Kenya is hoping to benefit from the current standoff between India and Pakistan to push the 16 percent share New Delhi supplies to Karachi.
East Africa Tea Traders Association (Eatta) said Kenya has an opportunity to raise its exports to Pakistan, the leading buyer of the local beverage whose numbers have been going down of late.
Pakistan and India are at the moment in another standoff after the latter suspended the semi-autonomous status of the contested Kashmir region.
“We would like to use this impasse to further our tea exports to Pakistan as Kenya stands to benefit from this standoff,” said Edward Mudibo, Managing Director at the Eatta.
India supplies Sh3 billion tea to Pakistan every year making it the second country in terms of market supply after Kenya.
Whereas Kenya might benefit in terms of volumes, the earnings could be lower as the Pakistan rupee has of late been losing value against the dollar.
The impact of currency devaluation is felt in Kenya today as the rupee has been shedding value for close to a year now.
Low global oil prices and currency devaluation of countries that are major buyers of the Kenyan tea have negatively impacted on the domestic price of the beverage.
Economies of several importing countries such as Egypt and Sudan, which are heavily dependent on oil and gas, have persistently recorded lower purchases.
In the last financial year, Pakistan imported 184 million kilogrammes of tea from all over the world with 84 per cent of the total (155 million kilos) coming from Kenya. Out of this, the Kenya Tea Development Agency’s produce accounted for 57 percent.
Kenya much relies on Pakistan, Egypt, the UK, Sudan and the United Arab Emirates for tea dollars. However, the volumes purchased by the countries have been declining as exports face trade barriers from some of the markets.
In January last year, Kenya nearly lost the Pakistan market as the country raised concern over possible contamination of aflatoxin in the commodity, requiring the beverage to undergo rigorous tests that created a backlog on consignment destined to Islamabad.