KENYA – The Edible Oil Manufacturers Association of Kenya has raised alarms over a significant increase in cooking oil prices, attributing the rise to a new 10 percent import duty on crude palm oil that took effect on July 1, 2024.
This decision has sparked concerns about the broader economic implications for millions of Kenyans, particularly low-income households.
Billow Kerrow, the association’s spokesperson and proprietor of Darford Industries Limited, addressed the media on July 30, 2024, stating, “In case you have not noticed, in the last one month, the price of cooking oil has gone up sharply. A 20-litre jerrican that was retailing at Sh3,800 is today costing Sh4,200.”
This sharp increase highlights the immediate impact of the new tax, which was introduced without public consultation, raising questions about the government’s decision-making process.
The new import duty is part of Kenya’s application of the East African Community Common External Tariff, which was published in the EAC Gazette No. 18 on June 30, 2024.
Kerrow explained that this tax will not only affect cooking oil prices but will also lead to increased costs for essential products such as soap, bread, mandazis, chapatis, and margarine, all of which rely on cooking oil as a key ingredient.
“It means for every bottle of cooking oil you purchase, 32 percent of the money you pay goes to taxes,” he added, emphasizing the burden on consumers.
The introduction of the tax follows a period of nationwide protests against rising taxation, which forced President William Ruto to withdraw the controversial Finance Bill 2024.
This bill had proposed a staggering 25 percent tax on both raw and refined vegetable oils, which would have further exacerbated the financial strain on consumers.
“We therefore ask the government to stay the execution of the new tax as this single act will cushion millions of Kenyan consumers, especially the vulnerable ones against significant price hikes for these essential household products,” Kerrow urged.
The implications of this tax extend beyond immediate price increases. Kerrow pointed out that the added financial burden could push many families deeper into financial distress.
“Such price hikes will disproportionately affect the most vulnerable members of society, exacerbating the already high cost of living,” he warned.
Furthermore, the association contends that the new duty renders locally produced edible oil uncompetitive in the international market.
“We no longer export edible oil to Uganda, the Democratic Republic of Congo, South Sudan because these countries are better off importing the commodity from Malaysia,” Kerrow noted.
This shift not only threatens local manufacturers but also jeopardizes thousands of jobs within the sector.
The Edible Oil Manufacturers Association represents 13 manufacturers across the country, highlighting the collective concern within the industry regarding the sustainability of their operations amid rising costs.
The association’s representatives have called for urgent government intervention to reconsider the tax, arguing that it risks destabilizing the manufacturing industry and could lead to a humanitarian crisis.
In summary, the recent rise in cooking oil prices in Kenya is a direct consequence of the newly implemented import duty on crude palm oil.
As manufacturers grapple with increased production costs, consumers are left to bear the brunt of these economic changes, raising significant concerns about the future of food affordability in the country.
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