Chief Executive Officers(CEOs) under the umbrella of the Kenya Association of Manufacturers(KAM) on Thursday put the government to task over the newly effected import duty on crude oil that has raised the cost of production putting the livelihoods of employees at risk.
During a meeting with the National Treasury officials led by Principal Secretary (PS) Chris Kiptoo and his Industry counterpart Juma Mukhwana on Thursday, the CEOs took issue with the East African Community’s hard-line stance of failing to reverse a Gazette Notice that imposed a 10 percent import duty on crude oil across East African nations, including Kenya.
KAM argued that the import duty was impacting negatively its bottom line, thereby affecting more than 80,000 employees who directly and indirectly depend on 13 edible oil companies.
”This sector generates over Ksh130 billion in revenue and contributes Ksh52 billion in tax revenue to the Kenyan Government. It directly employs 10,000 people and supports over 80,000 individuals through its value chain integration,’’ KAM told the two PS during a meeting.
An aisle of cooking oil in a Kenyan supermarket.
Photo
Business Today
The CEOs, therefore, asked the government to consider the revenue that their industries generate when revising the import duty on crude oil.
They also raised fears over the possibility of the imposition of the import duty on the main raw material revealing that it would have an impact on the competitiveness of Kenya’s produce.
The 13 companies possess a combined processing capacity of 2.18 million metric tonnes, serving both the East African Community (EAC) and Southern African Development Community (SADC) markets.
The CEOs added that the new duty had seen prices of basic products that Kenyans depend on for their daily use such as soaps and cooking oil shore up forcing Kenyans to dig deeper into their pockets.
”This increase in production costs is expected to negatively affect the competitiveness of Kenyan products. For instance, the price of a 20-liter container of edible oil, which previously retailed at Ksh3,800, has now risen to Ksh 4,200. Additionally, by-products from the crude palm oil refining process, such as soaps and margarine, have also become more expensive due to the introduction of this duty,’’ added KAM.
The developments came after the East African Community, via a Gazette Notice, decided to introduce a 10 percent import tax on crude oil on June 30, 2024.
The import tax will be in effect for the next year until June 29, 2025, as per the notice.
Currently, Kenya produces 80,000 metric tonnes of edible oil annually, while the national demand exceeds 900,000 metric tonnes. This results in a deficit of 820,000 metric tonnes, primarily addressed through the importation of crude palm oil, which is refined locally.
Treasury PS Kiptoo told the CEO’s that the government recognized their objections and promised that they will look into them and have them addressed.
A stock photo of bottled cooking oil on sale at a supermarket.
Photo
istock
