US sanctions hampering EA tea exports to Iran

Tea exporters from East Africa are ruing on the impact of US sanctions on financial institutions dealing with Iran.

These come on top of the Islamic state’s already stringent regulations on food imports.

The exporters now have to find ways to navigate Iran’s new food importation policies, besides finding ways of circumventing US’s sanctions.

Kenya’s ambassador to Iran, Ali Abbass Ali, says the two issues are the biggest stumbling blocks to East Africa tea exporters, who want to make inroads into the lucrative market currently dominated by Sri Lanka and India.

Washington’s financial sanctions on Iran also affect remittances to exporters.

The US government has barred banks from the rest of the world from trading with Iran, especially in dollars.

This is in a bid to pressure Tehran to give up its nuclear programme.

Washington aims at restricting Iran’s ability to acquire nuclear know-how and materials. Fearing Washington’s displeasure, several European and African financial institutions have severed ties with their Iranian counterparts.

The financial squeeze has discouraged many investors from doing business with Iran. But given the euro’s increase in value, relative to the dollar, many European institutions are switching currencies.

This is what tea exporters might have to do.

“As things stand, Kenyan banks do not accept Iranian currency because their roots are in the US.

“This presents a big challenge to traders who want to sell their products in Iran,” said Mr Ali.

He said that unless governments in East Africa intervene, the US squeeze on Iran could lock out local tea exporters.

Currently, Sri Lanka supplies up to 58 per cent of the black tea imported by Iran. It is followed closely by India, at 39 per cent, and East Africa, at a mere 2 per cent.

There has been renewed interest by Kenyan and Iranian stakeholders, as well as government officials, in increasing the volume of tea entering Iran.