The Kenya Association of Manufacturers (KAM) has expressed concerns over plans by the government to import duty-free finished and refined edible fats/oils.
KAM in a statement says the government is mulling importing at least 125,000MT of finished and refined edible fats/oils through the Kenya National Trading Corporation (KNTC) for a period of one year.
The move is aimed at creating a price stabilizer for essential household commodities and alleviating the current drought situation in Kenya.
But according to KAM, duty-free importation of edible oils will create unfair competition.
Association’s chairman Rajan Shah further says what is currently available locally is sufficient.
“The local edible oil manufacturing capacity is adequate to supply local market requirements and is currently operating at 60% of the installed capacity,” Shah says in part of the statement.
Local industries
“From our perspective, this move will therefore promote unfair competition to local industries and the government stands to lose revenue to the tune of over Ksh3.5 billion and put over 40,000 jobs on the line,” it added.
The Kenya Association of Manufacturers (KAM) is now asking the government to reconsider the plan and engage its members to find a long-lasting amicable solution.
It also dismissed reports that a majority of edible fats/oil manufacturers in the country import finished products and only repackage and push them to retail stores.
There are 13 manufacturers of edible fats/oil in Kenya.
“From the onset, this is false and all our members in this sub-sector have been open for verification of these claims,” said the KAM chairman.
He noted that the edible oil processing industry is vibrant with Ksh100 billion investments.
Currently, KAM says, the sector has a combined installed capacity of 7,160MT.
“The industry generates over Ksh 52 billion in revenue for the government annually through taxes. In addition, the sector directly employs 10,000 employees and over 30,000 indirectly across the value chain,” the association added.
Why increased cost of edible oil
The manufacturers have however linked the increased cost of edible oils to internal and external factors that make the cost of producing finished edible oils in the country extremely high.
One of the external factors is the fact that Kenya mainly imports Crude Palm Oil (CPO) from Malaysia and Indonesia.
“Locally, the sector is taxed 2% nut and oil crop (NOCD) levy by Agriculture and Food Authority; I.5% IDF and RDL, respectively; 16% VAT; 10% excise on locally produced packaging materials (Finance Act 2022); depreciation of KES against USD (by 19.5%); and Port charges,” said KAM.
