Chamber of Commerce Warns New Levy Will Render Kenyan Cereal Exports Uncompetitive

Collage image of cereals for sale
Collage image of cereals for sale
Safi organics

The Kenya National Chamber of Commerce and Industry (KNCCI) and the Cereal Growers Association (CGA) warned of an increase in the prices of cereals following the imposition of an export levy.

According to the Chamber, the imposition of a 0.3 per cent levy on export of cereals, legumes, roots and tubers by the Agriculture and Food Authority (AFA) will see the price of cereals shoot up particularly for export markets.

Kenyans who will be importing legumes will also be required to pay 2 per cent of the customs value and 0.3 per cent for exports.

On the other hand, those exporting roots and tubers will be required to pay 1 per cent for imports and 0.3 per cent for exports.

Agriculture CS Mithika Linturi during a meeting at Kilimo House on Tuesday April 25, 2023
Agriculture CS Mithika Linturi during a meeting at Kilimo House on Tuesday, April 25, 2023
Mithika Linturi

Consequently, KNNCI warned that such a move would render Kenyan exports uncompetitive  against those of other countries within the regional market.

“This levy stands in stark contrast to the government's efforts to enhance export growth, which is crucial for stabilizing and strengthening our currency. Instead of facilitating growth, it places an additional burden on our farmers and exporters, potentially leading to reduced export volumes and lower foreign exchange earnings,” stated KNCCI.

Further, the Chamber is decrying that the timing for the imposition of the levy comes at a time when the country’s  exports were recovering from a four year slump.

However, with the new imposition, the upward trajectory would be disrupted therefore prompting a downward spiral of the products.

“Notably the timing of this export levy is inopportune. Over the past four years, cereal exports from Kenya have been on a downward trajectory, with the sole exception of a recovery in 2023. Introducing an export levy now would stifle this nascent recovery, undermining the efforts of our farmers and exporters to regain lost ground,” read the statement in part.

Furthermore the organisation is seeking clarity on the recently introduced import levy.

According to KNNCI, it was unclear if the imposed levy would affect imports from member countries of the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA).

In the current trade agreements, EAC and COMESA countries engage in a business environment that is free of trade barriers and tariffs.

The Agriculture and Food Authority (AFA)  introduced the new levies in 2019 but on May 28 announced that the new levy will be payable starting July 1, 2024.

A cargo plane unloading goods at an airport
A cargo plane unloading goods at an airport
Alaska Air forwarding