Tanzania has inaugurated its own tea auction in a significant development poised to challenge Kenya’s dominance, as the weekly tea trade in Mombasa has traditionally handled the beverage originating from the neighboring country.

The Tanzanian Mercantile Exchange (TMX) commenced operations on Monday, marking the inaugural trading of tea from various regions across the nation in a historic milestone.

Concerns have lingered regarding the potential impact of the Tanzanian auction on the market share of tea traditionally auctioned through Mombasa, which stands as the world’s second-largest auction center, facilitating tea trade for at least 12 African nations.

In June, Tanzania announced stringent regulations stipulating that no tea could be sold abroad; instead, local blenders would acquire tea through the auction in Dar, with those possessing direct markets required to register and obtain necessary permits.

Tanzanian officials during the launch of the auction on 13/11/2023. Image: courtesy (Bodi ya Chai Tanzania).
Tanzanian officials during the launch of the auction on 13/11/2023. Image: courtesy (Bodi ya Chai Tanzania).

There is a growing apprehension that the establishment of TMX may divert a substantial portion of tea originating from the southern part of Africa to be sold through Tanzania, potentially sidestepping the logistical challenges of transporting it to Mombasa.

TMX has actively sought to attract traders from regional countries, positioning itself as a direct competitor to Mombasa.

At present, offerings in Mombasa include teas from Kenya, Uganda, Tanzania, Rwanda, Burundi, the Democratic Republic of Congo, Malawi, Madagascar, Mozambique, and Ethiopia.

Expressions of interest to join the association and auction teas in Mombasa have also been received from producers as distant as New Guinea and Indonesia.

Previous grievances about inefficiency and elevated taxes at the Mombasa auction have been cited by tea traders as factors driving their inclination towards abandoning the facility.

Tanzania has leveraged these concerns as a persuasive tool to entice traders from Mombasa to migrate their operations to the new TMX facility.

The Mombasa auction is managed by the East African Tea Trade Association (EATTA), a private membership organisation.