State in plan to import 580,000 tonnes of duty-free food items
Comedian Eric Omondi (right) struggles with police officers in an attempt to force his way into Parliament Buildings in Nairobi on February 21, 2023. He was leading a protest against the high cost of living.
What you need to know:
- The government is importing 580,000 metric tonnes of basic commodities duty-free in a bid to lower prices and ease the high cost of living.
- The Customs and Border Control Department of the Kenya Revenue Authority (KRA) has directed the state-owned Kenya National Trading Corporation (KNTC) to apply to be issued with a duty exemption code to allow it to clear the goods.
- KNTC was in November last year given Cabinet approval to spearhead the government’s initiatives to stabilise the cost of essential goods amid a biting drought that has curtailed local food production.
The government is importing 580,000 metric tonnes of basic commodities duty-free in a bid to lower prices and ease the high cost of living.
The Customs and Border Control Department of the Kenya Revenue Authority (KRA) has directed the state-owned Kenya National Trading Corporation (KNTC) to apply to be issued with a duty exemption code to allow it to clear the goods.
KNTC was in November last year given Cabinet approval to spearhead the government’s initiatives to stabilise the cost of essential goods amid a biting drought that has curtailed local food production.
To carry out its new mandate, the agency was handed approval to import 150,000 tonnes of rice, 125,000 tonnes of cooking oil, 2000,000 tonnes of sugar, 25,000 tonnes of wheat and 80,000 tonnes of beans duty-free.
The Cabinet also approved the importation of a further 25,000 tonnes of wheat donated by Ukraine. The approval is effective for one year from January 20, 2023, to January 19 next year.
This will add to the duty-free imports of maize and rice that the government has allowed private importers to ship into the country for a period of six months to ease the food shortage.
The National Treasury this year allowed traders to import up to 900,000 tonnes of duty-free white maize and 600,000 of duty-free milled rice from the beginning of February to August 6 to boost the food supply in the country.
“Only the five listed products and donations qualify for duty-free importation. Any other product outside the approved list shall be dutiable at the applicable EAC-CET rates,” said KRA.
“Once the quota is exhausted, any further importation by KNTC of the listed products shall revert to the payment of duty at the EAC-CET rates unless otherwise approved by the National Treasury,” said KRA.
Cabinet approval
Ahead of the November 2022 Cabinet meeting, the Ministry of Trade and Investment and the Ministry of Agriculture sought Cabinet approval to allow KNTC to borrow Sh15 billion to fund importation of the food commodities and a further Sh5 billion for fertiliser imports.
Following the meeting, the Cabinet gave the nod for KNTC to ink a “trading partnership with local government-owned banking institutions and regional financial intermediaries specialising in trade and commodity financing”.
Manufacturers have, however, opposed the duty-free i++mports, arguing that it will lead to unfair competition and loss of market for them.
Oil manufacturers have expressed concerns that KNTC could spell doom for the industry, which is valued in excess of Sh130 billion.
They argued that the industry generates over Sh52 billion in revenue for the government annually through taxes and that it also directly employs 10,000 employees and over 30,000 indirectly across the value chain.
The manufacturers are seeking clarity on whether the government will engage local manufacturers to supply the goods to KNTC and if it will reduce taxes to create a level playing field.
“Why doesn’t the government consider incentivising manufacturers through reduced taxation and lower cost of power to bring down the overall cost of production which will subsequently lead to the cost of finished goods to the level it wants?” posed the manufacturers.
This comes at a time when consumers are shouldering high cooking oil prices. Prices of the commodity that is used in cooking, baking, cleaning, beauty and in the pharmaceutical industry have hit an all-time high in April last year due to global supply chain constraints.
The average price of cooking oil rose by 9.1 per cent from an average of Sh303.34 per litre in December 2021 to an average of Sh330.96 in December 2022, according to data from the Kenya National Bureau of Statistics.
