Kenya’s tea exports to Sudan have received a boost after consignment inspection fees were reduced by three quarters and the US’ lifting of sanctions — which were delaying payments — on the Horn of Africa country.
Sudan has been levying an inspection fee of Sh82,800 ($800) on every consignment of tea originating from Kenya, subjecting exporters to high costs of doing business.
The two countries have however reached an agreement which will see Sudan slash the cost of tea inspection by 75 per cent to Sh20,700, head of the tea directorate Samuel Ogola has announced.
The directorate said that Kenyan exporters incurred a cost of Sh155 million ($1.5 million) between January and December when the directive on mandatory inspection of their tea was in force.
“The Sudanese government has agreed to cut down significantly on the amount that they charge our tea on inspection, this comes as a relief to traders who have been incurring high costs,” said Mr Ogola.
Additionally, the recent lifting of sanctions that had been imposed on Khartoum by America has also boosted sales of the commodity.
Timely payments
Mr Ogola said that lifting of sanctions has helped traders to get timely payments from Sudanese buyers.
The US-led sanctions had left Sudanese banks struggling to raise enough dollars to finance international trade transactions.
Khartoum has also handed over the tea inspection work, which was being handled by international standards body Bureau Veritas, to the Kenya Bureau of Standards which will carry out the task on behalf of Sudan.
Sudan is Kenya’s fifth largest tea market, importing 27 million kilos of the beverage worth Sh5.1 billion last year, from 19 million kilos in 2015 worth Sh3.7 billion.
A number of restrictions in recent years have lowered the competitiveness of Kenyan tea and posed a threat on the trade.
In 2014, Sudan put a restriction on the shelf life of Kenyan tea, cutting it from three to one-and-a-half years.
The directive saw sales to Khartoum drop by 30 per cent in 2015.
The order was revised in March last year after intense lobbying between the two states, with Kenya being given until the end of the year to conduct research to determine the actual shelf life of the beverage.
The suspension of the sell-by-date directive resulted in an increase in sales to Sudan by 27 per cent last year.
Two weeks ago a business delegation led by Noor Mohammed, chairman of the parliamentary Committee on Agriculture, managed to ink another deal that saw Kenya receive a further six-month extension after the previous waiver expired in December.
Kenya is the leading exporter of black tea in the world, selling 95 per cent of its tea in the global market.
In the 2016 financial year, small-scale tea farmers attached to the Kenya Tea Development Agency earned a record Sh84 billion.
The agency recorded an average of Sh300 per kilo at the Mombasa tea auction.
Source: Business Daily
