Two days after the Agriculture and Food Authority (AFA) imposed a raft of new levies on exports and imports of food crops, stakeholders in the sector have protested the move citing it would negatively impact the economy as a whole.
- The Kenya National Chamber of Commerce and Industry (KNCCI) and the Cereal Growers Association (CGA) have made it clear that the export levy on cereals, legumes, and tubers will diminish the competitiveness of Kenyan produce in global markets.
- The AFA introduced a 0.3% levy that will be charged on these food crops whenever they are exported, with additional but varying levies on imports of the same produce.
- The latest Statista findings report that in January this year, Kenya exported food produce worth KSh 36 billion compared to the same period last year which registered KSh 26 billion – signalling a recovery trend.
“Over the past four years, cereal imports 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,” the two bodies said in a joint statement.
The devastating drought situation for many months last year hampered the production of food crops that would sustain local consumption. Surplus produce, and therefore exports, remained low. A lot of imports in maize, wheat, and rice were needed to supplement the production.
Despite these challenges, Agriculture remains a crucial component of the Kenyan economy, contributing more than 20% of the GDP. It is also the second-highest employer in the country’s private sector. According to the stakeholders, export levies on the crops would slash Kenya’s forex reserve and cause the shilling’s descent.
“Instead of facilitating growth, it (the export levy) places an additional burden on our farmers and exporters, potentially leading to reduced export volumes and lower foreign exchange earnings,” the statement said.
While it is understandable why the government would wish to impose levies on imports, precisely to protect local farmers, the KNCCI and the CGA have questioned whether they shall be applied to member states of the EAC and COMESA. They are concerned that it would violate trade agreements, or attract retaliation policies that would deepen exporters’ woes.
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