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Commodities exchange plan in 9 months

Peter Munya
Industry and Trade Cabinet secretary Peter Munya. FILE PHOTO | NMG 

Agencies have a nine-month deadline beginning July to set up a commodities exchange to support the agro-processing and the nascent mining industry.

Industry and Trade Cabinet secretary Peter Munya said the ministry has allocated cash towards upgrading and modernisation of State-owned warehouses to meet international standards for warehouse receipting system.

The system will be used by micro-, small- and medium-sized enterprises (MSMEs) to supply produce to agro-processors through the proposed exchange.

“The commodity exchange whose creation is at advanced stage will assist in improving earnings for Kenyan producers as well as increase exportable goods,” Mr Munya said.

Suppliers of agricultural commodities such as staple maize, rice, tea, coffee and cotton will be issued warehouse receipts — proof of quantity and quality of materials supplied — which can be used as collateral to access credit. Tea and coffee will be given priority, the CS added, with minerals market set for a later phase.

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A Warehousing Receipt System Bill 2018 is before the National Assembly.

Receipt systems by privately owned East Africa Grain Council (EAGC) and the National Cereals and Produce Board (NCPB) have been largely avoided by small-scale farmers due to unclear operating standards.

“We can’t get the best prices for our produce under the current circumstances. The exchange will open up the market,” Mr Munya said. “The department of Trade has already developed regulations which we will be gazetting soon.”

The warehouses earmarked for renovations are under the watch of Kenya National Trading Corporation (KNTC), an asset-rich State agency charged with helping growth of the MSMEs through supply of raw materials, consultancy services and identifying markets for products.

KNTC owns 514,685 square feet of go-downs in all major towns including Nairobi, Mombasa, Naivasha and Kisumu which are targeted for industrial parks. The parastatal, established in 1965 further has 16,659 square feet of leased warehouses in Meru, Machakos, Kitale, Kapsabet and Wote.

KNTC acting MD Joel Imitira said in February it will spend an initial Sh100 million for renovating the warehouses targeted for exchanges in Nairobi and Mombasa from July.

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