Markets & Finance

Mombasa auction set to resume tea exports to Iran as embargo is lifted

mudibo

Mr Edward Mudibo, the East African Tea Traders Association MD. PHOTO | SALATON NJAU

The East African Tea Traders Association (EATTA) will resume tea exports to Iran following the lifting of international sanctions slapped against the Persian Gulf economic power house.

Managing director Edward Mudibo said Iran was previously one of the major markets for Kenyan tea and the association is banking on the new development to lift the price of the beverage.

The International Atomic Energy Agency, which is the UN nuclear watchdog, at weekend certified Iran was in compliance with the July 2015 agreement on limiting nuclear development, opening the country to trading with banks and companies outside US.

“Iran has a huge population with over 100 million people making it a niche market for the Kenyan tea, we expect to resume tea exports to the country following the lifting of the sanctions,” said Mr Mudibo.

He said that EATTA will work on a mechanism that would lead to the resumption of the exports from Mombasa auction as soon as possible to lift the sector’s earnings.

“The exports to Iran will spur the demand for tea at the auction and this will in turn impact positively on the price,” said Mr Mudibo.

READ: US-backed sanctions hit Kenya’s exports to Iran

The value of tea exports already increased by 41.9 per cent in the four months to last October compared to a similar period in previous year.

The Kenya National Bureau of Statistics (KNBS) data shows exports grew to Sh44.4 billion between July and October from Sh31 billion in the same period 2014.

The country exports 95 per cent of the tea produced locally making it the largest exporter of the beverage to the world market. This is unlike China, which is the leading producer of the commodity but consumes all its tea.

Iranian Industry, Mine and Trade minister Mohammad Nematzadeh, told the Business Daily last month his country plans to invest in agricultural sector once the sanctions are lifted.

He said Iran would partner with Kenya in mechanisation of the sector. The move would see investors from Iran pump money into the agriculture to boost crop production and offer direct market for produce to boost agricultural exports to the country.

He also said Iran could help to expand the Mombasa refinery’s infrastructure, whose current capacity is 192,000 cubic metres and equip it with the latest technology. He noted that a working refinery would have a positive ripple effect on the East African economies.

“We are ready to help Kenya expand and modernise the oil refinery in Mombasa because we have the technical ability,” said Mr Nematzadeh, on the sidelines of the WTO meeting in Nairobi in December.