Kenya risks losing KES 7B to EU
24 September 2014, 12:01
Nairobi - The East African Affairs Principal Secretary, John Konchella has said the government is racing to sign a trade agreement with the European Union (EU) to avoid the levies that could cost exporters KES 7.7 billion.
Konchella told the National Assembly's committee on Regional Integration that the government will sign the required Economic Partnership Agreement (EPA) before the September 30 deadline to save the country from losing its exports worth KES 61 billion annually.
“The ministry is equally concerned about EU issue. We will take up this matter and we hope to inch an agreement or a grace period will be granted to avoid disruptions in our exports," said Konchella.
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“The agreement would have been signed six months ago to save the country from loss of billions. There has been disagreement within the EU market but this has been resolved. We are still in business with EU and we anticipate signing the deal on Friday,” he added.
The Kenya Association of Manufactures Chief Executive, Betty Maina told the committee that 200 containers of fruits and 400 containers of flowers are at the port of Mombasa waiting for export to EU market despite the impending duties.
Maina said if the agreement is not signed before the provided time, Kenya will be the only country in Africa without duty free access to the EU market.
“Kenya's exports will be subjected to export duty rates under Generalized System of Preferences (GSP). The anticipated GSP rates will be higher and could amount to a revenue loss of KES 7.674 billion,” said Maina.
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She added that the country will not only incur losses on its exports but also thousands of jobs in the respective manufacturing industry.
“The impact on the economy through job losses would be major. Floriculture directly employs about 90 000 workers; vegetable sector employs up to 5 000 workers," said Maina.
She also reiterated that about 60 000 small scale farmers depend on vegetables for their livelihoods while their incomes impact over 500 000 persons directly in rural areas.
Maina further expressed fears that some exporters are likely to shift market to areas with duty free exports thus affecting the country's economy.
Kenya has enjoyed preferential duty free which includes zero percent duty rates on all exports to the EU for over 30 years.
On April 16, 2013, the EU Parliament issued a directive that all countries accessing the EU market sign new EPAs before October 1, 2014.
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