KENYA – The Kenya National Chamber of Commerce and Industry (KNCCI) and the Cereal Growers Association (CGA) have jointly expressed their concerns regarding the newly introduced 0.3% tax on the export of all food crops.

This levy, implemented by the Agriculture and Food Authority (AFA), is seen as a potential threat to Kenya’s agricultural sector, a cornerstone of the nation’s economy.

In a press release issued on Thursday, May 30, 2024, both organizations voiced their apprehensions about the negative impact this levy could have.

“The Kenya National Chamber of Commerce and Industry (KNCCI) and the Cereal Growers Association (CGA) express deep concern regarding the recent imposition of a 0.3% levy on the export of cereals, legumes, and roots and tubers by the Agriculture and Food Authority (AFA),” the statement read.

The concerns come two days after the government announced the new taxes pursuant to regulation 37 of The Crops (Food Crops) Regulations of 2019, and the Authority says it will be effective from July 1st this year. 

Bruno Linyiru, the Director General of the Agriculture and Food Authority (AFA), outlined these new levies in the Crops (Food Crops) Regulations, 2019.

According to the new levy, starting July 1, 2024, importers and exporters of legumes, pulses, cereals, and root and tuber crops will face new taxes ranging from 0.3% to 2% of the customs value.

Importers of cereals will pay a 2% levy on the customs value of their cargo, while exporters will incur a 0.3% levy on the value of their goods. Imports of legumes will attract a 2% charge, with exports taxed at 0.3%, and root crops will be subjected to a 1% import levy and a 0.3% export charge.

Opposing, KNCCI and CGA highlighted that this new levy could undermine recent efforts to boost agricultural exports, potentially making Kenyan produce less competitive in international markets.

“The imposition of this levy threatens to reverse the gains made in promoting agricultural exports, making our produce less competitive in the international markets. This levy stands in stark contrast to the government’s efforts to enhance export growth, which is crucial for stabilizing and strengthening our currency,” the statement continued.

The organizations stressed that rather than promoting growth, the new tax would add a financial burden on farmers and exporters, potentially leading to reduced export volumes and lower foreign exchange earnings.

The timing of the levy is particularly problematic, as cereal exports have been on a decline over the past four years, with only a brief recovery in 2023.

KNCCI and CGA also called for immediate clarification on a recently introduced import levy, questioning whether it applies to imports from East African Community (EAC) and Common Market for Eastern and Southern Africa (COMESA) member countries.

They warned that such levies could undermine the benefits of regional trade agreements.

“We urge the government to reconsider the imposition of this export levy and to engage in constructive dialogue with stakeholders in the agricultural sector. It is crucial to explore alternative measures that can enhance our export capabilities without imposing undue burden on our farmers and exporters,” the statement urged.

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