KENYA – Edible oil manufacturers have halted a move by the government to reduce tariffs on imported oils coming from outside East Africa from 35% to 25% arguing that the move would be negatively harmful to the sector.
According to The Nation, the petition follows proposed tariffs by the East African Community’s (EAC) Common External Tariff (CET) to set the new rate of 25%, which is 10% lower.
However, the Kenya Association of Manufactures has expressed discontent, saying that the rate will create an unlevel playing field for businesses that have invested heavily in the sector.
According to KAM, the move is detrimental to the edible oil sector adding that manufacturers have invested over KES 100 billion and employed at least 10,000 people directly in the edible oils value chain hence the sector deserves protection from the state.
“We reiterate our commitment to supporting government efforts in job creation and economic stability. This, however, has to start with the government creating a level playing field in the interest of all stakeholders and the general public,” KAM said.
The EAC Finance Ministers adopted the 35 percent 4th Band of the EAC-CET on May 5, 2022, with an implementation date of July 1, 2022.
The four bands of the CET are raw materials attracting a zero percent duty, intermediate goods (10 percent), secondary intermediate goods (25 percent), and finished goods (35 percent).
According to KAM, the 35% rate should be maintained since the tariff applies to ready-made refined imported oils from outside EAC and Comesa, arguing that the ideal would be possible since this is under the category of finished goods.
The lowering of the tariff comes barely a week after the Ministry of Trade and Industrialization wrote to Treasury asking for the EAC rate to be affected.
Earlier, KAM had cried foul as the government allowed the importation of edible oil duty-free to cushion the citizens from the rising cost of living.
While referring to the Kenya National Bureau of Statistics (KNBS) 2022 Report, the manufacturers stated that food contributed an estimated 2.1 percent revenue to Kenya’s overall share of manufacturing Gross Domestic Product (GDP), hence the sector should be protected.
In addition, KAM noted that Kenya has a vibrant Edible Oil Processing industry made up of 13 manufacturers with a combined installed production and processing capacity of approximately 2MMT per year.
The association has, however, called upon national and country governments to allocate industry players’ land to cultivate palm oil saying the move would enable the private sector to harness investments through public-private partnership.