The recent decision by the Agriculture and Food Authority (AFA) to impose a 0.3 percent levy on the export of cereals, legumes, and roots and tubers has raised concern among stakeholders, particularly the Kenya National Chamber of Commerce and Industry (KNCCI) and the Cereal Growers Association (CGA).
They argue that this move will negatively impact Kenya’s export sector, which is a vital component of the nation’s economy.
According to KNCCI and CGA, Kenya’s agricultural sector accounts for 21.8 percent of GDP and is the second-highest wage employer in the private sector.
They fear that imposing the levy could reverse the gains made in promoting agricultural exports, making the country’s produce less competitive in the international market.
Moreover, the timing of the levy imposition is particularly concerning as it comes at a critical juncture for the cereal export sector. While there was a modest recovery in the sector in 2023, cereal exports from Kenya have generally been on a downward trend over the past four years.
Introducing an export levy now risks stifling the recovery and impeding efforts to regain lost ground.
The KNCCI and CGA emphasize the need for immediate clarification regarding the recently introduced import levy. They seek clarity on whether these levies also apply to imports from member countries of the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA), as such levies could potentially disrupt regional trade agreements.
In light of these concerns, KNCCI and CGA urge the government to reconsider the imposition of the export levy and engage in constructive dialogue with stakeholders in the agricultural sector.
They call on the government to explore alternative measures that can enhance Kenya’s export capabilities without imposing undue financial burdens on farmers and exporters.
Ultimately, KNCCI and CGA stress the importance of collaborative efforts and open dialogue in achieving solutions that align with national objectives and promote the welfare of farmers and the broader economy.
