Covid, Chinese dealers drive Kenyan seafood traders out of business

By Kenyan journalist Allan Olingo, first published in The East African.

From Kwale to Lamu, Mombasa and Kilifi, the story is the same. The Chinese have not come to play. They are taking over the lobster export market.

For years, fishermen and traders operating along Kenya’s 640km coastline have earned a good living selling lobsters mostly to China, Dubai, and Singapore. For the lobster is one of the priciest and highly valued seafood products, both on the domestic and export market.

Then Covid-19 happened, forcing restaurants and export markets to close. And now, outside of the contracted market, they must contend with a new dilemma — Chinese buyers, who are financing fishermen directly, cutting the traders off the supply chain.

Philip Mnangu, a businessman from Kilifi, has spent years building his small empire selling lobsters all over the world. From his base in Kilifi, Mr Mnangu has shipped live lobsters to Asia, mostly China, Malaysia, Thailand, Hong Kong, and Singapore.

For years, the business has been good.

Then coronavirus struck and hit the seafood industry, sending his business on a downward spin.

Chinese buyers, who were his customers, added to his woes, scouring his source markets within the Kenya Coast to buy lobsters directly from fishermen.

“We are now facing two strong challenges, which are quickly driving us out of business,” Mr Mnangu says.

“Covid-19 aside, this unhealthy competition from Chinese firms who set up base in Kilifi, Kwale and Mombasa is the last nail in the coffin of our business.”

Outside of the threat of a market shutdown from the coronavirus pandemic, the well-heeled Chinese buyers are the biggest threat to Mr Mnangu and other local lobster sellers.

From Kwale to Lamu, Mombasa and Kilifi, the story is the same. The Chinese have not come to play. They are taking over the lobster export market.

“We have seen our colleagues close shop after being frustrated by the tricks and theatrics pulled by the new competitors in town. Some of us are sailing in murky waters,” says John Peshu, a Kwale exporter, who now says he is banking on his fishermen relatives to stay afloat.

For years, China’s middle-class’ growing taste for live lobster has been the key driver behind the commercial exploitation of the lobster fishery in Kenya’s Lamu Archipelago, Kipini-Kiwaiyu islands, and the Mambrui, Kilifi, Msambweni, and Shimoni areas all lying within the Kenyan coast. 95% of the live lobsters are exported to China.

Commercial exploitation

The arrival of Chinese dealers, who have the money and ready market connections back in China is changing the nature of this business.

“We are not sitting pretty. How can you when some of these traders, mostly Chinese buy lobsters from fishermen at a higher price than the normal market price leaving us with no suppliers?” poses Juma Naftali, a trader from Lamu.

For the Kenyan lobster exporters, the game is almost over.

For starters, lobster fishing is a mutual partnership that brings together the exporters, owner of the boat, owner of fishing gear, and the fishing crew.

Martin Kazungu, one of the brokers for the Chinese exporters, says that in the previous arrangement, local traders, who financed the fishing operations, determined the price.

Mr Kazungu, who supplies Chinese buyers in Mombasa, says most dealers relied on credit from the Chinese buyers, who would then recover their money after being supplied with lobsters.

“Then, the dealers would get up to $4,000 in credit to buy the lobsters from the fishermen. But that stopped, with the Chinese now going directly to the fishermen,” he said.

Twalib Abubakar, the chairman of Lamu Fishermen Association says that they will work with those who will ensure the plight of those “who go to the sea’ are taken care of.”

“This is business like any other. The fishermen will always go for the one who offer better terms, and prices,” he says, adding that Lamu lobster catchers account for more than 50 percent of Kenya’s total lobster production.

Ahmed Hemed, one of the lobster fishermen in Lamu, says catching quality lobster is a tedious job, often taking the better of the day and requires better remuneration from the market.

For hours at sea, together with skin divers, they hand-catch the lobsters.

