By George Omondi
In Summary
- Firms say the protectionist policy, which imposes heavy import duties on commodities, is making local goods uncompetitive in other markets.
Kenyan companies are pushing for changes in the
structure of East African Community’s customs taxes, ahead of a crucial
meeting by the bloc’s ministers in Kampala, Uganda, on Thursday.
‘‘The protectionist policy, which imposes heavy
import duties on commodities such as wheat, maize, rice, milk powder and
sugar, is making our goods uncompetitive in other markets,’’ said James
Ojiambo, regulatory affairs manager at Nestle Kenya.
“We are shouldering high cost of production partly
because most of the items designated as the region’s sensitive
products such as milk powder and sugar also happen to be our core
inputs,” he said.
Under the East African Community (EAC) Common
External Tariff structure, goods that local firms are capable of
producing are classified as sensitive items and are shielded from
external competition by high import duties.
Sugar attracts a common external tariff of 100 per
cent, rice (75 per cent), milk cream (60 per cent) while maize imported
from non-EAC member markets is charged 50 per cent duty.
Similarly, the wheat grain and flour attract import duties at 35 per cent and 60 per cent respectively.
Firms relying on protected items as inputs have
called for a review of the customs structure, saying local producers
have failed to meet domestic demand, forcing them to pass on the high
cost of imports to consumers.
“The government should move with speed to abolish
the custom taxes on grains from outside EAC in order to boost flow of
stocks and stabilise flour prices,” said Cereal Millers Association
chairman Diamond Lalji.
Kenya produces just one third of its wheat and
rice grain requirements. An assessment by Egerton University’s policy
thinktank, Tegemeo Institute, indicates that the country has to import
30 per cent of the national maize requirement after a disappointing
long season harvest.
Apart from customs tax structure, the local firms
have taken issue with the long process of clearing their goods at the
border.
“We have signed pacts and even harmonised 1,200
standards for use in the region but member states have been slow at
embracing them,” said Kenya Bureau of Standards’ official David Kimetto.
EAC council of ministers are set to meet in
Kampala on Thursday to review progress on regional integration, paving
the way for a heads of state summit at the end of the month.
At a forum organised by the Kenya National
Chambers of Commerce and Industry in Nairobi last Wednesday, local firms
called for a review of policies on firms under various export promotion
schemes.
Nestle Kenya said the duty remission scheme that
it currently enjoys has also locked most its products out of the
regional market.
“The condition of the remission scheme is that
only 20 per cent of our products are allowed for sale in the entire
region yet this (EAC) has been our central focus market,” said Mr
Ojiambo.
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