Kenya in talks to barter tea for Pakistani rice

East African Tea Traders Association managing director Edward Mudibo. FILE PHOTO | NMG

Kenya is pushing for barter trade on tea in exchange for rice imports from Pakistan as the country moves to cushion the top buyer of its beverage in the wake of serious economic woes in Islamabad, occasioned by a shortage of dollars.

Agriculture Cabinet secretary Mithika Linturi is in Pakistan where the discussion on the possibility of Kenya importing rice from Pakistan in exchange for tea to the Asian nation will take centre stage.

Kenya is worried that the financial woes in Pakistan, which have affected the tea trade at the Mombasa auction may worsen in the coming months.

Tea traders at the auction have been pushing for the government to embrace barter trade on the two commodities to enable Pakistan-Kenya’s largest buyer of tea to sustain its trade at the auction.

East African Tea Trade Association says one of the things to be discussed in Pakistan by the Kenyan team is modalities that can be put in place to facilitate barter trade.

“I am aware that barter trade on our tea and other key commodities that we import from Pakistan is one of the things to be discussed. We welcome this arrangement because it will work in our favour given the economic situation in Pakistan,” said Edward Mudibo, managing director of Eatta.

Under the barter arrangement, Kenya will import rice from Pakistan worth a given amount and export tea of the same value, then pay the money to the agency that would have participated.

The government, through Kenya National Trading Corporation, plans to import 150,000 tonnes of rice.

A local media in Pakistan reported that Mr Linturi was due to visit the country’s Commerce minister on Monday in Islamabad to discuss barter trade on two commodities.

“Pakistani authorities will propose a barter trade system due to the ongoing economic crisis… Islamabad plans to export rice and pharmaceuticals in return for tea from Nairobi,” a local media reported.

Tea traders have welcomed the move, which they say has been long overdue as the ongoing financial crisis in Pakistan has hampered their ability to purchase sufficient stocks.

“The barter trade will be the best solution in the light of the ongoing economic crisis in Pakistan,” said Peter Kimanga, a tea trader in Mombasa.

A fortnight ago, Treasury Cabinet secretary Njuguna Ndun’gu told a House Committee that the situation in Pakistan and Egypt would hurt Kenya’s economy this year as tea is one of the largest foreign exchange earners, with the two countries being the largest buyers of the beverage.

Mr Linturi is leading a team of other stakeholders, including the Kenya Tea Development Agency, on a tour of Pakistan.

Pakistan and Egypt account for 55 percent of the total tea exports from Kenya.

The weakening pound in Egypt has impacted consumers’ purchasing power negatively as it fuels inflationary pressure in an economy where 60 percent of the population lives below the poverty line.

Already, the tea industry is feeling the pinch of the economic woes that the two countries are currently facing, which has seen the volumes of tea that they purchase decline significantly at the Mombasa auction.

In October last year, tea exports to Egypt dipped 33 percent to 54 million kilogrammes with Pakistan recording a 13 percent drop.

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