Inside Politics

Marketing agents brew more uncertainty at coffee auction

Tuesday, October 5th, 2021 00:00 |
Coffee farming. Photo/Courtesy

Uncertainty surrounding the coffee marketing in the country is far from over as leading brokers are yet to apply for new broker licences.

Their failure to seek new broker licences signals a crisis that is likely to face the market as deadline set by Capital Markets Authority (CMA) approaches.

As at the end of last month none of the leading coffee marketing agents had applied for the licences to be allowed to operate as coffee brokers at Nairobi Coffee Exchange (NCE) in accordance with the Capital Markets (Coffee Exchange) Regulations, 2020.

Last week, Capital Markets Authority (CMA) extended provisional licences it had granted to four coffee brokers three months ago by a further 30 days.

According to CMA, the coffee marketing agents ought to have applied by end of September 2021 failure to which they will be disqualified from trading at the NCE.

The authority also granted an extension of 30 days to October 30, to the current marketing agents who have not submitted applications for licensing but are eligible for coffee brokerage licences and intend to continue trading.

 Wyckliffe Shamiah, CMA chief executive officer also said that the marketing agents will be allowed to use current bank guarantees pending approval of the Direct Settlement System by the NCE.

The regulator issued two notices on July 1, 2020 and March 16, 2021, urging marketing agents intending to operate as coffee brokers at the NCE to apply to the authority for licensing.  

And that only licenced coffee brokers will be allowed to carry out the role at the coffee auction from July 1, 2021. 

Previous regime

Shamiah gave marketing agents who had been licensed under the previous regime but had not submitted application for licensing and intending to continue trading three months from the June 30, 2021 to fully comply with the coffee regulations and submit the necessary application to the authority for consideration.

Failure to do the above, he added, will lead to the non-compliant marketing agents being disqualified from trading at the NCE upon expiry of the three months. 

“Further, the licenced coffee brokers as well as marketing agents operating before the expiry of the three months shall be required to obtain and maintain the appropriate bank guarantees pending competitive selection of a Direct Settlement System (DSS) by the NCE, its approval by the authority and subsequent deployment.”

The industry, according to pundits, is likely to be faced with a crisis as the marketing agents that are subsidiaries of international coffee organisations continue to dilly-dally in applying for the licences.  

Eight coffee marketing agents that trade at the NCE handle more than 80 per cent of total produced coffee in the country. The newly licenced coffee brokers are yet to make a mark in the industry.   

“The coffee brokers have up to October 30, 2021 to fully comply with provisions of the regulations,” Shamiah in a statement sent to media houses lat week.

More on Inside Politics