Cut The Scrap!

Guest Writer
17 December ,2013

by Owaahh

Scrap metal is an unattractive topic because its name implies rust and junk. That is its camouflage and strength. Scrap metal in Kenya is actually a multi-billion shilling sector built on theft, vandalism, economic sabotage, and pure avarice.

The scrap metal industry in Kenya is unregulated save for a few policies that are never implemented. The lucrative industry ‘relies on an old school means of acquisition and an infinite pool of small players, making this massive industry fragmented and difficult to navigate.’ No one ever asks these small players the source or proof of ownership of the goods they bring. No one needs to anyway because no one cares.

Not enough to do something tangible about it anyway.

 73-year old Benson Kariuki fell into a gaping manhole in Nakuru in July 2012. He suffered a broken kneecap and a ruptured tendon. The treatment process cost him KES 1.5 million, and KES 500, 000 in follow-up costs.  These are the direct costs, the loss in productivity is not quantified. The curse was not done with Benson yet as his workshop in Nakuru’s Industrial Area was raided while he was in India for treatment. The thugs stole anything metallic over the course of three break-ins, including engine pistons, cylinder heads from three of his vehicles.

The same story tells of Sharon Ochangi who has fallen into two open manholes within Nairobi. She survived the first one intact, only to fall into a second on Jogoo Road and break her leg.

In another story tucked into a column in a local daily, a man shot and killed his 31-year old son. Joseph Cheptoo Maiyo was killed by his dad after he was found stealing sufurias from his parent’s home. To our collective middle class psyche, sufurias are a mundane, basic equipment that no one should die for. Yet the story is different.

These stories may look like mere coincidence with no real villain, but one exists. That villain is not a single person but a system that seeks obscurity and profit – the scrap metal industry.

You might not fall into a manhole cover or have your engine parts stolen, but your sufurias and jikos are not safe. If your thieving house-help is sharp, she will steal your cutlery set and haul away the metal parts you hoard in your store. If your neighbor finds the sufuria you cooked Ugali in last night outside your door, your sufuria may well be going to China.

Forget the guardrails and transformer cables that you feel are the responsibility of the utility company, the vandals are after the little you have. Have you heard about the gate thieves of Murang’a? They yank your gate with a blow torch in the middle of the night and skirt it off to a scrap metal dealer. Once that first transaction takes place, your gate is gone for good.

We are actively exporting scrap metal in exchange for, laughably, more steel. The cycle is such that one party, say the government buys steel products using your taxes, an entrepreneurial chain of Kenyans then work together, most in the dark of the night, to make sure that steel goes back to China and India where it is then bought back as finished steel product, to replace the one just stolen.

Scrap metal exports fetched KES 2 billion for 517, 068 tonnes in 2012, and KES 1 billion in 2011, an impressive 100 percent growth in less than a year. If only the Kenyan smelting industry would grow at such rates. As of 2013, the sector was worth a paltry KES 8.5 billion, less than the annual impact of scrapped steel on the economy.

The Kenyan steel industry has been retarded by having to compete for raw materials with the rocket-on-steroids that is China’s economy. These emerging economies are the Bermuda Triangle of scrap metal and raw materials from Kenya and her peers. China, in response to its own demand and grip on the developing world, has scrapped importation licenses. We now proudly export more tonnage than a good number of steel/iron ore producing countries.

In 1992, 5 towers on the Juja-Rabai power line collapsed due to theft of steel bracings in the Ruai area.  It cost Kenya Power 2 million shillings to repair each transmission tower, with indirect costs going as high up as KES 54.5 million for every tower down. The utility company lost 250 kilometers of conductor (copper and aluminium) between 2004 and 2007. Such vandalism cost the utility company direct losses of KES 707.72 million, a direct impact of about 3 billion for the economy. Telkom Kenya suffers KES 500 million vandalism-related losses per year – losses that you paid for.

The Kenya National Highway Authority (KENHA) is spending KES 120 million to keep vandals away from Mombasa to Thika roads alone. This money is sourced through road levy, fuel levy and other forms of taxes. Not only are you replacing your stolen gate, sufuria, panga, hoe and engine parts, you are also paying for the losses the utility companies incur due to vandalism linked to scrap metal.