“That is how we ensure most are caught alive,” says Mr Hemed, who has been at it for 20 years now.

There are good and bad days. Sometimes they return with no lobster.

“A day’s catch can weigh between 20kg and 50kg of lobsters, which essentially means we wasted our fuel that day,” he says, adding that with low prices, then the trade cannot be sustainable.

“Most fishermen prefer this new arrangement of being financed to go to sea. That way, the whole fishing process is secured, with a guaranteed return for all parties.”

Currently, the lobster business in Kenya’s coast is dominated by Chinese companies, which account for up to 95 percent, latest figures from Food and Agriculture Organisation (FAO) shows.

However, local companies like Pwani Sealife Kenya, Sea Harvest, Trans Africa, and Crustacean Processors, dominate the lobster processing and supply business, but are also said to be feeling the pressure from the Chinese firms.

But even as the coastal traders lament the entry of the Chinese into the fish exports, on the import front, local fishermen, especially around Lake Victoria, where Kenya’s biggest catchment of Tilapia lies, are also struggling to compete against the tonnes of Tilapia fish landing at Kenya’s port of Mombasa every day, pushing them off their source of livelihoods.

Insufficient stocks

This comes even as experts raise health concerns over this Chinese farmed fish, with several tests done already indicating presence of heavy metals in them.

Despite this, the Kenyan government says that the country will still have to contend with China as its main source of fish imports.

“Kenya will continue importing fish from China due to an acute deficit it is grappling with,” Agriculture, Livestock and Fisheries Cabinet Secretary Peter Munya says.

The latest data from KNBS shows that Kenya’s fish production registered its first improved performance in 2019, with total fish output rising from 146,300 tonnes in 2018 to 328,400.

Kenya requires one million tons of fish annually but only 200,000 tonnes were produced domestically, leaving a gap of 800,000 tonnes.

Besides China, Kenya was also currently importing fish from Uganda, Tanzania, and India.

“Infiltration of fish from China is because we do not have enough. You cannot stop people from eating fish just because you do not have any. If it is not there somebody has to bring it. We lack sufficient stock,” Mr Munya said.

However, the pandemic handed Kenyan fishermen an unexpected boon after the country’s fish imports from China dropped to US$9.14 million in the nine months of 2020, as compared to the US$18.68 million it spent in 2019.

The latest data on fish trade from the Kenya National Bureau of Statistics (KNBS) shows that China’s fish exports to Kenya dropped by almost 50% because of the global supply chain disruption occasioned by the Covid-19 pandemic.

In the seven months to September 2020, Kenya imported 8,900 tonnes of fresh chilled fish from Beijing, a drop from 18,074 tonnes it imported in 2019.

This was the second time the Chinese fish imports to the country dropped in the last eight years, having previously recorded near double digit growth, adding impetus to concerns that the Asian nation is flooding the local market with sea food to the detriment of local fishermen. In 2018, Kenya bought US$21.35 million worth of frozen fish from China.

Despite the drop, China still accounted for almost 90% of the fish imports into Kenya. Frozen fish that included tilapia and mackerel was the most imported fish stock from China.

This category included mostly frozen and chilled tilapia. The data also shows the Nairobi took in large amounts of smoked fish, dried and salted fish from the Asian country.

The latest estimates from the Ministry of Agriculture shows that the country’s fish demand is about 600,000 tonnes against the national production of 150,000 tonnes, necessitating importation to plug the gap.

In 2019, Kenya’s total annual fish production stood at 146,687 tonnes comprising of 23,700 tonnes from marine resources, 18,542 tonnes from aquaculture production and freshwater production of 102,331 tonnes, against an estimated potential of 350,000 tonnes annually.

China commands the highest volumes of fish sold in the world market because of its thriving aquaculture sector, with data from Chinese customs showing that Kenya was among the top 20 export markets last year for Chinese fish at number 15, receiving more than 357,000 tonnes of Tilapia worth US$30 million.