Coffee miller Neumann Kaffee Gruppe (NKG) Coffee Mills Limited is closing down its milling operations in Kenya due to its inability to secure a government license under the newly implemented Coffee Regulations 2019 and Capital Markets (Coffee Exchange) Regulations 2020.
The Capital Markets (Coffee Exchange) Regulations 2020, gazetted in 2019, granted the Capital Markets Authority (CMA) the authority to license the coffee exchange and brokers.
Additionally, it introduced the Direct Settlement System (DSS) to facilitate payments between coffee brokers and farmers after the expiration of the previous regulations.
The Regional Head of HR at NKG Coffee Mills Limited, Hellen Akumu, confirmed the impending changes in a letter to affected employees.
"In these ongoing changes, there is a potential/possibility of certain posts within the company’s staff establishment becoming redundant," stated Akumu, emphasizing that the notice adheres to Section 40 of the Employment Act 2007, Laws of Kenya.
The affected employees have already received redundancy letters, signalling the imminent cessation of their roles within the company.
However, NKG Coffee Mills Limited plans to engage in consultative meetings throughout January and February before finalizing any decisions, including redundancies.
"While exploring alternative avenues during consultations, we wish to notify you of the intended redundancy. If no alternative is found and the redundancy is confirmed, as per existing laws, it will be effective from 29th February 2024," the company stated.
This development underscores the challenges faced by businesses operating in Kenya's coffee sector in adapting to the regulatory changes, raising concerns about the broader impact on the industry's workforce and the local economy.
NKG Coffee Mills Limited's decision to shut down operations in the wake of licensing issues adds a new layer of complexity to the ongoing transformations within Kenya's coffee industry.