KRA to lose billions as State firm gets nod to import duty-free food

Lavenda Achieng Machine Operator at Nyatike Agri-Business Self help Group growers limited rice Milling plant on October 16, 2020. [Caleb Kingwara, Standard]

The Kenya National Trading Corporation (KNTC) will over the next one year import thousands of tonnes of essential food items duty-free in the government's latest bid to lower the cost of living.

Among the commodities that KNTC will be importing include the cooking oil cargo that is already causing anxiety among local edible oil manufacturers.

It will also import large quantities of sugar, rice, beans and wheat for distribution across the country through its depot network.

This is expected to force down retail prices and offer Kenyans some reprieve. The Cabinet in November last year agreed that KNTC would be key in stabilising prices of essential goods and gave the corporation the leeway to borrow Sh20 billion to enable it to import the food items.

The commodities include the 125,000 tonnes of edible oil that has kicked up a storm, with local manufacturers opposing the plan that they say puts at risk their investments as well as the thousands of jobs within the industry.

KNTC is also set to import 200,000 tonnes of sugar, 150,000 tonnes of rice, 25,000 tonnes of wheat and 80,000 tonnes of beans.

It will distribute the 25,000 tonnes of wheat the crisis-hit Ukraine donated to Kenya to help the country fight the impact of the prolonged drought. "The (Customs and Border Control) Department shall facilitate the duty-free importation... the approval is effective January 20, 2023, for a period of one year," said KRA in a February 14 letter, approving a January 27 request by the National Treasury to allow KNTC to import the food items duty-free.

"Implication therein is that the import window shall lapse immediately after the quota is exhausted or on January 19, 2024, whichever is earlier. "The Remissions and Exemptions office shall facilitate the issuance of an exemption code to exempt 100 per cent import duty. The other taxes, fees and levies shall be payable as per the applicable laws."

The waiver means KRA will lose billions of shillings in tax revenues. Manufacturers noted that in allowing KNTC to import the 125,000 tonnes of edible oil duty-free, the State would be forfeiting tax revenues of about Sh3.5 billion.

There are also fears that Kenya's neighbours might place restrictions on Kenyan products in their markets fearing that price disruptions might affect their markets.