US-backed sanctions hit Kenya’s exports to Iran

Njue Kiarie, the chairman of the Tea Traders Association, told the Business Daily that trade between Kenya and Iran has been declining steadily since January and nearly grinding to a halt since the beginning of the month.

Kenya exported 5.4 million kilogrammes of tea to Iran last year, accounting for the bulk of Sh1.9 billion worth of commodities sold to the oil producing state.

Iran last year signed a contract with the State-owned Kenya Meat Commission for the supply of 1,000 metric tonnes of beef and other meat products, but escalating dollar scarcity in the Persian country has left that deal on the rocks.

Tea and meat exporters top the list of Kenyan businesses that have been hardest-hit by the US-backed smart sanctions slapped against Iran last year.
Kenyan commodity traders said it had become difficult to do business with their Iranian counterparts who have been facing a crippling US dollar shortage since January.

READ: Kenya turns to Iran for oil despite embargo

The US and its European allies imposed an oil exports embargo on Iran — the world’s fourth largest oil producer — over a long-running nuclear power stand-off.

The Western powers accuse Iran of developing nuclear technology that could be used to make bombs, an allegation Iran has denied, insisting that its programme is for peaceful, non-military use.

Smart sanctions

The targeted or smart sanctions also bar foreign firms or governments from doing business with Iran’s central bank, cutting the country’s ability to earn dollars – the international currency of trade – to almost nil.

The acute scarcity of dollars in Tehran is now being felt in Nairobi as Iranian traders are rendered incapable of paying for imports from Kenya.

Njue Kiarie, the chairman of the Tea Traders Association, told the Business Daily that trade between Kenya and Iran has been declining steadily since January and nearly grinding to a halt since the beginning of the month.

“We have lost that market because buyers of our commodities cannot pay for anything,” said Mr Kiarie. According to him, the crisis had worsened in recent weeks.

Trade with Iran has been declining since January with most payments coming through from the United Arab Emirates, according to Mr Kiarie.
“We do not know when this will end so that the Iranians can start buying our goods again,” he said.

Kenya exported 5.4 million kilogrammes of tea to Iran last year, accounting for the bulk of Sh1.9 billion worth of commodities sold to the oil producing state.

Iran last year signed a contract with the State-owned Kenya Meat Commission for the supply of 1,000 metric tonnes of beef and other meat products, but escalating dollar scarcity in the Persian country has left that deal on the rocks.

International trade experts expected the dollar scarcity in Iran to hamper the meat export deal opening yet another area of potential loss of business for Kenya.

Indian rice exporters to Iran in February reported massive payments default for commodities delivered in the last quarter of last year as the dollar squeeze progressed, highlighting the risk that Kenyan traders face.

Mukhisa Kituyi, a former Trade minister , said the dollar scarcity could cut trade between the two countries by up to 80 per cent of last year’s exports, adding that Kenya’s desire to maintain good relations with the Western world puts the country in a difficult position.