Investors are now pleading with the government to pay their VAT refunds to enable expansion and growth of their flower farms.
Despite the rosy performance of the sector last year, flower farms claim delays in paying back the VAT has accumulated over the past 12 months, stifling the expected growth.
Bobby Kamani, MD of Primarosa Flower feels the industry could drag behind in safeguarding future profits unless the VAT refunds are paid out now.
“Delays have stretched over 12 months, impacting cash flow and increasing the base cost of operating,” he said in an interview, adding that fertiliser delays could also affect production.
He said the annual 10 per cent raise in salaries for workers as per Collective Bargaining Agreement poses a problem in cost of operations with fears that this could lead to farms winding down their businesses owing to high operational expenses.
“Labour and energy are our biggest costs and these could result in farm closures,” he pointed out. The cost of power in Kenya is still high compared to other East African countries and there are no exemptions or incentives that the Government is providing to investors in this sector.
The first quarter of the year is the peak season for flowers in Europe and this gives Kenyan exporters pressure to work extra hard to meet this demand.