Coffee exchange to accept five CMA-licensed brokers


Nairobi Coffee Exchange CEO Daniel Mbithi. FILE PHOTO | DIANA NGILA | NMG

The Nairobi Coffee Exchange (NCE) will admit five brokers the Capital Markets Authority (CMA) licensed last year, reversing an earlier stance in which it had resisted their admission to the auction.

The CMA licensed United Eastern Kenya Coffee Marketing Company, Meru County Coffee Marketing Agency Limited, Kipkelion Brokerage Company Limited, Mt Elgon Coffee Marketing Agency, Murang’a County Coffee Dealers Limited and Embu Coffee Farmers Marketing Agency Limited.

NCE chief executive Daniel Mbithi said they are working on modalities to admit the five brokers who had initially been denied access to the auction floor following clear instructions from the Ministry of Agriculture.

The move appears to end the supremacy battles between CMA and the coffee regulator witnessed in the last two years as each claimed to have authority in regulating the sector.

“We are going to admit them because we are following what the law says. At the moment we are working on the modalities of admission,” said Mr Mbithi.

The CMA has emerged as a winner in this battle after the Agriculture Food Authority (AFA) — the regulator of the coffee crop, withdrew the amendments to the Coffee Act, which had vested the mandate of regulating the beverage on the Coffee Directorate.

In a letter seen by the Business Daily and addressed to different coffee stakeholders, the AFA advises that the amendments that had vested the regulation of the sector on the Coffee Directorate had been suspended.

Last year, then Agriculture Cabinet secretary Peter Munya gazetted the Crops Act (Coffee General Amended Regulations that gave the mandate to license coffee millers and marketers to the Coffee Directorate, which is under AFA, sealing the fate of CMA as a regulator of spot commodities.

But the Capital Markets (Coffee Exchange) Regulations 2020, which were gazetted in April 2019, had given the CMA the mandate to license the coffee exchange and brokers.

The CMA had argued that the law gave it the mandate to regulate the coffee sector, following the amendment of the Capital Markets Act in 2021, while Mr Munya insisted the function was with the AFA since changes were not made to the Crops Act.

However, it is not clear when the Direct Settlement System (DSS), a platform on which the payment to farmers should be made under the new regulations, will be established.

The creation of the DSS was one of the reasons why the new coffee regulations did not take effect as planned in August 2020.

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