Exporters emerged as the biggest winners in this week’s presidential roundtable with business leaders in an operating environment where growing protectionist tariff policies are gradually replacing multilateralism in international trade with bilateral deals.

President William Ruto directed Cabinet Secretary for Investments, Trade and Industry Lee Kinyanjui to urgently resolve emerging policy bottlenecks that make Kenyan-made goods uncompetitive in international markets.

Dr Ruto gave the directive even as he remained confident Kenya was close to inking bilateral deals with China, India, and Turkey as alternative markets for Kenya’s fresh produce, which are largely exported raw.

Currently, the 27-member European Union remains the largest global destination for Kenya’s fresh produce ahead of other markets such as the United States and Pakistan (tea).

During the meeting, Dr Ruto asked Mr Kinyanjui to intervene in reviewing taxes on materials for packaging fresh produce, such as cut-flowers and avocados, which only came into force in July.

The government introduced the 25 per cent excise duty on kraftliner and kraft papers in the Finance Act 2025. Kraftliner and kraft papers are used as raw materials in the manufacture of packaging materials such as carton boxes, packets, and wrapping papers used to transport avocados, flowers, and flour. Players in the manufacturing and fresh produce export sectors had warned that the new taxes would make Kenya’s produce uncompetitive due to additional product prices, risking loss of overseas markets for exporters and exposing companies to layoff risks.

This came after taxes on packaging materials for tea and coffee, which are imported, were reduced to 10 per cent in line with a deal struck between the private sector and the government during a previous presidential roundtable meeting.

“The major omission was on kraftliner and kraft paper used in packaging materials for exports, which is still subjected to a raft of taxation, including the export promotion levy of 10 per cent,” Tobias Alando, the chief executive officer of Kenya Association of Manufacturers (KAM), said. “It becomes very expensive. Our counterparts in the region that produce the same paper produce it at a cheaper price. The material is not locally manufactured.”

The KAM said the new tax raised the cost of producing a 10kg avocado box by Sh26 to Sh182 and a flower box by Sh50 to Sh247. “Our undertaking when we met was that we are going to remove taxes on packaging materials for tea, coffee, and all that space, which was done, and I signed it,” Dr Ruto said. “Waziri [CS Kinyanjui] here has my instruction to ensure it [kraftfliner] is captured [in tax reliefs] even if we have to do a small intervention in the interim.”

Exporters also scored a win after the President directed that Mr Kinyanjui engage with his counterpart at the National Treasury, John Mbadi, to raise the monthly allocation for value-added tax refunds to Sh5 billion and review upwards the ceiling for claims by a single firm from the current Sh30 million.

This was after business leaders complained that the Sh30 million limit for VAT refunds was deepening cash flow pressures for large exporters.

“You should find a way of… finding an exemption for bigger exporters whose claims are bigger and report back in December,” the Head of State ordered.

Dr Ruto also directed the Investments and Trade ministry to review the $10 (about Sh1,300) per consignment that the Kenya Trade Network Agency has been charging exporters applying for a Unique Consignment Reference (UCR) number since May 2024.

Clement Tulezi, the chief executive officer for Kenya Flower Council (KFC), argued that while the fee charged for use of the Kenya TradeNet System looked minimal, it becomes bigger for exporters who ship out 50-100 consignments daily.

“$10 looks very little until you start crunching the numbers. We appreciate that KenTrade facilitates our trade, and with the single window, we are able to move our produce across the international customs very easily, but this cost is prohibitive,” he said.

It is eroding our competitiveness because it is not only us exporting [cut-flowers],” Mr Tulezi said.

Mr Tulezi argued that an industry with as many as 500 exporters ends up paying tens of billions of shillings annually, adding to their costs, while competitors such as Ethiopia do not incur such charges.

“Take it up, and if you face any challenges with the agencies and your colleague [Mr Mbadi], you can bring it to my attention. It [UCR] is a matter that requires urgent resolution. Let’s find ways to do it as a matter of urgency,” Dr Ruto said.

Kenya has, over the years, struggled to sustainably narrow goods trade deficit partly due to reliance on traditional farm produce exports such as tea, horticulture, and coffee, which are largely sold raw, fetching relatively lower earnings.

Most Kenyan traders export raw produce because of higher taxes slapped on semi-processed or processed products in destination markets like Europe, fearing that value-added goods will attract tariffs and make the consignments less competitive in the global markets.

Kenya is among African countries pushing for full implementation of the African Continental Free Trade Area (AfCFTA) to ease reliance on Western markets, which charge tariffs on value-added imports from the continent.

AfCFTA is expected to facilitate free movement of goods, services, and labour in a market of nearly 1.5 billion people and a gross domestic product of about Sh3.4 trillion.

“If protectionism grows, Africa will suffer. Africa accounts for three per cent of global trade, and trade amongst African countries is still low,” Rifat Hisarcıklıoğlu, chairman of ICC World Chambers Federation (WCF), warned in Nairobi on April 9. “I support the African Continental Free Trade Area because it … creates a huge market. I call on African governments and champions of commerce to make this great agreement.”