Punch-up over scrap metal - African Business Magazine
Punch-up over scrap metal

Punch-up over scrap metal

Kenya is about to pass a Bill that aims to regulate the often-wild scrap metal industry in the country. While the demand for scrap metal has led to wanton theft of public metal fixtures, there is a thriving domestic and export market for it. Aamera Jiwaji reports on the various reactions to the Bill.

It is a modern-day Wizard of Oz story with Principal Secretary Wilson Songa at Kenya’s Ministry of Industrialisation and Enterprise Development cast in the role of Dorothy.

His job in the coming months will be to shepherd a group of stakeholders as diverse as the scarecrow, tin man and lion to – not Emerald – but Steel City. But as Kenya’s Scrap Metal Bill enters the final stretch of approvals, it seems his journey may just be beginning.

Kenya’s scrap metal dealers have long been accused of profiting from the vandalism of the country’s road furniture and public infrastructure, including electricity and telephone cables, roadside lamp posts, guard rails, manhole covers and fibre-optic cables.

According to the Public Interest Stakeholders in the Scrap Metal Industry, Kenya annually loses KSh16bn ($186m) to the menace. In 2012, Kenya Power and Lightning Company Managing Director Joseph Njoroge revealed that his company had lost over $70m to vandalism over the last 10 years while Telkom Kenya claims an annual loss of $6m.

The country’s last Scrap Metal Act was passed in 1959, and in the 55 years since, the sector has run wild. In October 2007, the Act was amended to abolish the requirement for a licence to deal in scrap metal, which opened the industry up to further abuse.

Attempts to rein in the sector began in June 2010 when the Ministry of Trade banned the export of scrap metals from Kenya. The ban was endorsed by the East Africa Community Council of Ministers, thus restricting export of particular classes of scrap metal to any country outside the region. Data from the Economic Survey 2013, however, shows that despite the ban Kenya’s exports of scrap metal rose by 169% from $11m in 2011 to $32m in 2012.

Since then, attempts to regulate the sector have shifted gear. A draft Bill was prepared by the Ministry of Industrialisation and approved by Senate in November 2013.

“The Scrap Metal Bill 2013 seeks to introduce a number of new far-reaching measures that will help bring sanity and clean up the scrap metals sub-sector by, amongst other things, rendering it difficult to buy and sell stolen metal,” said Principal Secretary Wilson Songa.

According to the Bill, any person operating in the industry must be licensed by the Scrap Metal Council. Dealers and millers will be required to document the origin of metals, record details of buyer and seller, and when the transaction was carried out among other requirements. They will also be obliged to keep a stock of metals for not less than seven days before smelting it.

The Bill is expected to be tabled in Parliament in March or April 2014, but sector stakeholders – including the politically powerful Kenya Scrap Metal Dealers Association (KSMDA) – are fighting the hefty fines and punitive jail sentences built in.

Irshadali Sumra is the Secretary General of the KSMDA and owner of Roma Metals, one of the six largest scrap metal dealerships in the country. He is also a Member of Parliament.

Sumra is adamant that the KSh2m ($23,000) dealer licensing fee that the Bill proposes is inhibitive when compared to average monthly earnings of Sh500,000 ($5,800). “The fines are also punitive. If you are caught with two kilos of copper, it is KSh20m ($232,000) fine or seven years in jail,” he exclaimed.

As a Member of the National Assembly’s Finance, Planning and Trade Committee, he is confident that when the Bill is tabled in Parliament, he will be able to influence key amendments. “When [the Bill] comes to the Finance Committee, we will cut it (the fines).”

Sumra says, “Scrap metal is one of the top foreign exchange earners for the country. The industry is worth billions.” He added that with 800,000 dealers in the country, the sector makes a key contribution to local employment.

The behaviour of a handful of unscrupulous dealers should not besmirch the entire sector, he insists.

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Written by Aamera Jiwaji

Aamera Jiwaji is a Nairobi-based business journalist who writes for the East African and MENA markets. A graduate of South Africa's Rhodes University, she returned to the media in 2011 after working in Kenya's publishing and public relations scene. Tweet her on @amijiwaji.

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