Uganda traders jittery ahead of Kenya electionsMonday February 25 2013
Ugandan tea traders are anxious that their commodity will not reach international markets if Monday’s General Election in Kenya leads to civil strife.
Farmers said they had expanded the acreage under tea over the years to reap from the rising prices in international markets.
“We are praying for peaceful elections in Kenya. If anything goes wrong, it will lead to a financial disaster in Uganda just like what happened in 2008,” said Igara Growers Tea Factory chairman Arthur Babu Muguzi.
Uganda depends heavily on the port of Mombasa for its exports and imports, including oil. The landlocked country was cut off from essential supplies and services when post-election violence broke out in Kenya in 2008 after the disputed presidential vote.
This is not the first time Kenya’s biggest regional trading partner has raised concerns over possible disruption of transport along the Mombasa-Malaba highway in case of violence.
Last month, the government of Uganda was in talks with Tanzania over use of Dar-es-Salaam port.
However, Kenya government agencies, the church and the private sector are optimistic the elections will be peaceful and are engaged in various campaigns to promote peace.
Last Sunday, six presidential candidates - Raila Odinga, Uhuru Kenyatta, Peter Kenneth, Martha Karua, James ole Kiyiapi and Mohamed Dida- committed to uphold peace during a national prayer meeting held in Nairobi.
Last week, Kenya Ports Authority (KPA) management also launched a peace campaign during which managing director Gichiri Ndua assured importers and exporters of smooth operations at the port.
(Read: Companies invest in peace drive ahead of polls)
Buhweju factory was built at a cost of $5 million (Sh425 million) and opened last year. It processes 45,000 kilogrammes (kg) of green leaf a day from about 7,000 farmers in the remote part of Uganda.
Tea from the factory started trading at the Mombasa auction which is managed by the East Africa Tea Trade Association (ETTA) six months ago.
“Because of the good prices we have enjoyed at the Mombasa auction, we are investing $2 million (Sh170 million) in a second production line,” Mr Muguzi said.
Uganda Tea Development Agency marketing manager Purity Mbae said Uganda tea sold at the auction increased from 110,000 kgs in 2012 to 140,000 kgs.
To reduce over-reliance on Mombasa auction, Ms Mbae said Uganda has ventured in direct overseas markets such as Holland, Pakistan, UK, USA and Ukraine.
“Ugandan tea has gained the confidence of the overseas markets and is being shipped as straight line instead of blends which make it lose its identity,” she said.
Ms Mbae said the Mombasa auction was susceptible to erratic demand and prices.
She said supply of green leaf to factories in Uganda was projected at 34 million kilos this year, up from 30 million kgs last year following the expanded production in the Kayonzo, Igara and Buhweju highlands.