A photo showing cups of tea. Reuters
Speaking at a panel in Nairobi on Monday, Ndung’u shared that Egypt's Ambassador Wael Nasr El-Den has requested to sustain the tea trade between the two nations using a barter system.
Under this arrangement, Egypt's government will procure Kenyan tea, while the Asian country will have the freedom to choose what it wants to import from Egypt, Nasr El-Den added.
The motivation behind this move stems from the severe shortage of US dollars in both countries, which has exacerbated inflationary pressures and placed a heavy burden on their economies.
Egypt's US dollar crisis
Egypt, in particular, aims to minimize its reliance on its US dollar reserves in the face of an acute foreign currency shortage crisis.
Despite this scarcity, the country faces mounting demands for US dollars to facilitate food and fuel imports and to meet a $2 billion bond maturing in June 2024.
To address the scarcity of US dollar liquidity, Egypt has recently presented 35 state-owned companies as investment opportunities, either through its IPO programme or by assigning them to strategic investors.
The government has unveiled a comprehensive plan to alleviate the strain on the domestic market by attracting an annual inflow of $191 billion within three years.
This influx will primarily be sourced from revenue generated by the Suez Canal, remittances, commodity exports, and other avenues.
Egypt anticipates collecting $83 billion in foreign currencies during FY2023/2024 through diverse sources.
Furthermore, the global rise in beverage prices, triggered by the Ukrainian war, volatile weather conditions, and the El-Nino weather phenomenon, has contributed to the surge in tea prices.
Since the beginning of 2023 until November, tea prices have escalated by $0.19 per kilogram or 6.71 percent, now reaching $3.02 per kilogram with a 10.22 percent increase on a year-on-year basis, according to Trading Economics data.
Egypt stands as Kenya's second-largest purchaser of tea, trailing only Pakistan. However, exports to both markets have declined by 23 percent and 13 percent, respectively, in the first eight months of 2023, according to data from the Tea Board of Kenya.
This underscores the significance of securing a sustainable tea trade agreement between Egypt and Kenya through barter, ensuring the continued flow of tea.
By adopting a barter system for the tea trade, Egypt and Kenya aim to navigate the challenging economic circumstances they face, simultaneously meeting their tea requirements and alleviating the strain on their US dollar reserves.