When Australian Base Titanium set up in Msambweni at the Coast, its properties were constantly targeted, and scrapped, as a form of protest by local residents against the company’s hiring policy. Telkom claimed that its fiber optic cables had been vandalized several times, especially in cases where the network runs to the company’s key customers. Scrap metal is now a new form of economic sabotage.

It is not just an endless cycle of vandalism, it is an endless cycle of poverty and utter stupidity.

The new county governments, tasked with a greater jurisdictional development mandate than the local governments they are replacing, will feel the pinch of the trade. The Nairobi Governor reacted to this concern in June noting that scrapping scrap metal licenses will lead to loss of jobs –legitimate ones, thieves will always find a new trade to ply- but will lower the operational costs of running Nairobi. The ban did nothing for Sharon’s fractured leg. Nakuru, where Benson lives, also initiated bans perhaps too late to give the formerly successful entrepreneur any comfort.

Some of those found with vandalized scrap metal in Nakuru are former local government officials and elected representatives. In one case, a former mayor, David Gikaria, was found with tonnes of everything metallic and movable. The cache ranged from billboard signs to power cables. Of course nothing happened to him beyond the bad publicity which, given our whimsical focus, is never really anything in Kenya. We celebrate the entrepreneurial spirit, we are optimists like that.

In 2006, a man called Irshad Sumra was arrested with KES 10 million worth of vandalized cables belonging to two utility companies.  He had a 19.2 tonne-haul in his home and warehouse, all cables ‘formerly’ owned by Telkom Kenya.  Nothing substantial ever happened. Even more representative of how we reward sin here, we elected him to Parliament. He is now the Embakasi South MP.

These players are merely tiny cogs in a wheel. A wheel that is looping copper wire cables, bridges, power transformers, water pipes, manhole covers, stop signs, your kitchen set, gate, fence, doors, windows and anything that falls on the right side of the periodic table. That wheel costs the economy – scrap that, costs you and I – anything between 10 to 16 billion bob a year. Like all wheels built on greed and profit, it is growing hungry.

In response to the vandalism that accompanies the sector, a legislative bill has been in the works for over five years now. The current bill, scheduled for presentation to the National Assembly, proposes stopgaps to ensure that the source of the scrap is verified. It is not a foolproof provision but anyone caught trading with stolen scrap metal will be jailed for seven years or fined KES 20 million. At least that’s what the bill should have looked like.

Aware that such measures would cripple the industry by denying vandalism a crucial lifeline, scrap metal players used their influence in the process to lower the fine to a maximum of KES 1 million, a slap on the wrist when compared to the profits involved.

The current president banned the exportation of copper wires, cables, steel and aluminium in 2009 when he was the Finance Minister. The ban was designed to protect the power and telecommunication utility companies. The East African community followed with a ban on all scrap metal exports outside the community:

The logic is that exporting the little we have is daft as manufacturers have to pay higher prices, incurring higher operational costs, employing fewer people and never reaching their full potential.

The ever-resilient industry sought a loophole in this ban too. They lobbied for partial removal of the ban for non-ferrous metals – bronze, brass, and copper – on the pretext that what they had in stock was more than Kenya or the EAC (East African Community) can currently handle. Thus only the ban on ferrous metals – steel and iron – remains, but it is poorly implemented.

The law also sought to provide a framework for a licensing body called the Scrap Metal Council (SMC). In this Nirvana version of Kenya, the SMC would be the licensing body for all dealers and millers in the industry. They would be required to handle scrap as it should be handled, like a national resource or a dangerous weapon. Proper records of buyers and sellers and documentation of the sources, and other such measures, would propel Kenya to become a net exporter of finished steel products.

To this provision, the rusty wheel of avarice changed clauses on membership that will give them more clout and power in, you can laugh now, regulating themselves. If you are thinking of the wolf that doubles up as a shepherd, you are thinking of Kenya’s current scrap metal situation.

The stories of scrap metal related vandalism, both physical and economic, need to be told. The legislative process will not be the answer to all our problems, especially because we are lethargic implementers, but it will provide a framework for some hope for, if nothing else, some semblance of sanity.

 Owaahh is a writer, blogger and researcher. He blogs here  and tweets from @Owaahh

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