This archive report was first published on 31 October 2019.
Kenya's Flower Industry in Turmoil ¶
Kenya's flower industry, once hailed as one of the best in the world, is facing a crisis that threatens to tear off its global lustre. The industry, which brought in Sh113 billion in 2018 and indirectly employed over 500,000 people, is struggling with stiff competition, increasing costs, and delayed reimbursement of value-added tax.
Finlays Kenya, a leading flower farm, announced last week that it would close its two farms in Kericho County by Christmas, citing decreasing demand in the European market, staggering labour costs, unfavourable weather conditions, and weakening exchange rates.
"It is no secret that in the last 18 months, the flower industry has been facing severe challenges. As a result, the directors have made the decision to close Chemirei and Tarakwet farms earlier than initially communicated," said Finlays General Manager Stephen Scott.
The closure of the farms will affect 2,000 employees and has sparked concerns about the impact on the local economy. Industry players say the effects will be devastating, with Mary Kinyua, a director at Oserian, a leading flower farm, warning that the high cost of production, oppressive taxes, and bureaucratic hurdles are weighing down the industry.
"This industry is a key employer. It brings foreign exchange and sells Brand Kenya. Are we ready to look at it as a subsidy? It is time we began that conversation," she said.
At the centre of the industry woes is the delayed reimbursement of value-added tax, which stands at Sh6 billion, having accumulated since 2013. Industry players are also facing challenges related to infrastructure, including the deplorable state of the Moi South Lake Road, which leads to most of the farms.
"A flower grower now pays up to 42 levies," said Kenya Flower Council chief executive Clement Tulezi, warning that the coming into force of the proposed 2019 Crops (Food Crops) Regulations and the 2019 Crops (Horticulture Crops) Regulations would further burden the industry with more taxes and bureaucratic gridlock.
The government has imposed a 2.5 per cent Free on Board cess on growers, which industry players say is a significant burden. They are calling for support from the government "rather than coming in only for taxes".
Other challenges facing the industry include cut-throat competition from new entrants like Ethiopia, and the need for the government to start negotiations with Britain, which accounts for about Sh20 billion worth of Kenyan flower sales, before the Brexit deadline.
Published on October 31, 2019, at 13:06:34.
