Rising levies and other charges are undermining the tea export business through the Mombasa Auction. This is a major tea trading hub run by the East African Tea Trade Association, which also handles the produce from neighbouring countries.
High county levies, port charges and other fees are increasing the cost of handling tea and squeezing farmers’ revenue margins. The tea industry generates Sh180 billion annually and supports millions of smallholders and workers.
Trucks transporting tea into Mombasa County are charged a road toll or cess of Sh7,000 each. Parking costs are Sh500 a day, while exporters pay Sh523 per import container and Sh262 per export or empty container to the Kenya Ports Authority. There are also county licences for factories and exporters.
The country is facing lower demand and increasing competition from other tea producers. International buyers are going for cheaper teas from Rwanda, Burundi, and Uganda. Trading sessions have seen large unabsorbed stock. Trade and investment Cabinet Secretary Lee Kinyanjui says the government will engage the Council of Governors over the multiple county levies.
Businesses are subjected to many licences and levies while moving products from one county to another. The counties should ensure that licences do not adversely affect competition and investment. Tea from other East African Community member countries for sale through the Mombasa Auction is subject to a 25 per cent excise duty and a 16 per cent transit tax. This is likely to make Mombasa less attractive as a regional tea trading hub.
A new 0.8 per cent export levy and other charges by the Kenya Revenue Authority for the Tea Board of Kenya have also increased the cost of the country’s tea.
Industry groups want the government to scrap the levy, but government officials maintain it is needed to fund modernisation and promote Kenyan tea abroad. The national and county governments should reduce the levies to improve farmers’ earnings.
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