Kenyan Tea Exporters Fretting as US Sanctions on Iran Take Effect

The Kenya-based East African Tea Traders Association has called for government intervention to sustain exports to Iran, as US sanctions took effect on Tuesday.

The US has reimposed unilateral sanctions against Iran, bringing back harsh penalties lifted as part of the 2015 Joint Comprehensive Plan of Action, colloquially referred to as the Iran nuclear deal. It has warned it will place restrictions on countries that continue to trade with Tehran.

According to its website, EATTA is a voluntary organization bringing together tea producers, buyers (exporters), brokers, tea packers and warehouses, all working to promote the best interests of the tea trade in Africa.

Iran is among the traditional buyers of Kenyan tea and in the six months to last June purchases reached Sh575 million ($5.7 million).

“We want to engage with the government and other stakeholders to see the options that we can adopt in the wake of the sanctions to sustain that market,” EATTA Managing Director Edward Mudibo was quoted as saying by Kenyan newspaper The Daily Nation.

Mudibo urged the government, through the Central Bank of Kenya, to move in and help traders get timely payments.

“You will realize that most banks will now be shy to transact money coming in from Iran and this will impact negatively on trade. We want CBK to come up with modalities that will ease payment so that we do not lose out on this market,” he said.

The International Atomic Energy Agency, which is the UN nuclear watchdog, in 2016 certified Iran was in compliance with the July 2015 agreement on limiting nuclear development, opening the country to trading with banks and companies in the rest of the world.

The local banks were allowed to transact with Iranian lenders to facilitate payment, including for tea traders. Last October, Iranian buyers owed local exporters Sh120 million ($1.19 million), as they faced difficulties in remitting funds.

Kenya is targeting Iran as one of the major buyers of its beverage and has since the lifting of the sanctions tried to promote trade. Last October, officials from the Tea Directorate visited the country to promote the commodity.

Iran normally gets the bulk of its tea from India and Sri Lanka, with Kenya supplying about 20 million kilograms of the 120 million it imports annually.