The Managing Director of a state-owned Kenya National Trading Corporation Lucy Anangwe, on Wednesday narrated to the court how they incurred losses of Sh800 million after contracting a company linked to a city businesswoman for rice supplies.
Anangwe told Milimani Chief Magistrate Charles Ondieki that KNTC received a consignment of rice from the company but suffered financial setbacks due to the depreciation of the Kenyan shilling.
The company was one of several suppliers contracted by the state to provide rice among other supplies.
These companies, according to Anangwe, were financed by a local bank through letters of credit.
Anangwe explained that the company supplied on a consignment basis, where suppliers delivered goods and KNTC would sell them before making payments. However, the corporation struggled to fulfill its payment obligations due to the fluctuating exchange rate.
She stated, "When we negotiated the contract, the exchange rate was Sh121 to the dollar, but by the time of payment, it had risen to Sh155."
The contract between KNTC and the firm, signed in January 2023, stipulated that payments would be made in U.S. dollars.
Anangwe emphasized the impact of the exchange rate, saying, "If we had negotiated at Sh121 and the dollar appreciated, we were ultimately losing Sh34 for every dollar."
She explained that KNTC procured 43 metric tonnes of rice at $600 per metric tonnes. They purchased the rice for Sh3.1 billion and paid the company Sh3.9 billion.
"We sold in Kenyan currency, and KNTC suffered a loss as it paid the company Sh3.9 billion due to depreciation of the Kenya shillings," said the witness.
She told the court that the value that was to be paid was Sh3.1 billion if the exchange rate remained the same.
She further explained that the base rate of rice was $460 and that KNTC had options of buying at $460, $520, or $600, but the corporation chose $600.
Anangwe joined KNTC in 2008 as an accounts assistant and is now the MD. She explained that KNTC procured for national government and private businesses.
She said importation of essential commodities was a directive from the cabinet that they were implementing. Her participation in relation to the procurement of the commodities was limited to the letters of credit.
She maintained that she was not involved in the procurement of the rice and other essential commodities.
Anangwe was the first witness to testify against former MD Pamela Nduku.
Nduku was six months ago charged in court with failing to adhere to procurement laws in relation to the case.
