Cash Crunch – Kenya Reviews Tea Taxes To Boost Main Foreign Exchange Earner

Kenya is reviewing taxes and levies on tea production after industry executives and farmers said the charges were putting them at a competitive disadvantage. Producers of Kenya’s No. 1 export earner complain about a 1 percent levy on tea sold at a weekly auction in Mombasa and a 16 percent value added tax on tea processed and consumed locally. The East African nation is the world’s leading exporter of black tea, a crop that offers a livelihood to thousands of small-scale growers who complain not enough cash reaches them.

Kenya earned 125.25 billion shillings ($1.24 billion) from tea exports last year on output of 399.21 million kg. A slightly stronger shilling means officials expect earnings to slip to 115 billion to 120 billion shillings this year. Top buyers of Kenyan tea include Britain, Afghanistan, Egypt, Sudan and Pakistan. Kenyan officials have also been holding marketing trips to Asia in a bid to increase sales of the commodity to countries like China. A Kenyan department of agriculture team is reviewing taxes and levies, the department’s principal secretary Richard Lesiyampe. Read more on Kenya’s tea tax here.