Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe has announced new measures to boost agricultural exports in the next financial year.
The new measures are designed to unlock reinvestment, protect jobs and restore exporter confidence.
Kagwe said over the years, the sector has faced cash-flow pressure caused by delayed VAT refunds, high levies and rising logistics costs.
“We are fixing the exporter ecosystem deliberately and permanently. The Finance Bill 2026 will ensure exporters of agricultural produce are competitive, liquid and able to reinvest in Kenya,” the CS said.
The Bill is set to introduce targeted tax and regulatory relief for exporters of agricultural produce.
There will be a reduction of input VAT from 16 per cent to 8 per cent for exporters and removal of excise duty on packaging materials, including kraft paper, used by agricultural exporters to eliminate unnecessary domestic taxes on export inputs.
Kagwe assured of faster offsetting of VAT refunds against future tax liabilities and special treatment for long-standing 100 per cent exporters to operate like EPZs and SEZs, eliminating VAT on local purchases.
The CS said there will be rationalisation of regulatory levies and an expanded air freight capacity through Kenya Airways and new international carriers, including Turkish Airlines.
The reforms are expected to unlock billions of shillings in stalled exporter capital and accelerate reinvestment in horticulture, tea, coffee, fresh produce and livestock value chains.
The announcement coincided with Flamingo Group’s launch of a Sh2 billion expansion programme, involving annual investments of Sh644 million for the next three years.
The programme will create 500 new direct jobs and expanded value-added bouquet production for export to Europe and the UK.
Kagwe acknowledged the long-standing VAT refund backlog that has affected exporters, citing Flamingo’s Sh1.8 billion outstanding refund balance.
He said Sh470 million has already been disbursed, with further payments scheduled.
“These refunds are not losses to the government. They are reinvestment capital for farms, jobs and technology,” the CS said.
Principal Secretary for Investment Promotion Abubakar Hassan Abubakar said the government is fully aligned in removing bottlenecks that undermine investor confidence.
“Kenya’s competitiveness depends on
how fast we convert policy into action. Exporters are central to our growth
story and we will support them,” he said.
