Tea exports hit by US anti-terror campaign

The Kenyan economy could soon be hit by a steep decline in tea exports as a result of US efforts to combat terrorism in Central Asia, the 'Daily Nation' reported on Friday. Kenya's tea exports to Pakistan and Afghanistan would be completely cut off, leaving a large dent in the country's foreign exchange earnings. "It is not possible to quantify the magnitude of damage at the moment when tea exports to the Middle East [including Central Asia] stop, but it is safe to say that it will definitely damage the Kenyan economy," the newspaper quoted a tea industry expert as saying.

Pakistan is the largest buyer of Kenyan tea, with some 70 million kg bought each year, followed by the United Kingdom and Egypt, while Afghanistan is fourth with 24 million kg each year. The anticipated escalation of conflict in Afghanistan would disrupt trade with both Pakistan and Afghanistan, and could also hit sales to the wider region, the 'Nation' said. Kenya is the world's third largest exporter of tea (after India and Sri Lanka), and earns the country Ksh 35.1 billion (US $455 million) annually, the country's highest source of foreign exchange.

Tea exports to Pakistan alone earn Kenya Ksh 7.4 billion (US $96 million). Exports to Afghanistan have already been suspended as a result of the growing US anti-terror campaign following the 11 September terrorist attacks in the US. The prime suspect in the attacks, Saudi-born militant Osama bin Laden, is widely believed to have bases in Afghanistan.

Fears were raised of a trade dispute with Egypt on Thursday after Egypt imposed a 33 percent import duty on Kenyan tea. The 'Daily Nation' quoted tea industry official as saying that the dispute with Egypt was "just the tip of the iceberg" for problems in the Kenyan tea trade, but that escalation of conflict in Central Asia would be a disaster. "With millions of kilogrammes of tea lying around that would have gone to the top seven buyers, all of whom are in the Middle East [including Central Asia] lying around, prices in Kenya will drop drastically because of the glut," he warned.