APPROVED

CMA grants licenses to five coffee brokers

Even so, only Meru County Coffee Marketing Agency Limited has been granted a full coffee broker licence.

In Summary
  • It has also extended  the application deadline to December 31, 2021
  • Only Meru County Coffee Marketing Agency Limited has been granted a full coffee broker licence.
Acting Capital Markets Authority CEO Wyckliffe Shamiah.
Acting Capital Markets Authority CEO Wyckliffe Shamiah.
Image: COURTESY

The Capital Markets Authority (CMA) has issued the first set of licenses to five coffee brokers in line with the Capital Markets (Coffee Exchange) Regulations, 2020.

The licenses will allow the brokers to carry out the role of coffee brokerage services at the Nairobi Coffee Exchange (NCE) with effect from  July 1,2021.

Even so,  only Meru County Coffee Marketing Agency Limited has been granted a full coffee broker licence.

Others like  Kipkelion Brokerage , Murang’a County Coffee Dealers Company, Mt. Elgon Coffee Marketing Agency Limited and United Eastern Kenya Coffee Marketing Company Limited have been granted conditional licences.

They are expected to come into full compliance with the requirements of the Coffee Exchange Regulations within the next three months.

The Authority is mandated to regulate the spot commodity markets in Kenya and in particular, the coffee commodity market according to Section 11(3) of the Capital Markets Act.

The Coffee Exchange Regulations were gazetted by the Cabinet Secretary of the National Treasury and Planning in April last year.

The Coffee Exchange Regulations together with the Crops Coffee General Regulations, 2019 envisage that the NCE and coffee brokers were to be licensed and supervised by the CMA with effect from 1 July 2020.

However, the Coffee Exchange Regulations provided for a transitional period of one year for the NCE to come into full compliance.

There was also a dispute between the CMA and the Ministry of Agriculture over who had the mandate to extend the old rules past the June 30, 2020 deadline.

Agriculture CS Peter Munya argued that it was his ministry’s mandate because the Crops Act had not been amended, and subsequently threatened to have the regulations repealed on the grounds that the CMA did not involve all stakeholders when formulating the new regulations.

The rules seek to guarantee speedy and transparent payment of proceeds to farmers through a direct settlement system which will be established by a licensed commercial bank.

The system is aimed at limiting diversion of sales proceeds.

Speaking on the approval, CEO Wyckliffe Shamiah said the authority is fully supportive of the reforms in the coffee subsector and is ready to execute its mandate as envisaged in the regulatory framework.

''These conditional licenses are our commitment to ensuring that the trading of coffee continues at the NCE without disruption even beyond the June 30,2021 deadline,''Shamiah.

In order to ensure that there is no disruption in the coffee value chain, the Authority has granted an extension of  three months to the marketing agents currently trading at NSE for them to apply for the coffee broker licence.

The Authority granted a provisional license to NCE on  July 1 last year to continue operating in its existing form as it worked towards full compliance with the Coffee Exchange Regulations.

Shamiah added that the NCE’s in-principal approval has since been extended to end of this year  to enable the Coffee Exchange to come into full compliance with the regulatory requirements. 

NCE is expected to competitively select a commercial bank to provide the direct settlement system for clearing and settlement of coffee proceeds during this period. 

CMA is  working with other state and non state stakeholders through the coordination of the Coffee Subsector Reforms Implementation Standing Committee (CSRISC) which is domiciled in the Office of the President to support implementation of reforms in the coffee subsector.