Nairobi, Kenya – April 17, 2025 – In a major boost for trade and manufacturing, the Kenyan government has announced a sweeping exemption on import levies for nuts and oil crops imported by Export Processing Zones (EPZ) and Special Economic Zones (SEZ) enterprises from East African Community (EAC) partner states. The move, set to take effect from April 17, 2025, is expected to lower production costs, enhance competitiveness, and stimulate cross-border trade within the region.
What’s Changing?
The Agriculture and Food Authority (AFA) issued a press release confirming that EPZ and SEZ enterprises will no longer be required to pay the AFA-NOOD import levy on nuts and oil crops sourced from EAC member states. This exemption follows an amendment to the Crops (Nuts and Oil Crops) Regulations 2020 through Legal Notice No. 26, signed by the Cabinet Secretary for Agriculture and Livestock Development on February 14, 2025.
The decision aligns with Sections 101 and 102 of the Finance Act 2023, reinforcing Kenya’s commitment to fostering industrial growth and regional trade integration.
Which Countries Are Covered?
The exemption applies to imports originating from the following EAC partner states:
- Democratic Republic of the Congo
- Republic of Burundi
- Republic of Rwanda
- Federal Republic of Somalia
- Republic of South Sudan
- Republic of Uganda
- United Republic of Tanzania
Why This Exemption Matters
1. Boosting EPZ & SEZ Competitiveness
Kenya’s EPZ and SEZ enterprises play a crucial role in export-oriented manufacturing. By removing the import levy, the government aims to:
- Reduce production costs for processors and manufacturers.
- Encourage sourcing of raw materials within the EAC, promoting regional value chains.
- Enhance Kenya’s attractiveness as an investment hub for agri-processing.
2. Strengthening EAC Trade Ties
This policy shift signals Kenya’s push for deeper economic integration within the EAC. By incentivizing intra-regional trade, the move could:
- Increase demand for EAC-sourced nuts and oil crops (such as cashews, macadamia, sunflower, and sesame).
- Reduce reliance on imports from outside the region, supporting local farmers and agribusinesses.
- Align with the African Continental Free Trade Area (AfCFTA) goals of boosting intra-African trade.
3. Impact on Farmers & Processors
While EPZ and SEZ firms stand to benefit, local farmers could also see increased demand for their produce if processors opt for EAC-sourced materials over imports from Asia or Europe. However, some stakeholders may raise concerns about:
- Potential revenue loss for AFA, which previously collected levies on these imports.
- Fair competition between EPZ/SEZ firms and local processors who still pay levies.
Implementation & Next Steps
The AFA has confirmed that the exemption will take effect immediately (from April 17, 2025) and has pledged to issue guidance on the KenTrade TFP portal to ensure smooth compliance. Businesses operating in EPZs and SEZs should:
- Verify eligibility for the exemption.
- Ensure proper documentation to prove the EAC origin of imported goods.
- Monitor updates from AFA and Kenya Revenue Authority (KRA) for procedural details.
Industry Reactions
Early responses from the private sector have been largely positive:
- EPZ Association of Kenya: “This is a game-changer for our members. Lower input costs mean better pricing for exports.”
- East African Business Council: “A step in the right direction for regional trade harmonization.”
- Local Processors (Mixed Reactions): Some worry about unequal playing fields, while others see opportunities to supply EPZ firms.
What’s Next?
Experts predict that this exemption could lead to:
- Increased investments in nut and oil crop processing within EPZs/SEZs.
- Stronger EAC supply chains as firms prioritize regional sourcing.
- Potential expansion of similar exemptions to other agricultural products.
Final Thoughts
Kenya’s latest tax break for EPZ and SEZ enterprises underscores the government’s push to enhance manufacturing competitiveness and regional trade. While the move is expected to spur economic activity, its long-term success will depend on effective implementation, compliance, and balancing stakeholder interests.
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