Nairobi, Kenya - Cooking oil manufacturers have expressed deep concern over the introduction of a 10% import duty on crude oil, warning it will cause significant price increases for cooking oil, an essential staple for millions of Kenyan households.

New Import Duty Introduction

A 10% import duty on crude palm oil has been introduced, effective from July 2024, following the application of the East African Community (EAC) Common External Tariff. This change was officially published in the EAC Gazette No. 18 on June 30, 2024. The new levy replaces the previous zero rate on crude palm oil imports.

Impact on Cooking Oil Prices

The Edible Oil Manufacturers Association pointed out that the new levy is expected to have a cascading effect on the prices of everyday products, further exacerbating the financial burden on already struggling Kenyans. Prices of refined soybean oil, RDB Palm Olein, sunflower oil, and refined corn oil are also set to rise after Kenya imposed a duty rate of 25% for one year.

Effect on Daily Necessities

Cooking oil is a key ingredient in producing various essential products such as soap, bread, mandazi, chapatis, and margarine. The price hike in cooking oil will, therefore, inevitably lead to increased costs for these daily necessities, affecting millions of households across the country.

Public and Industry Response

President William Ruto responded to the calls of Kenyans by withdrawing the Finance Bill 2024, stating that it will be shelved to allow for dialogue and a collective approach to financing the current budget. The Finance Bill 2024, passed by MPs on Tuesday, has sparked widespread outrage, particularly among Kenya’s youth, who feel disproportionately burdened by the proposed tax increases. Protests have erupted nationwide, with demonstrators calling for the bill’s rejection, arguing it will worsen the economic hardships faced by ordinary Kenyans.

Investment Concerns

Manufacturers lament that Kenya has become unfavorable for investment compared to neighboring countries like Egypt, Uganda, and Tanzania. They argue that the frequent tax increases make the market less attractive for investors. The stakeholders had also opposed the introduction of an eco-levy of Sh150 per kilogram in the Finance Bill 2024, stating it is counterproductive and lacks effective mechanisms for environmental conservation through recycling. The manufacturers expressed that the levy will be passed on to consumers since alternatives in packaging oil, such as glass, are expensive and not sustainable.

Call for Government Action

“In view of the ongoing uproar and demonstrations against tax hikes across the country, we call upon the government to urgently seek a stay of execution of this new tax as this single act will cushion millions of Kenyan consumers, especially the vulnerable ones, against imminent significant price hikes for these essential household products,” read a statement from the Edible Oil Manufacturers Association.

Critics argue that the abrupt introduction of the new taxes on crude palm oil and other vegetable cooking oils, done without public participation, has sparked further outcry. They assert that this measure will deepen the financial distress of millions of Kenyans by increasing the cost of living.

Source: Capital News