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Ministry rejects MPs’ request to raise import tax on wheat

By | Jul 7th 2010 | 2 min read

The Finance Ministry declined to raise import tax on wheat despite protests from farmers and a hostile Parliament.

Assistant Finance minister Dr Oburu Oginga said the Finance ministry is constrained by a collective decision of the East African Community (EAC) Common Market protocol that decreed the uniform duty and regulations of the World Trade Organisation (WTO) that bar farm subsidies.

On Sunday Agriculture Minister Sally Kosgei said she was not consulted when the duty was lowered and promised to raise it to protect local farmers.

Hostile MPs rallied to the defence of protesting wheat farmers in South Rift who say the new duty threatens their crop and accused the ministry of working in the interest of businessmen who import the harvest from Eastern Europe.

They also argued that the agricultural sector in Kenya has, historically, been hamstrung by profiteering middlemen under the ministry’s watch and warned that protocols from the EAC integration are beginning to hurt several sectors in Kenya.

Oburu said Finance ministers of the five EAC members imposed a uniform 10 per cent import tax after protracted negotiations to avoid smuggling of wheat, which he alleged would have hurt the Kenyan farmer more.

He also claimed the new duty will enable the region bridge the net wheat shortage through cheaper imports.

Locally produced

Prior to the new duty, Kenya, had imposed a 35 per cent import tax while Rwanda and Burundi had zero-rated its imports. Uganda and Tanzania had imposed a 10 per cent duty each.

Oburu disclosed that Kenya produces 300,000 bags of wheat annually.

Kilgoris MP Gideon Konchellah said the new tax would crush the price of locally produced wheat and flood the Kenyan wheat market with imports from Eastern Europe.

Gichugu MP Martha Karua accused the Finance minister of refusing to protect wheat farmers but Oburu claimed subsidies flout WTO regulations.

Yatta MP Charles Kilonzo said Kenya has become a country of middlemen. He added the EAC should not kill Kenyan industries. He said Tanzania continues to subsidise its rice crop despite signing EAC protocols.

The EAC Common Market Protocol was effected on Thursday last week. Investors hope to take up the business opportunities offered by the integration. The bloc will create a market of close to 130 million people and a combined GDP of $80 billion, making it one of the largest in Africa.

— Reports by David Ochami and Alex Ndegwa

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