Kenya faces tough tea export future in Pakistani cuts
Kenya’s tea trade is staring at an uncertain future after Pakistan — the largest buyer of Kenyan tea — asked its citizens to cut the consumption of the beverage. FILE PHOTO | NMG
Kenya’s tea trade is staring at an uncertain future after Pakistan — the largest buyer of Kenyan tea — asked its citizens to cut the consumption of the beverage to reduce its import bills in an economic crisis.
Ahsan Iqbal, Pakistani’s senior minister, has asked citizens to cut up to two cups of tea daily as the country, which is struggling from high inflation and slowing economic growth, is importing the commodity on credit.
Pakistan is the world's largest importer of tea, buying more than $600 million worth last year with Kenya accounting for 83 percent of the total imports having exported beverage valued at $503 million.
Kenyan traders are afraid that Pakistan could impose a limit on what buyers are allowed to import, a move that will have a significant impact on one of the country’s top foreign earners.
“We are looking at a scenario where the Pakistan government could cap the importation of tea to address its financial woes and this will be problematic for Kenya given that they are our largest buyers,” said Peter Kimanga, a director with Global Teas which trades the commodity.
The request came as Pakistan's foreign currency reserves continue to fall rapidly, putting pressure on the government to cut import costs and keep funds in the country.
"I appeal to the nation to cut down the consumption of tea by one to two cups because we import tea on loan," Mr Iqbal was quoted by Pakistani media.
BBC reports that Pakistan's forex reserves dropped from around $16 billion in February to less than $10 billion in the first week of June, barely enough to cover the cost of two months of all its imports.
Last month officials in Karachi restricted the import of dozens of non-essential luxury items as part of their bid to protect funds.
Pakistanis consume up to a kilogramme of tea annually on average when compared with Kenya whose per capita intake stands at 400 grammes.
The country accounts for up to 40 percent of the total beverage that is exported to the world market.
