Kenya edible oil denied tax-free Uganda, Tanzania entry

Kenya has suffered a blow in its effort to change East Africa’s market access rules to allow duty-free sale of edible oil manufactured from imported raw material.

Kenya, with the support of Burundi, has been pushing for the review of East Africa Community’s rules of origin to give tax-free access to products even if imported raw material constitutes up to 70 per cent.

At the moment, edible oils only enjoy duty-free access to member states if wholly made from locally grown oil seeds like palm, soya bean, sunflower or cotton.

Kenya argues that preferential terms would safeguard the 9,000 direct jobs and $55 million worth of investments put in edible oil manufacturing across the region.

A team of experts appointed by the bloc to review Kenya’s case however warned that the region must keep its eye on the thousands of farmers who are likely to lose market if local firms get the free hand to import raw materials.

Protect farmers, manufacturers

“The current rule is necessary to encourage more production and to support flourishing palms plantations, sunflower, soya beans, cotton and other oil seeds in our region,” the team says in its recommendations released last week.

The observation is set to harden the position of Tanzania and Rwanda which have argued that changing the bloc’s rule of origin to recognise edible oil made from imported products could hurt farmers and small-scale manufacturers “the same way second-hand clothing destabilised textile industry.”

Going by information filed with the team of experts, Kenya has a 25,000 out grower farmers who supply around 2500 tonnes of soya bean oil, 3000 tonnes of sunflower seeds and 15,000 tonnes of maize germ per year.

That level of production cannot meet market demand. Kenya’s Kapa Oil, for instance, obtains 75 per cent of its sunflower from Ukraine with the remaining 25 per cent being sourced from Uganda. The firm which obtains all its corns locally also imports 50 per cent of its soya beans.