FOR SIX MONTHS NOW

Mombasa tea auction goes digital, switch in final stages

In February 2015, EATTA members approved the proposal to adopt the electronic auction system

In Summary

•The Mombasa tea auction was started in 1956 to take care of the interests of the tea sector in Africa. The auction is the largest in the world and it is managed by the East African Tea Traders Association.

•President Uhuru Kenyatta will commission it in April.

Sacks of tea for Export at one of the warehouses in Shimanzi, Mombasa. Kenya is one of the leading exporters of Tea/FILE
TEA PRICES Sacks of tea for Export at one of the warehouses in Shimanzi, Mombasa. Kenya is one of the leading exporters of Tea/FILE

The East African Tea Traders Association managing director Edward Mudibo has confirmed that the tea auction has now been running electronically for the last six months.

“We went live six months ago with funds from the Danish International Development Agency as the main donor and Trade Mark East Africa (TMEA) as the implementers‚” he said.

Speaking last week during an interview in Mombasa, Mudibo said they are in the final stages.

In February 2015, EATTA members approved the proposal to adopt the electronic auction system.

He explained that previously, members were required to physically visit the auction in Mombasa to buy tea, but now that is no longer a requirement.

“With automation, members are currently buying tea from the comfort of their offices and homes. This is a big change from the past trend where all members had to be physically present,” he said.

The Mombasa tea auction was started in 1956 to take care of the interests of the tea sector in Africa. The auction is the largest in the world and it is managed by the East African Tea Traders Association.

Mudibo said the journey to the automation of the tea auction started in July 2011 during the First African Tea Convention in Mombasa when former President Mwai Kibaki advised the tea sector to adopt ICT.

This was followed by similar sentiments from President Uhuru Kenyatta during the tea stakeholders’ visit to Statehouse in June 2014. In January 2016, Kenyatta again stressed the need for automating the auction.

Mudibo said they have been working on the new online system since 2017 with assistance from the donors at Sh217 million.

“We have been working to ensure the system has the capacity to handle all tea from Kenya and in the region. We are hopeful it will be officially commissioned by the President,” he said.

President Uhuru Kenyatta will commission it in April.

The modernisation of the trading facility will guarantee a high level of transparency especially in terms of price, traceability and supply chain visibility.

The new system will help in the reduction of cost and players attending the auction hall physically during the official trading days.

Mudibo said the online platform will offer an opportunity of multiple trading windows and hence the possibility of breaking bulk tea volumes.

The trading facility before modernisation was operated manually and semi-automated.

Mombasa tea auction that trades more than 750 million kilograms of tea annually is the largest tea auction centre in the world. Ten countries in the region trade their tea through the auction with Kenya leading with over 76 per cent.

Mudibo said the proposed integrated Tea Trading System would reduce the period in the trading cycle, ensure availability and access to tea trade data in a timely, reliable, accurate and verifiable manner.

“When fully implemented it will significantly reduce the need for physical presence as a pre-requisite to buy and sell tea. The automation will contribute to a significant reduction of direct costs associated with the auction process mainly administrative costs,” he said.

Antony Mureithi, Agriculture and Food Authority director-general said tea remains one of the major foreign earners for Kenya. He added that the country plays a crucial role in the global market as the largest exporter of the beverage and the third-biggest producer in the world.

The Tea Regulations 2020 have spelt out a wide range of issues that directly affect the Mombasa Auction.

Some of these include digitising the system to enhance transparency in transaction and to boost the price discovery mechanism at the auction.

Mureithi noted that the electronic system will enhance transparency in the tea export process especially in price determination, and also increase participation in the tea trading process by the various actors.

 

 

Edited by Kiilu Damaris

Edward Mudibo, East African Tea Traders Association managing director explains about the automated Tea Auction in Mombasa that has been running manually since 1956.
Edward Mudibo, East African Tea Traders Association managing director explains about the automated Tea Auction in Mombasa that has been running manually since 1956.
Image: AGATHA NGOTHO