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Trade Cabinet Secretary Moses Kuria has written to Treasury Cabinet Secretary Njuguna Ndung'u, urging the removal of the 35% duty on edible oils and proposing the introduction of a 10% export and investment promotion levy.
This move aims to support the local production of edible oils and ensure stable prices for essential household items in the country.
Dated June 20, Kuria’s letter highlighted the critical role played by the edible oils value chain in determining the overall cost of basic food commodities in the nation.
He explained that while the government has implemented measures to stabilize prices, the importation of crude oil, amounting to approximately Sh102 billion, continues to hinder the growth of local manufacturing in this essential sector.
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To address this challenge and promote local manufacturing in the edible oils value chain, Trade CS Moses Kuria also proposed the elimination of the 35% duty on crude oil.
Instead, he suggested implementing a 10% export and investment promotion levy on imported crude oil.
This levy would be targeted at selected goods for which local manufacturing industries can produce. The goal is to encourage investments in domestic production and establish a fair pricing structure for edible oils.
According to Trade CS Moses Kuria, the proposed substitution would support local manufacturing and also contribute to the growth of palm, soya, and sunflower farming.
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Impact of CS Moses Kuria’s proposal
Kenyan Manufacturers of Edible Oils
The removal of the duty on edible oils and the introduction of the export and investment promotion levy would provide a boost to local manufacturers.
With the elimination of the duty, the cost of importing crude oil, a major component in edible oil production, is expected to decrease.
This reduction in costs would enhance the competitiveness of domestic manufacturers and encourage them to expand their operations. As a result, Kenyan manufacturers would have a greater opportunity to meet the local demand for edible oils and reduce reliance on imports.
Consumers
The proposed measures have positive implications for consumers of edible oils in Kenya.
By supporting local manufacturing, the government aims to stabilize prices for essential household food items.
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With increased domestic production, there will be a more consistent and reliable supply of edible oils, reducing the dependence on imported products.
Stable prices and a secure supply of affordable edible oils would benefit consumers by ensuring access to a vital component of their daily diet.
Farmers
The introduction of the export and investment promotion levy would have a direct impact on farmers involved in palm, soya, and sunflower farming.
With the incentivization of investments in local manufacturing, there would be an increased demand for raw materials from these farming sectors.
This, in turn, would provide opportunities for farmers to expand their cultivation of palm, soya, and sunflower crops. The growth in these farming sectors would not only contribute to the local production of edible oils but also stimulate rural economies and create employment opportunities.
Economy
By reducing the dependence on imported edible oils, the government aims to strengthen the local manufacturing sector and boost the overall economy.
Increased domestic production is expected to generate employment opportunities, stimulate investments, and contribute to the country's Gross Domestic Product (GDP).
Additionally, by substituting the duty on edible oils with the export and investment promotion levy, the government aims to attract foreign direct investment and enhance the competitiveness of Kenyan industries in the global market.