The Kenya Association of Manufacturers has warned of adverse effects of the proposed 25% excise duty on edible oils contained in the Finance Bill 2024.
Industry representatives argue that this significant tax increase could lead to widespread economic and social hardships across the country.
The excise duty, set to apply to both raw materials and refined cooking oils, is predicted to cause a substantial rise in the price of cooking oil, a staple in many Kenyan households.
Projections indicate that the cost could surge by up to 80%, making it unaffordable for millions, particularly low-income earners and small-scale traders known locally as “hustlers” and “mama mbogas.”
Cooking oil is an essential ingredient in many common foods such as bread, mandazis, chapatis, and chips.
Finance Bill 2024 impact on Cooking Oil Prices
The Kenya Association of Manufacturers (KAM) warned that the excise duty will have a cascading effect on these items, inflating the price of a standard loaf of bread (400g) from Kshs 70 to Kshs 80.
Other products derived from vegetable oils, such as long bar soap and margarine, will also see price increases—from Kshs 180 to Kshs 270 for soap and from Kshs 160 to Kshs 300 for margarine (250g).
The manufacturers emphasized that these price hikes will disproportionately impact the most vulnerable members of society, exacerbating the already high cost of living and plunging millions into deeper financial distress.
In addition, they highlighted that the 25% excise duty could undermine the government’s efforts to promote local value addition in agribusiness and hinder the growth of local edible oil production.
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Impact of Edible Oil Sector on Economy
According to KAM, the edible oils sector is a crucial part of Kenya’s economy, directly employing approximately 10,000 individuals and indirectly supporting over 30,000 jobs.
The proposed tax threatens to decimate these livelihoods and destabilize the manufacturing industry.
“Edible oils sector is a significant contributor to Kenya’s economy, directly employing approximately 10,000 individuals and indirectly supporting over 30,000 jobs,”
“The proposed tax risks decimating these livelihoods and destabilizing the manufacturing industry at large,” said the Association of Manufactures.
Scrap Proposed Excise Duty
Moreover, KAM is urgently calling on the government to remove the proposed 25% excise duty on vegetable oils from the Finance Bill 2024.
They argue that this tax is not only an economic miscalculation but also a potential humanitarian crisis that the country cannot afford.
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“In light of these grave implications, we urgently call upon the government to scrap the proposed 25% excise duty on vegetable oils from the Finance Bill 2024,”
“This tax is not just an economic miscalculation; it is a potential humanitarian crisis that Kenya cannot afford,” noted the Manufactures statement.
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