Category Archives: Tetu coffee

Nairobi Coffee Auction

Here’s a report from a visit to an auction at the Nairobi Coffee Exchange in 2004. This was done on behalf of an investor who wanted to export coffee to North America and was around the time there was a controversy on the licensing of coffee marketing agents like Tetu Coffee.

  • Kenya has a real coffee exchange, where coffee is bid for and sold electronically in US$ but the exchange is located off Haile Selassie Avenue, near the main bus station.
  • Dealers are issued with electronic keys that enable them to buy coffee that is in the warehouses of KPCU and other coffee marketers. The coffee lots, priced in dollars, are displayed on a digital boards for local buyers such as Dormans and Java, and exporters.
  • These dealers pay $1,000 for a license to trade at the exchange. I talked to one dealer, and he advised to buy from him because he exports up to 15,000 bags to the States each year. They have offices in LA and NY and one can pick up a bag from either of these places for around $300.
  • 38 bags (2,303 kg) of AA (60Kg) sold today for $118 while he bought 49 bags (2956 kg) of C grade coffee for $77. Also, coffee grades are difficult to prove because one tree can produce all seven varieties of coffee.
  • It costs 8 Euros to airfreight a kilo to North America (about 800 shillings per kilo – and therefore about 40,000 per 50kg bag)

I learnt about coffee grades and the industry – there are so many cartels, millers, marketers, dealers etc. – that the Tetu concept to cut out all these middlemen, and deal with the farmers makes sense, but this would also affect the livelihoods of everyone in the chain.

It would be nice to visit the Nairobi Coffee Exchange again in 2021.

Syriana & Maendeleo Monday

Banking

Guardian (Bank no. 24) ended 2005 with a pre-tax profit of 56 million (m)shillings.

K-Rep (No. 29 ) pre tax profit was cut in half from 110m to 48m by increased staff and operating expenses.

Oriental (No. 38) The former Delphis and former BCCI is still in the red but showed improvement in reducing its pre-tax loss from 369m to 86m. The Bank also re-capitalized from 376m to 723m.

Dubai (No. 40) Pre-tax profit was about 30m same as in ’04 at the high interest margin bank.

Housing

New housing
(i) 240 houses in Ndumberi, Kiambu, 24 km from Nairobi comprising 3 and 4 bedroom (br) bungalows.
(ii) Phase 1 of Diamond Park housing estate comprising 155 houses in South B next to balozi & hazina estates. The final complex will have 850 4-br maisonettes.

No boom
According to the Sunday Nation the so-called Nairobi property boom was only a speculative bubble that was confined to upmarket areas like kileleshwa and kilimani. A true boom would have seen housing prices appreciate in all parts and in all housing segments in the city.

Agriculture

Tetu kicking
Tetu coffee is still alive despite almost three years of frustrating hurdles. The company has applied for a coffee buyer/dealer license as well as packers & roasters license to process 400,000 kilos of coffee per year.

Relief for farmers
Good news for farmers as a new scheme will enable them to be paid on time. It involves the Agricultural Finance Corporation, Kenya Seed Company, and National Cereals and Produce Board (NCPB).

This will help in the perennial problem of late payments that leave farmers at the mercy of middle-men who extend goods to unpaid (and broke) farmers at exorbitant rates to plant as they await late payments for their previous seasons crop. Also the NCPB has been losing out on deliveries as farmers prefer to sell maize to middlemen who, even though they pay less per bag than NCPB, give cash upfront and collect crops directly at the farms. Farmers are then able to use the money to meet holiday expenses, school fees etc.

It would also be nice to see more trade finance banks get involved with similar products to farmers.

The scheme looks good on paper, but in real life, there are crafty Kenyans who convert schemes into scams e.g. Goldenberg and now others who have imported luxury cars bila duty under a simba scheme that was meant to enable faster clearing of vehicles.

ICT

Bigger site
Alexa.com has sparked a media war between the nation (rank 12,963) and the standard (rank 13,277) over who has Kenya’s leading online media website.

Mobile office
Safaricom has introduced Pocket Office – a mobile email solution.

Consulting opportunities
(i) The East African Portland Cement company is inviting bids for the design, supply, and installation of a new 80-tph cement mill factory. Apply by April 26.
(ii) The GJLOS program is inviting bids for consultants to supply, install, and maintain an intelligence and investigation application system for the Kenya Anti Corruption Authority. Apply to KPMG by April 28.

At the movies
Saw, and enjoyed, Syriana over the weekend which was a very complex & nice movie done by the writer of Traffic and the similarities are apparent in the parallel inter-weaving storylines. However, after watching it, I must say the George Clooney did not deserve a best-supporting actor award and that better performances were given, within the movie by both Matt Damon who plays an energy trader and Alexander Siddig, who plays the prince who plans to save his oil-rich country.

Business Opportunities

Bonus shares
Diamond Trust Bank will issue one bonus share for each four held by a shareholder in the Bank’s record as at May 24 2005. The new bonus share certificates will be sent out from July 11, the same date on which they will start trading on the Nairobi Stock Exchange.

Education
The Higher Educational Loans Board now offers loans for full time (not part time, parallel or self-sponsored) students pursuing masters and doctorates degrees. They also have several scholarships available that range from 200,000 to 450,000, which can be applied for at helb@helb.co.ke

Property
The United Nations High Commissioner for Refugees (UNHCR) is seeking new premises, after which they will move from their unsightly building next to Consolata Church. The new building should be located in the Westlands/Gigiri area, be between 18 – 32,000 sq. ft, have parking for 80 cars, be a secure facility with good telephone and satellite communications set-up as well as other appealing features, but should be far away from bus stops and other public/insecure areas. Proposals should be hand-delivered to the Chairman, Office Premises Committee UNHCR by May 25

Land
USIU (United States International University) is selling a 40-acre plot at Garden Estate, off Thika Road. Bids should be received by the Land Sale Committee, USIU, P. O. Box 14634-00800 Nairobi by May 26

Renovation
The Nairobi City Council has finally invited tenders for the reconstruction of City Hall, which was almost burnt down by arsonists more than a year ago. Of course, nothing comes for free at the NCC, and bidding documents can be collected at the City Engineers Department after payment of a non-refundable 5,000-shilling fee (and this is only for the pre-qualification stage, not the actual repair work) and returned to the Town Clerk, NCC P. O. Box 30075 Nairobi by June 13

Distribution
Unipatch Rubber, makers of Omni brands, and India’s largest exporter of tyres and tubes is seeking distributors for East Africa. Apply to export@unipatchrubber.com or corporate@unipatchrubber.com

Coffee
The Coffee Act of Kenya states that anyone wishing to engage in any coffee business must be licensed by the Coffee Board of Kenya. You can apply for 2005 – 2006 licences as dealers, marketers, millers, roasters, auctioneers, warehouse, packers or management agents by paying a non-refundable 1,000 shilling fee and return the forms by May 30. Last year, Tetu coffee was unable to break down this cartel of cliquish middlemen.