Mbadi sued over Sh21bn rice duty waiver as farmers await paddy buy-off

CS Treasury John Mbadi sued over sh.21 billion duty waiver on 490,000 metric tons of free import duty rice as farmers await government to buy off paddy rice.[Courtesy]

Cabinet Secretary (CS) for Treasury John Mbadi has been sued for waiving import duty on 490,000 metric tonnes of rice worth sh21 billion in duty taxes without the relevant powers.

In a petition filed before Justice Jairus Ngaah, Human Rights Activists said Mbadi has no powers at all to waive, exempt or suspend the import duty on payable rice under the East African Community (EAC) Common External Tariff by publication of a national gazette notice.

The activists led by Genesis For Human Rights, People Movement For Human Rights and Kenya Legal Resource Centre said the Gazette notices dated July 28 2025 and July 6 2026 authorizing f 990,000 metric tons of imported duty-free rice are illegal and incapable of conferring any right, exemption or benefit upon any person.

Genesis Director Caleb Ngw’ena said that the power to impose, vary, waive tax is reserved to the legislators by Article 210(1) of the Constitution.

Ngw’ena said Kenya Revenue Authority (KRA) and Customs are currently clearing the 490,000 metric tons of the said rice from Kenya Ports Authority KRA Container Freight Stations (CFS) which will cost sh.21 billion of unpaid duty.

The Director said that import duty on rice is fixed by the EAC Common Tariff at the rate of 75 percent ad valorem or sh.41,400 (USD 342) per metric ton whichever is higher.

He said the Common External Tariff may be varied and its application stayed only by the East African Community (EAC) Council Ministers, whose decisions takes effect upon publication of the EAC Community Gazette.

“Nowhere in that architecture, and any written law of Kenya is a CS conferred with powers to waive, exempt or suspend Common Tariff duty on rice by national Gazette Notice,” said Ngw’na.

Further, he said that the exemption issued under the Fifth Schedule of the EAC Customs Management Act (EACCMA) 2004 is meant for relief goods imported for emergency use in areas afflicted by natural disaster.

He said the exemption under the Fifth Schedule operates according to its own terms and conditions none of which can be satisfied by commercial consignment of rice imported by private traders for sale at a profit, in absence of a declared emergency.

“The power to vary or stay the Common External Tariff or grant exemption or duty remission is reserved by the protocol on establishment of the EAC Union and the EACCMA,” said Ngw’ena.

The activists sued Mbadi for issuing a Gazette Notice dated July 6 2026 allowing for the importation of the said duty-free rice without powers conferred to the EAC Council Ministers.

The petition also cited CS Agriculture Mutahi Kagwe, Kenya Revenue Authority (KRA), Commissioner of Customs and Boarder Control, Agriculture and Food Authority (AFA), National Cereals and Produce Board (NCPB) and The Attorney General (AG).

In the suit, The National Assembly has been cited as Interested Party.

The Director said that Kagwe announced in 2025 that the government will purchase (mop-up) locally produced paddy rice from farmers at a guaranteed floor price. As a result, farmers held their stock.

However, on July 28 2025, Mbadi issue a Gazette Notice of July 17 2025, after Kagwe’s recommendation allowing duty free importation of 500,000 metric tons of grade 1 milled white rice on or before December 31 2025.

Ngw’ena said at the time, there was no state of emergency, disaster or calamity had been declared to warrant the duty-free importation under fifth schedule.

“The rice authorized for importation was ordinary commercial merchandise to be imported by private traders for sale at a profit and none of the conditions of item 20 was or could be satisfied,” said Ngw’ena.

He said that on July 6 2026 without any published evaluation of the preceding windows, any assessment of national production, stock or deficit and without a declared emergency, Mbadi issue the second impugned Gazette Notice.

“This is not a complaint about how a lawful power was exercised, it is a complaint that the power does not exist. The petition therefore seeks a declaration of want of power, the quashing of both impugned gazette notices,” said Ngw’ena.

The petitioners said that despite existence of similar petitions in Kerugoya and Kisumu high Court, no order has been issued stopping the ongoing clearance of the duty-free rice under the current Gazette Notice issued by Mbadi.

They now want Justice Ngaah to order that no clearance or release of any rice free of duty shall occur under the current Gazette Notices.

Ngw’ena applied to have Mbadi restrained from publishing any further Gazette Notices purporting to authorize duty free rice importation.

The activists also seek to have a publication of all beneficiaries of the duty-free scheme and the duty waived in favour of each and an assessment and refund of the duty waived to the public.

They also want the court to lay out a structural interdict prescribing the mandatory constitutional and statutory steps that must be completed, verified and publicly certified before any duty-free rice may ever lawfully be released into the Kenyan market.

Ngw’ena said that while they are not challenging the conduct of any trader, the identities of the beneficiaries of the impugned Gazette Notices have never been published.

The petitioners want the court to order Mbadi and Kagwe and Kenya National Bureau of Statistics to compile and publish official statistics of national rice production, stock and consumption for relevant seasons for the years 2024/2025 and 2025/2026.

The activist also wants a national rice deficit established, quantified and published on the basis of the said statistics and the volume of the permitted duty-free importation capped at a certified deficit.

Ngw’ena also applied to have NCPB publicly certify completion of the purchase of all locally produced paddy offered for ale at the announced floor price with full payment for farmers.