Tea, coffee, dairy bag long cushion in EAC trade plan

coffee

Charles Munyao at his coffee farm at Muthwani Village in Machakos County on June 18, 2022. 

Photo credit: Pius Maundu | Nation Media Group

A host of top agricultural produce including tea, roasted coffee, cut flower, beef, and dairy will enjoy lengthy protection as Kenya and its East Africa Community (EAC) partners offered tariff concessions for transition into the new Africa free trade area.

A review of a newly published schedule by chairman of the EAC Council of ministers, Ezekiel Nibigira shows that the crops will be protected until 2029 to save growers from competition.

Under the Africa Continental Free Trade Area (AfCFTA) agreement, intra-Africa trade will be liberalised by 2030 via removing all cross-border taxes, in a series of actions that officially began last year.

Under the agreement establishing the AfCFTA, members must phase out 90 percent of tariff lines over the next five to 10 years. Another seven percent considered sensitive will get more time, while three percent will be allowed to be placed on an exclusion list.

Most of the products traded across African borders will not be attracting any taxes by 2029 or will be slapped with as little as a one percent tax.

But products including meat, cut flowers, tea, coffee, and dairy will continue to attract 3.5 percent in tax up to 2029.

Food products including tomatoes, onions, cabbages, potatoes, beans, vegetables, and wheat will also enjoy protection with their taxes projected to remain at 3.5 percent by 2029, the EAC tariff concessions plan shows.

Taxes on a kilogramme of wheat, for instance, were 35 percent before introduction of the AfCFTA last year when they dropped to 31.5 percent. This year, they further declined to 28 percent, before dropping further to 24.5 percent next year, 21 percent in 2024, 17.5 percent in 2025, and 14 percent in 2026.

By 2027, a kilogramme of hard wheat will be taxed at the rate of 10.5 percent to be imported from any African country that is a signatory of the AfCFTA agreement, which will reduce to seven percent in 2028, then 3.5 percent in 2029 before being fully eliminated in 2030.

Review of the tariff concessions shows that the products EAC States have always protected will accrue a comparatively higher tax rate up to 2029, before full elimination the following year.

Human hair, which has also gained popularity in Kenya with a rapidly growing beauty industry, will attract the 3.5 percent tax rate up to 2029.

Welcome!

You're all set to enjoy unlimited Prime content.