivery of these products to consumers.”
Kenya’s wheat harvests
The government says Kenya expects a wheat harvest of more than 1.2 million bags of 100kgs this season which is still insufficient in meeting the country’s demand of about three million bags per year.
The country expected to face a shortage of imports and a hike in prices. In response, the government has announced a cap on prices at Kes5,200 for a 100kg bag of grade one wheat. The government aims at forcing millers to buy all local produce before importing.
But millers claim that the shortage is already impacting the market. The price of a two-kilogramme packet of whole wheat flour is retailing at about Kes212, from Kes165.89 in May.
Millers claim that Kenya has produced only 200,000 bags that are being bought by millers in Narok. This means that if the imports are not approved, then the prices will begin climbing up immediately. A conversation with a wheat farmer informed me that the shortage was already squeezing markets. Brokers are approaching farmers, offering as much as Kes10,000 for a bag, twice the price set by the government.
Kenya typically grows wheat on the Narok, Molo-Nakuru belt. At the moment, farmers are harvesting around this area. Wheat farmers in Uasin Gishu will be harvesting around October and September. All this yield is, however, not enough to meet the country’s demand.
Grain Bulk Handlers
Mr. Jaffer’s company is set to have a significant impact on wheat product prices in the country. Media reports reveal that Grain Bulk Handlers holds approximately two million 90-kilogram bags of wheat. This stock conveniently matches Kenya’s annual deficit.
However, the wheat is currently stuck at the Mombasa port, awaiting clearance from the Agriculture and Food Authority (AFA). The AFA is hesitant to allow imports until local wheat harvests are fully utilized under an agreement between the National Treasury, Ministry of AgricuJture, Ce-real Millers Association (CMA) and wheat farmers.
The 2010 agreement requires millers to mop up the entire local wheat production before they are allowed to import. A move that sees them pay reduced import duty from 35 per cent to 10 per cent
A top official from a wheat miller refutes the AFA’s claims. He notes that the millers have indeed met their quota for local wheat produce.
“Any costs incurred through demurrage, unentered [fee charged Grain Bulk Handlers Ltd for lack of clearance papers] and storage will ultimately affect consumer prices. Prices are expected to rise if the matter is not resolved in a timely manner,” the local daily said.
