KENYA – The Capital Markets Authority (CMA) in Kenya, appointed by the treasury to regulate coffee trading in the country has allowed the use of the old payment rules at the Nairobi Coffee Exchange (NCE).
As such, coffee marketers are required to remit the funds to the cooperative societies as they have been doing under the General Coffee Regulations which ceased to exist at the end of June.
The Capital Markets (Coffee Exchange) Regulations 2020, which were gazetted in April and were to be effected on July 1, giving the CMA the mandate to license the coffee exchange and brokers.
CMA says the extension has been necessitated by delays in putting up a Direct Settlement System that is meant to facilitate payments for sales.
“CMA directs that the existing payment mechanisms be utilised in the interim period as the DSS is being put in place. Details of direct coffee sales will be reported to the Nairobi Coffee Exchange,” said acting CMA chief executive Wycliffe Shamiah.
“The Nairobi Coffee Exchange is granted permission to operate as it works towards full compliance with the regulations.”
He added that those intending to offer coffee brokerage services are also allowed to continue performing the role, as they work towards full compliance of the CMA regulations.
In addition, the extension was in a move to give stakeholders more time to comply with the new Capital Markets Authority Act.
Stakeholders in the coffee sector have been grappling with uncertainty over protection of coffee sales, after it emerged that the Capital Markets Authority regulations would not kick in at the start of this month as planned.
The concerns emerged from the fact that farmers will no longer be covered by the guarantee money that the marketing agencies had paid to Agriculture and Food Authority, which was applicable under the general coffee regulations that were to cease operating in June, reports Business Daily.
Each marketing agency normally pays Sh1 million as a guarantee to the regulator to protect farmers’ produce in the event they fail to remit the growers’ earnings.
Shamiah has indicated that all disputes that may arise in relation to coffee sales should be forwarded to the Authority to ensure follow up and resolution for the benefit of the coffee growers.
The industry committee has also been constituted to address any gaps that exist and those that may emerge during the transition period.
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