Kenya’s commodity markets have gone hi-tech with auction trading going online in a move aimed at increasing efficiency and cutting costs.  

Mombasa’s Tea Auction in Mombasa and the Nairobi Coffee Exchange have now gone digital with manual activities considerably reduced.

Edward Mudibo, managing director of the East Africa Tea Traders Association (Eatta), which runs the auction, said the new system will bring a lot of benefits to sellers and buyers of tea.  

For starters Mr Mudibo said the new platform will help in the fight against the Covid-19 pandemic as physical contact will be significantly reduced.

“Operating virtually reduces the rate of infections amongst the traders, and saves lives as all the active 60+ traders no longer meet as they operate remotely from their offices and homes,” noted  Mr Mudibo.

The two commodity auctions were stopped from operating in April due to lack of space to allow trading in the face of Covid-19.  The move by the Ministry of Health spooked players who were set to incur millions of shillings in losses.

The system comes with a catalogue of benefits key of which is accurate and real-time information, which is disseminated at each level, significantly reducing trading cycle.

Daniel Mbithi, the chief executive officer of Nairobi Coffee Exchange, said the electronic system is a boost to farmers as it has brought efficiency in pricing of coffee.

“The high prices that we have been witnessing are a result of the digital platform that we are using at the moment,” noted Mr Mbithi.

The new system, added Mr Mudibo, will contribute to a significant reduction of direct costs related to the auction process, mainly administrative costs.

It is also expected that the system will provide opportunity of multiple trading windows and hence the possibility of breaking up bulk transactions.  This will enable tea packers to effectively participate in the auction.

The integrated tea trading system is set up with varied components playing different roles at the auction. For instance, it comprises Inventory management platform that will manage the committing of teas for sale by producers, manage the dispatch of teas – i.e. booking of transport service providers- loading and stuffing of tea and the tracking of tea destined to warehouses in Mombasa.

The platform will also include a virtual warehouse management system that will have tea arrival verification, stock in/out, warehouse inventory documentation and notifications.

The digital system supports support the logistics organisation for tea meant for auction by providing visibility and predictability of the movement of the commodity from the factory warehouses to auction warehouses in Mombasa.

The e-Catalogue platform will automate the generation, transmission, use and storage of the tea throughout its life cycle. This way, producers and buyers will be able to access the same document as the broker in real-time.

The trading analytical platform will also have a variety of analytical tools and instruments that will have the capabilities to mine, analyse, visualise and warehouse tea trade statistics that will help in price determination, analysing market dynamics and provideing information to potential market entrants. This, experts say, will support the drive towards a data-driven decision in tea trading.

The trading management platform will introduce much shorter, more scientific, intelligence-led auction process. Before the automation, a bell had to be rang to confirm a bid.

The trading payment gateway platform will centralise and manage all payments transacted after the buying and selling of tea. This will make it possible for producers to be paid to any bank of their choice that is linked to the platform.