‘Black gold’ trade that turned Kenyans into millionaires

By Joseph Karimi

Kenya: Under the cover of darkness, Kenyan traders rolled in money, thanks to Ugandan ‘black gold’. Hundreds of Nairobi and Mombasa business tycoons invaded Kisumu town in 1976 to scramble for a share of Uganda’s coffee smuggled via Lake Victoria in small boats.

The four-year period, 1976 through to 1979, was christened the “Chepkube Coffee Boom” era, which made many Kenyans millionaires overnight from trading in the Uganda ‘black gold’.

The unprecedented rapid monies promoted small business timers to millionaires, also transforming many paupers into business-oriented citizens.

The phenomenon of Uganda’s ‘black gold’ flooding Kenyan market was highly politicised and the Attorney General’s office moved swiftly to try and contain this “economic crime” with little success.

Not even government officials were left out. Two former parliamentarians: Muhuri Muchiri and Mwangi Gachago were jailed for allegedly stealing coffee.

Just before the fall of dictator Idi Amin in 1979, I was assigned to cover a territorial meeting of delegates from Kenya, Uganda and Tanzania discussing East African Community assets held at Kisumu. The weekend gave me an opportunity to rub shoulders with the high and mighty.

I even took time off to visit Sio Port, one of the major destinations of the boats loaded with smuggled coffee. However, I was not able to reach Chepkube, the open-air market where the first smuggled coffee was traded.

The smugglers — a ring of senior politicians, administrators, traders, and prostitutes — had turned the once-sleepy village of Chepkube in Bungoma into a paradise. The coffee continued to flow in as business picked up attracting traders from Nairobi and elsewhere who invaded Kisumu in droves to catch on the coffee boom.

Earlier on, Kenyans had been up in arms with Idi Amin when he claimed Kenya’s territory up to Naivasha. Amin was right though living in the past as maps he had read were only relevant before Kenya was declared a British Colony in 1920. He was never apologetic of the error, but Kenyans reacted by staging demonstration condemning Amin’s contemplated invasion to recapture the territorial chunks he claimed.

I covered one such demonstration by thousands of Kenyans at Malaba border town where placards and branches were deposited over the Malaba bridge territorial boundary with a warning to Amin to venture into Kenya’s territory and face the consequences.

Amin was used to make claims over some odd issues to divert attention of internal problems of discontent within his army.

The coffee smuggling was of his own making. 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.

 Amin arbitrarily disrupted the Uganda Coffee Board marketing strategies directing the entire farmers’ coffee crop airlifted to Libya in exchange of military hardware. For a number of years, coffee farmers’ payments ceased and a boycott of delivery to Uganda Coffee Board created hoarding.

Economic sabotage

After the coffee farmers boycott, Amin created a special squad headed by his British top adviser Bob Astles, to track down boatmen and traders smuggling coffee through Lake Victoria. Astles was thorough. When caught, the culprits answered squarely for their take in the economic sabotage to the chagrin of their president. They were shot on sight and others seriously tormented.

Outlets for the smuggled coffee could hardly be sealed as middlemen loaded bags of the black gold to boats they rowed across Lake Victoria under cover of darkness.

 I visited Sio Port to witness arrival of several boats in pitch darkness. The loaded boat signified by a dim light from a spotlight would be shoved amid ferocious high water waves hitting the shores with a backlash. Besides rowing the boat, occupants also scooped water spilling into the boat floor wetting the beans in the sacks.

Buyers waited for their arrival with anxiety and bargained prices. The commodity moved to makeshift stores for the night for immediate delivery at dawn to Nairobi and Mombasa. Marketing was a continuous process and by end of the day, the agents already had their money to re-invest and the business continued. 

Tycoons behind the coffee trade used to obtain short term credit arrangement with banks in terms of millions of shillings they paid back within two or three days of transaction.

Economic boom

The coffee trade transactions windfall created an unprecedented economic boom in the country and Nairobi took the lion’s share. The industrious businessmen made a kill as cash money flooded the market. Indeed, Kenya’s unscrupulous businessmen assisted the Uganda coffee farmers in the chain of marketing their coffee for which they received a share through the chain of handlers and middlemen.

Kenyans’ gains were expressed in the manner of the utility of these fortunes. Evenings through the week turned into levering business in big hotels and bars in various corners of Nairobi City.

If you had no money to inebriate yourself, you just availed yourself to the drinking dens like the Wakariro, the then Mayfair Hotel, Heron Court, Hotel Milimani and you were sure to find open invitation among scores of tycoons and beneficiaries of the coffee trade.

The coffee boom climaxed in 1979, one year after the death of President Jomo Kenyatta on August 22, 1978, when remarkable changes occurred in political and social circles as President Daniel arap Moi took over reigns of leadership and consequently President Amin was deposed in 1979 by rebel armies led by Peter Okello and Yoweri Kaguta Museveni backed by Tanzania army.