Small traders oppose KRA's planned 28pc customs hike

Kenya’s small traders have opposed a planned 28 per cent increase in consolidated cargo that is set to take effect on August 21. The customs costs will increase the cost from Sh2.5 million to Sh3.2 million.

The MSME Alliance of Kenya, an organisation that represents micro, small, and medium enterprise (MSMEs) traders and importers say the proposed adjustment will push up the cost of business, strain working capital, resulting in higher prices towards the consumers.

In a statement, the group noted that the Sh700,000 increase in the customs benchmark is not just a technical adjustment but a change that will have significant economic effects on smaller traders whose businesses depend on consolidated cargo, as they do not have the capacity or resources to import full containers independently.

They argue that MSMEs, unlike the larger importers, work with narrow profit margins and have restricted cash flow. Therefore, a sudden 28 per cent change in the benchmark would be harmful to them.

The traders further warn that the higher benchmark value would have a domino effect on the MSME trading ecosystem as import costs would go up, working capital requirements would grow, business profits would shrink, and ultimately, Kenyan households would face higher prices for imported products.

This, according to the Alliance, could jeopardise the competitiveness and sustainability of lawful small businesses, putting jobs and livelihoods at risk and hindering initiatives to promote formalisation and voluntary compliance with tax regulations.

“We do not oppose taxation, nor do we object to genuine customs enforcement. MSMEs are ready and willing to pay their lawful, fair share of taxes and to contribute to national development. Our concern is with the magnitude, timing and structure of this change, especially at the moment when businesses and families are already under severe economic pressure,” the Alliance notes.

Even though the Kenya Revenue Authority (KRA) has engaged with traders, consolidators, and other private-sector players and has temporarily kept the Sh2.5 million benchmark in place until August 20, many MSMEs doubt that their issues would be resolved. Leaders insist that meaningful engagement requires not only participation in consultations but also visible incorporation of traders’ views into final policy outcomes.

In July, the Alliance had presented its position to KRA leadership, where it proposed the retention of the Sh2.5 million benchmark and developing a structured, predictable, evidence-based mechanism for any future reviews, anchored in stakeholder consultation.

“Our position is simple and reasonable. Withdraw the proposed Sh3.2 million benchmarks, retain the Sh2.5 million level, commit that no future increases will be made without impact assessment and genuine consultation and ensure that any reviews are gradual, predictable and evidence-led. With direct MSME representation in customs deliberations, Kenya can protect jobs and consumer affordability while still meeting its revenue goals,” the Alliance said.