New dawn for coffee trading at NCE

Coffee farmer in Baringo

By: Isaac Thuku  @MountKenyaTimes

Five coffee brokers will from tomorrow July 1, 2021, carry out the role of coffee brokerage services at the Nairobi Coffee Exchange (NCE).

This is after the Capital Markets Authority (CMA) on Monday issued the first set of licenses to five brokers in line with the Capital Markets (Coffee Exchange) Regulations, 2020.

According to Section 11(3) of the Capital Markets Act, the Authority is mandated to regulate the spot commodity markets in Kenya and, in particular, the coffee commodity market.

The five include Meru County Coffee Marketing Agency, which has been granted a full coffee broker license.

Four others, Kipkelion Brokerage, Murang’a County Coffee Dealers, Mt. Elgon Coffee Marketing Agency and the United Eastern Kenya Coffee Marketing company who have been granted conditional licenses pending the full compliance to requirements.

The four are expected to come into full compliance with the requirements of the Coffee Exchange Regulations within the next three months.

The new clearance comes ahead of a new dawn for coffee trading, in which the markets’ regulator set to supervise trading and license market participants.

The rules seek to guarantee speedy and transparent payment of proceeds to farmers through a direct settlement system, which will be established by a licensed commercial bank.

NCE is expected to competitively select a commercial bank to provide the direct settlement system for clearing and settlement of coffee proceeds during this period.

The system is aimed at limiting diversion of sales proceeds.

The Authority granted a provisional license to NCE on July 1 last year to continue operating in its existing form as it worked towards full compliance with the Coffee Exchange Regulations.

CMA Chief Executive Wyckliffe Shamiah said the authority is fully supportive of the reforms in the coffee subsector and is ready to execute its mandate as envisaged in the regulatory framework.

”These conditional licenses are our commitment to ensuring that the trading of coffee continues at the NCE without disruption even beyond the June 30,2021 deadline,” Shamiah said after the approval.

CMA boss also noted that NCE’s in-principal approval has since been extended to December 31, 2021 to enable the Coffee Exchange to come into full compliance with the regulatory requirements.

CMA is working with other state and non-state stakeholders through the coordination of the Coffee Subsector Reforms Implementation Standing Committee (CSRISC) which is domiciled in the Office of the President to support implementation of reforms in the coffee subsector.

The Coffee Exchange Regulations together with the Crops Coffee General Regulations, 2019 envisage that the NCE and coffee brokers were to be licensed and supervised by the CMA with effect from 1 July 2020.

However, the Coffee Exchange Regulations provided for a transitional period of one year for the NCE to come into full compliance.

There was also a dispute between the CMA and the Ministry of Agriculture over who had the mandate to extend the old rules past the June 30, 2020, deadline.

Agriculture CS Peter Munya argued that it was his ministry’s mandate because the Crops Act had not been amended, and subsequently threatened to have the regulations repealed on the grounds that the CMA did not involve all stakeholders when formulating the new regulations.

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