NAIROBI // In the cool, fertile highlands of western Kenya, tea plantations dot the landscape, their leafy green bushes stretching to the horizon.
Kenyan tea pickers, hunched over with white sacks slung across their backs, methodically graze up and down the endless rows of tea plants ensuring that they only pluck the top two leaves and a bud from each stem, the most flavourful part of the bush.
British colonialists first planted tea here a century ago in an experiment that would turn out to become one of the biggest profit making enterprises for this east African country.
Currently, Kenya produces about 350 million kilograms of tea per year and is the fourth biggest exporter of the beverage behind China, India and Sri Lanka. Tea makes up 30 per cent of the country's export earnings and ranks with coffee and cut flowers as Kenya's largest foreign exchange earners.
Additionally, the tea industry provides hundreds of thousands of jobs for Kenyans from growers and pickers to packers and shippers. Much of Kenya's tea is exported to the UK, the Middle East and Pakistan, where consumers enjoy the strong taste of the dark black tea and its low price.
But there is trouble brewing in the Kenyan tea industry. A low rainfall is expected to produce a less than bumper harvest this year. The decrease in production will likely drive prices up. Consumers, already hit hard by the global financial crisis, may think twice about having a second cup of tea in the morning.
The failed rainy season has created a drought in Kenya that has caused food shortages and also disrupted tea production, which is almost entirely rain fed.
"The drought is too prolonged," said Sicily Kariuki, managing director of the Tea Board of Kenya. "The weathermen tell us we are not likely to have a good rain. Some pockets of tea growers are likely to suffer."
The Tea Board predicted that production will drop by at least five per cent this year to 328m kg down from 345m kg last year. Production was already down 12 per cent in the first two months of this year. Analysts fear that this will cause prices to climb.
"If the shortfall turns out to be as deep as expected, then prices will go through the roof," Kaison Chang, an economist with the United Nations Food and Agricultural Organization's tea division, told the BBC.
Consumers are already starting to feel the pinch of higher tea prices. In 2007, Kenyan tea sold for an average of US$1.76 (Dh6.5) per kg. By the end of 2008, tea was above $2 per kg.
Prices have been steadily rising this year. Last week's tea auction in the port town of Mombasa, where 70 per cent of Kenyan tea is sold, saw an average price of $2.40, according to Africa Tea Brokers Ltd, the founding broker of the Mombasa auctions.
"Definitely reduced production affects the price," said David Mwashumbe, an auctioneer with African Tea Brokers Ltd. "Good tea is getting a high price."
As the price of tea goes up, countries that are hit hard by the financial crisis are buying less tea. As a result, a lot of tea is going unsold, Mr Mwashumbe said.
"We are seeing a selective buying from the buyer countries," he said. "A lot of countries have cash flow problems because of the financial crisis. They are only purchasing the teas that they can use immediately whereas before they would buy tea to keep on stock."
Tea factories are taking the hit from unsold lots and are buying less from growers. This is expected to eventually trickle down to the three million Kenyans who depend on tea for their livelihoods.
"The impact has not been felt yet, but we are planning for it," said Charles Kimathi, a spokesman for the Kenya Tea Development Agency, which represents 500,000 small-scale tea growers. "If it indeed happens, there would be fewer purchases from small-scale farmers and it would be a serious impact."
Small-scale farmers account for 62 per cent of all the tea produced in Kenya. A handful of multinational companies, such as Unilever and Finlays, grow the rest of Kenya's tea. A lot of Kenya's exported tea is blended with tea from other countries to make a bolder, more flavourful brew.
The Tea Board, a government agency, is looking to develop new markets for its tea in the Middle East, West Africa and China, Mrs Kariuki said. As long as there is a market for Kenyan tea, the rise in price will make up for the shortfall in production, she said.
"We will just have to live with depressed production," she said. "Overall, I'm confident we will be able to find a market for the tea we produce."
mbrown@thenational.ae
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COMPANY PROFILE
● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine
The biog
Name: Dr Lalia Al Helaly
Education: PhD in Sociology from Cairo
Favourite authors: Elif Shafaq and Nizar Qabbani.
Favourite music: classical Arabic music such as Um Khalthoum and Abdul Wahab,
She loves the beach and advises her clients to go for meditation.
AS%20WE%20EXIST
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
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SPECS
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UAE currency: the story behind the money in your pockets
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
