An opposition member of parliament (MP) in Tanzania, Zitto Kabwe, has called on the Bank of Tanzania to publicly name the bank that issued a letter of credit (L/C) that facilitated a controversial sale of Tanzanian cashew nuts to a buyer in Kenya.

The L/C was used in a transaction that involved the Tanzanian government selling its stockpile of cashew nuts to a virtually unknown Kenyan company that has been described as 'virtually unknown' and 'shady' by local media.

Under pressure

Tanzanian farmers had been struggling to make money out of cashew nuts as brokers increasingly squeezed producers' margins on the crop.

Disquiet amongst farmers caused the government to ask farmers to surrender their crop to the state.

Change of heart

The government said it would process the nuts and sell the finished product at a premium to increase the farmers' earnings.

But instead of doing this, the authorities set out to find a bulk buyer for the more than 200,000 tonnes of cashew nuts it had collected from the farmers, in what looked like an international invitation for bids.

It was then announced that Tanzania had struck a US$180 million deal to sell 100,000 tonnes of its unprocessed cashew nut stockpile to a Kenyan company, Indo Power Solutions.

Doubts cast

The Kenyan company was only formed in 2016 and has no trading record dealing in such large quantities of any commodity.

Research by local media claims to have revealed no deals made by Indo Power valued at more than US$10,000.

Lack of transparency

Kabwe says the deal lacks transparency and this is why he wants the Bank of Tanzania, the country's central bank, to name the bank that issued an L/C for US$180 million to facilitate the deal.

Indo Power's chief executive Brian Mutembei had earlier declined to name any bank supporting the deal. "This L/C was from international banks, and this credit line will make the purchase successful. So the money isn't going to be coming from Kenya's financial system. I cannot name the banks that offered these L/Cs," he told The East African newspaper.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.