THE FINANCIAL SANCTIONS IMPOSED ON IRAN BY THE US GOVERNMENT COULD ADVERSELY AFFECT THE EXPORTATION OF TEA FROM EAST AFRICAN COUNTRIES TO TEHRAN.
Trade News By Leo Odera Omolo In Kisumu City
TEA exporters from East Africa are currently feeling the heat and impact of the United States sanctions imposed on world-wide financial institutions dealing with Iran, says analysts and stakeholders.
These come on top of the Islamic state’s already stringent regulation in place on foodstuff imports. Its effect is likely to have adverse economic impact on tea producers in Eastern African region, namely Kenya, Tanzania, Uganda and Rwanda who depend on the foreign exchange for their agro-based economies.
As the results of the sanctions, the exporters now have to find ways to navigate Iran’s new food importation policies, besides finding ways of circumventing the US sanctions.
Kenya’s Ambassador to Iran, Mr Ali Abbas Ali, was last week quoted by the EASTAFRICAN, a Nairobi weekly publication as saying that the two issues are the biggest stumbling block for East Africa tea exporters, who want to make inroads into the lucrative market , which is currently dominated by Sri Lanka and India.
Washington’s financial sanctions on Iran also affect remittances to the exporters. The US has barred banks from the rest of the world from trading with Iran, especially in American dollars.
And this is mainly in a bid to pressure Tehran Islamic regime to give up its nuclear programme.
The US government aims at restricting Iran’s ability to acquire nuclear know-how and materials.
And fearing Washington displeasure, several European and African financial institutions have severed ties with their Iranian counterparts or corresponding banks.
The financial squeeze has discouraged many investors from doing business with Iran.
“This presents a big challenge to traders who want to sell their products in Iran,” said Mr Ali.
“As things stand, Kenyan banks do not accept Iranian currency because their roots are in the US dollar”, the Kenyan envoy Ali, was further quoted as saying, adding that, “unless the governments in East African intervene, the US squeeze on Iran could lock out local tea exporters from the region”.
Currently, trade index shows that Sri Lanka supplies up to 58 per cent of the black tea imported by Iran . It is followed closely by India, at 39 percent, and East Africa at a mere 2 per cent.
There has been renewed interest by Kenyan and Iranian stakeholders, as well as government officials in increasing the volume of tea entering Iran.
Buyers at the Mombasa tea Trade Association say such a system should be free of tariff and non-tariff barriers, or be at par with the tariffs used by Sri Lanka and India.
“Some exporters have acquired Good Manufacturing Practices Certifications, but cannot make much headway into Iran because of the remittance problems”, said a member of the tea buyers association.
Such hurdles have led several Kenyan traders to visit Iran, and vice versa, to try to boost trade between the regions.
Already several tea producers in Kenya have acquired the Iranian Ministry of Health and Medical Education and Good Manufacturing and producers certificates.
They include the Kenya Tea Development Agency [KTDA] ,which manages close to 62 tea factories countrywide and four other private ones, according to Ghasmal Ashrtee, the Assistant Director general in the department of control of foodstuff, beverages, cosmetics and hygiene in the Iranian Ministry of health, treatment and medical education.
Many traders hope that the Mombasa based tea auction, which is conducted in US dollar, will embrace other currencies like the Euros, whose members countries have not fully embraced the US sanction on Iran. Many traders have also started to use telegraphic swift money transfer.
The system is executed confidentially through the Belgium-based Society for Worldwide International [swift} Financial Telecommunication as an alternative to letters of credit.
But the insiders says the sanction is really biting hard.
Ends
leooderaomolo@yahoo.com
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From: Leo Odera Omolo
Date: Mon, Aug 17, 2009 at 11:07 PM
Subject: US IMPOSED FINANCIAL SANCTIONS ON IRAN ARE HURTING TEA EXPORTERS IN E.AFRICA