Agribusiness in KenyaNews

Kenyans rejoice as Government removes taxes on maize and wheat

Thursday was a good day for ugali lovers after the Government proposed to bring down the cost of maize significantly. This is good news for the ordinary mwananchi for whom the cost of maize flour – used to prepare Kenya’s staple dish, ugali – has gone through the roof. Reading the budget speech in Parliament, National Treasury Cabinet Secretary Henry Rotich proposed to allow duty free importation of white maize for four months. Kenyans will be hoping that permission to import maize will not be abused to the extent of affecting Kenyan producers at some point. Maize imports have always touched a raw nerve. Maize and wheat flour have also received a major tax relief after the Government decided to waive all taxes on the inputs used to manufacture the foodstuff.

The decision goes a long way in addressing the worsening state of food security in the country – close to 3.2 million Kenyans in over 20 counties are facing starvation. Input tax “Mr Speaker, ordinary bread and maize flour are VAT exempt, which means they do not benefit from deduction of input tax. Therefore, the input tax is built into their selling price.

“In order to make these commodities affordable for the common mwananchi, I propose to zero-rate bread and maize flour to remove VAT altogether,” said Mr Rotich, warning that should traders fail to comply, the Government would withdraw the incentive.

“Manufacturers, wholesalers and retailers who sell such goods will be expected to reduce the prices of these basic commodities, failing which I will reverse the policy,” said the CS. The Government expects to see a significant reduction of prices as soon as these measures start taking effect after the lawmakers sign into law the appropriation Finance Bill.

“In addition to further lower the cost for wananchi, the importation of maize during the next four months will be duty free. I expect, therefore to see a reduction of prices for these basic commodities that are enjoyed by the majority of our people,” added Rotich.

Rains failed Government silos have in recent times run short of maize after rains failed, dampening harvests in the country’s so-called bread-basket regions. The current drought has depressed harvests, which has seen the price of a 2kg packet of maize flour retail at Sh135 in most outlets in the country. A 2kg tin of maize has been trading for as high as Sh150 in some areas.

via Smart Harvest