The Ministry of Agriculture will not renew the trading licences of the tea and coffee auctions if they fail to permanently migrate trading to an online platform in two months.
Agriculture Secretary Peter Munya has asked Mombasa tea auction and the Nairobi Coffee Exchange (NCE) to move to digital trading, pointing out the current disruption in trading following Covid-19 would have been avoided if the auctions had been automated.
Whereas the Mombasa tea auction has indicated it is ready to go online before the end of the ultimatum, the NCE requires Sh30 million to automate systems and does not foresee itself moving to the digital platform within the period.
“We have told them to move to an online platform, which will among other things help in price discovery mechanism because of the transparency that comes with this system. Failure to do so, we shall not renew their trading licences,” he said.
Edward Mudibo, managing director of the East Africa Tea Traders Association (Eatta), which manages the auction, says the system is ready and they are conducting tests before the official launch.
On the other hand, NCE chief executive Daniel Mbithi said it would not be migrating unless State provides funds.
NCE had in 2018 automated its systems but it is yet to go online as it does not have the necessary software for online trading.
“We require at least Sh30 million to upgrade our system and go online. We can move to this new platform as soon as we get the funds,” said Mr Mbithi.
However, Mr Munya said the auction has been making money through service fee and the government has no money to give them for that function.
The tea auction signed a grant agreement with the Trade Mark East Africa in 2016 for automation of its system.
The work was supposed to have been completed in December 2019 but Eatta says it was delayed as the data centre took longer to complete.
“We’re now ready to go online, we have finished the process and at the moment we are testing the new system,” said Mr Mudibo.
Trading at the coffee auction has been paralysed after the Ministry of Health stopped trading to curb the spread of the coronavirus.