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International trade

Kenya's Exporters Emerge as Winners in Presidential Roundtable Meeting

Strategic Insights

— 1 min read

President William Ruto addressed concerns raised by Kenyan exporters regarding tax policies and fees that were hindering their competitiveness in international markets. The meeting was aimed at resolving emerging policy bottlenecks that were making Kenyan-made goods uncompetitive in international markets. Key takeaways from the meeting include the following:

Key Takeaways:

  • The President directed Cabinet Secretary for Investments, Trade and Industry Lee Kinyanjui to urgently resolve emerging policy bottlenecks that were affecting the competitiveness of Kenyan-made goods in international markets.
  • The government introduced a 25% excise duty on kraftliner and kraft papers, which are used as raw materials in the manufacture of packaging materials, but this tax was later reduced to 10% for imported materials used for tea and coffee.
  • The Kenya Association of Manufacturers (KAM) expressed concerns that the new tax on packaging materials would make Kenya's fresh produce uncompetitive due to additional product prices.
  • The President directed Mr Kinyanjui to intervene in reviewing taxes on materials for packaging fresh produce, such as cut-flowers and avocados, which were seen as prohibitively expensive due to the existing tax rates.
  • The President also directed the Investments and Trade ministry to review the $10 (about Sh1,300) per consignment that the Kenya Trade Network Agency has been charging exporters applying for a Unique Consignment Reference (UCR) number.
  • Exporters were also to benefit from a review of the Sh30 million limit for VAT refunds, which the President ordered to be raised to Sh5 billion, and a review of the ceiling for claims by a single firm to be increased.

Statistics:

  • 27-member European Union remains the largest global destination for Kenya's fresh produce.
  • Current taxes on kraftliner and kraft papers make Kenya's produce uncompetitive.
  • The Kenya Association of Manufacturers (KAM) argued that the new tax would raise the cost of producing a 10kg avocado box by Sh26 to Sh182 and a flower box by Sh50 to Sh247.
  • The Kenya Trade Network Agency charges $10 (about Sh1,300) per consignment for UCR number.
  • Large exporters face cash flow pressures due to the Sh30 million limit for VAT refunds.
  • Estimated tens of billions of shillings are added to exporters' costs annually due to the UCR fee.
  • Competitors such as Ethiopia do not incur the UCR fee.

Sources:

  • "Exporters score win as Ruto directs CS Kinyanjui to ease taxes on packaging materials" (The Daily Nation)
  • "Ruto tackles exporters' concerns" (Business Daily Africa)

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