East Africa's Finance Bills deal heavy blow to women’s wallets

A woman is arrested while marching to parliament in Nairobi on June 18, 2024, during a protest against the proposed Finance Bill, 2024.

Photo credit: Evans Habil I Nation Media Group

What you need to know:

  • Proposed tax measures in Kenya, Uganda, and Tanzania on sanitary pads, diapers, second-hand clothes, and fuel will disproportionately burden women, especially those running informal businesses or from low-income households.
  • Kenyan women will still have to bear the burden of higher costs for imported sanitary pads and diapers, as these imported products are more widely used because of constraints in local manufacturing capabilities.

Women across East Africa are bracing for the impact of new tax measures on essential goods and services as parliaments in Kenya, Uganda, and Tanzania debate and approve budgets for 2024.

Finance ministries in these countries have proposed taxes that will increase the basic cost of items like sanitary pads, diapers, second-hand clothes, and fuel, disproportionately affecting women's daily lives.

In Kenya, the amended Finance Bill initially included additional taxes on locally manufactured sanitary pads and diapers. However, after facing public pressure, parliament removed these proposed taxes on domestically produced items, providing a reprieve to women.

Nevertheless, Kenyan women will still have to bear the burden of higher costs for imported sanitary pads and diapers, as these imported products are more widely used because of constraints in local manufacturing capabilities.

The relief for Kenyan women was tempered by Tanzania's decision to increase taxes on diapers and second-hand clothes (mitumba), a trade dominated by women entrepreneurs.

In Kenya, the changes to the Finance Bill came after weeks of intense pressure from activists and citizens on online platforms, who argued that the proposed taxes on sanitary products would push more girls and women into period poverty, making menstrual hygiene products unaffordable.

A petition on change.org highlighted the insensitivity of the Bill, stating, “The Bill proposes a new eco-tax on sanitary pads, making them even more expensive for millions of women and girls who already struggle to access affordable menstrual hygiene products.”

On Tuesday, in a partial victory for women's rights advocates, the Finance Committee of Kenya's National Assembly bowed to pressure from various stakeholders and dropped several controversial clauses from the Finance Bill, 2024, including the eco-tax on sanitary pads and diapers.

Kimani Kuria, the chairperson of the committee, clarified that locally manufactured products would not be subject to the eco-tax, as it would only apply to imported finished products. “Consequently, locally manufactured products, including sanitary towels, diapers, and others that we had highlighted, will not attract the eco-tax. The eco-levy will only be chargeable to imported finished products," Kimani stated.

While the initial proposal had sparked an outcry from women's groups and activists, who called on the government to address period poverty, nominated Senator Gloria Orwoba, a period shaming campaigner, pushed back against the pressure. She pointed out that Parliament was not attempting to impose any form of tax on sanitary towels.

“In fact, even the eco-tax that will be imposed on manufacturers will not affect local manufacturers of sanitary towels and diapers,” Orwoba said.

On the contrary, she explained that the Finance Bill proposed to remove a policy that prevented manufacturers of zero-rated products, including sanitary towels, from charging VAT.

Kigumo legislator Joseph Munyoro had condemned the move to charge a levy on diapers, saying it would burden women and mostly young mothers. “What do young mothers do now that you want to impose a levy on diapers? Are you asking them to go back to using napkins?” Munyoro posed.

In Tanzania, the government has proposed increasing the duty on baby diapers from the current 25 per cent to 35 per cent, with the aim of encouraging local production of these products. However, it has also reduced the 25 per cent tax on raw materials used in the domestic production of diapers.

Additionally, it has proposed to zero-rate fabrics and garments made from locally grown cotton, potentially making them more affordable. The country has also reduced taxes on vitenge from 50 per cent to 15 per cent.

Regarding second-hand clothing, Tanzania is now proposing a flat 35 per cent tax on second-hand clothes, shoes, and related items. Previously, the country charged 35 per cent or $0.4 per kilogramme, whichever was higher. However, it has since done away with the per-kilogramme limit, meaning traders will pay more depending on the volumes they import.

Uganda has also joined the trend of increasing taxes on second-hand clothing, raising rates by 3 US cents per kilo in January, from $1.16 to $1.19. However, the commissioner of customs at the Uganda Revenue Authority stated that while they had considered changing the rates earlier in the year, the proposal was eventually shelved.

“We usually review the rates at the beginning of the year, but we have shelved this particular proposal," the commissioner said.

Despite this claim, the Uganda dealers in Used Clothing and Shoes Association maintains that the new tax change is in effect and has already forced some traders out of business. “We are seeing most of our members dropping out," lamented Lydia Ndagire, the association's vice chairperson.

In Kenya, the government has proposed further increasing the road maintenance levy on petroleum products from Ksh18 ($0.14) to Ksh25 ($0.19). Thomas Kinyonda, an economist at Atlast, warned, “This is expected to further increase the cost of doing business and particularly hurt informal businesses – the majority of which are run by women.”

Additionally, Kenya has proposed a 3.0 per cent export and investment promotion levy on liquid fuel (paraffin) stoves, a measure that is expected to hit women in informal settlements and low-income groups particularly hard.

The impact of these fuel-related taxes comes on the heels of Kenya's decision in 2023 to increase Value-Added Tax (VAT) on petroleum from 8.0 per cent to 16 per cent. This move was jointly criticised by the Kenya Gender Budget Network, the National Taxpayers Association, and the Collaborative Centre for Gender and Development, who stated that it “has the greatest negative impact on marginal small and micro-enterprises (SMEs) – mostly informal businesses where women are in the majority.”

The 2024 Finance Bill initially proposed increasing the excise duty on mobile money transfers to 20 per cent. This came after a hike in 2023 that raised the duty from 12 per cent to 15 per cent. Women's groups had raised concerns that the previous increase was likely to create barriers to accessing financial services, particularly for women-led small and medium enterprises that heavily rely on mobile money platforms.

However, in a relief for mobile money users, Treasury Cabinet Secretary Njuguna Ndung'u dropped the proposed increase for 2024, maintaining the current excise duty at 15 per cent.

In Uganda, the Ministry of Finance had initially proposed, through the Excise Duty Amendment Bill 2024, to significantly increase taxes on petroleum products. The proposal sought to raise taxes to Ush1,550 ($0.42) per litre of petrol and diesel, and a further Ush550 ($0.15) per litre of paraffin – a product widely used by women in poor and low-income households, up from the previous Ush200 ($0.05).

However, following public outcry over the potential impact on vulnerable groups, the Ugandan parliament dropped this proposal from the amendment bill.