Kenyan tea and coffee exchanges urged to move to electronic trading

Stake: In a context dominated by the coronavirus crisis, accelerate the arrival of an electronic execution, less "risky" from a health point of view.
The Nairobi coffee and Mombasa tea exchanges could soon switch to fully electronic execution of their trades, under pressure from the Kenyan regulator.

According to information reported on 28 April by the business daily Business Daily, the Ministry of Agriculture has stated its intention not to renew the operating licences of the two institutions if they do not manage to migrate permanently to an online trading platform within two months. This threat is justified by the national authorities on the basis of the measures taken to combat the spread of Covid-19 in the country (363 people infected and 14 deaths recorded as of 28 April), the Minister of Agriculture, Peter Munya, having recently recalled that the current disruption to trade on the two aforementioned exchanges as a result of the coronavirus « would have been avoided if operations had been automated ». In fact, electronic trading has advantages to be highlighted: in addition to not requiring the physical presence of traders – possible vectors of contamination – electronic execution offers real-time price transparency, faster order processing and a potential expansion of the market, since participants can connect to the platform from anywhere in the world.


It remains to be seen whether the challenged exchanges will be able to be ready on time. In Mombasa, the East Africa Tea Traders Association (EATTA), which runs the auctions of the world’s largest black tea exchange (a quarter of the world’s tea exports), has confirmed that the switch to a digital platform will be completed by the end of the ultimatum, Business Daily reports. In contrast, the Nairobi Coffee Exchange, which has suspended its auctions since early April, said it will need 30 million shillings ($300,000) to automate its systems and that it did not plan to « have a functioning digital platform in time ».


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