DIGITAL UPGRADE

Mombasa Tea Auction automated at Sh200 million

The Integrated Tea Trading System (iTTS) project is funded by Danish International Development Agency through TradeMark East Africa

In Summary
  • -The Mombasa Tea Auction is considered one the world’s largest black tea auctions for export.
  • Each week, teas worth over $20 million are traded from Kenya, Uganda, Tanzania, Rwanda, Burundi, DRC, Malawi, Madagascar, Mozambique and Ethiopia.
Packaged tea for export at warehouses in Shimanzi, Mombasa/FILE
Packaged tea for export at warehouses in Shimanzi, Mombasa/FILE

The East African Tea Trade Association (EATTA) has announced the automation of the Mombasa Tea Auction by unveiling the Integrated Tea Trading System (iTTS).

The project has been funded by The Danish International Development Agency (Danida) through TradeMark East Africa to a tune of over Sh200 million (USD 2Million)

The digital trading platform will automate the manual processes along the tea value chain covering dispatch of made tea from the factory to receiving of the tea by the warehouse.

It will also cover cataloging and offering the tea for sale by the Broker, buying of the tea and paying for it by the buyer and finally collecting the bought tea from the warehouse.

The Mombasa Tea Auction is considered one the world’s largest black tea auctions for export.

Each week, teas worth over US$20 million are traded from Kenya, Uganda, Tanzania, Rwanda, Burundi, Democratic Republic of Congo, Malawi, Madagascar, Mozambique and Ethiopia.

Tea is one of the top export foreign exchange-earners for Kenya.

In 2021, tea generated USD 1.14 billion for the country with more than 55 percent of teas sold at the auction originating from smallholder farmers.

Speaking during the launch Morgens Strunge Lursen, Counsellor at the Danish Embassy in Kenya said that the digitization of the Mombasa Tea Auction is just one of several projects supported by Danida in the region geared towards making it easier to trade across borders.

He added that the importance of automation was amplified by current efforts to mitigate the negative economic impacts of the Covid-19 pandemic in the region and facilitate safe trade.

“The launch of the iTTS is particularly exciting because it helps position such a critical sector for future growth and success by driving efficiency and supporting both increased traceability and information exchange,” said Strunge.

The introduction of the automated trading platform sought to remedy the limitations in the old manual set-up, such as the lack of in-depth consolidated auction statistics, and limitation on the scale-up of the participants in the auction.

He added that having expedited the automation process in early May 2020 at the onset of Covid-19, the project helped the industry meet social distancing requirements in line with the Covid-19 pandemic health protocols and facilitate safe trade in the East Africa region.

“The buyers were able to bid for the tea from the comfort of their office or residence,” he added.

According to EATTA managing director Edward Mudibo, the system is expected to shorten the pre-auction, auction and post-auction stages.

“It will create the potential for increased frequency in trading volumes and reduce the tea trading cycle by about 65 per cent from the current 45 to 60 days to less than a month. It will also fast track payments to farmers and reduce the need to take loans to finance farming operations,” said Mudibo.

Mudibo further stated that the platform will ensure that stakeholders of the tea auction, including farmers, buyers and sellers receive real-time information on what is happening on the auction bourse, which will boost confidence in the process.

Trademark East Africa country director Ahmed Farah said that the launch of the new system was timely adding that it will not only deliver benefits in terms of improving the efficiency of the industry but will also contribute to increasing transparency of trade.

“It’s a testimony to the TMEA partnership approach which has seen us fast-track interventions that promote safe trade to protect livelihoods and avoid job losses in East Africa, especially in the context of health pandemics,”