Cooking Oil Prices Set to Rise By 80% Due to Finance Bill

The Edible Oil Manufacturers Association of Kenya (EOMAK) has issued a stark warning to lawmakers against passing the Finance Bill 2024, highlighting its potential to significantly increase cooking oil prices. The bill proposes a 25% excise duty on vegetable oils, which the association describes as draconian and likely to lead to severe economic repercussions for Kenyan households and businesses.

In a press statement released on May 19, EOMAK stressed that the excise duty would trigger an unprecedented surge in the cost of cooking oil, a staple commodity in Kenyan homes. They project an 80% price increase, making it unaffordable for millions, particularly impacting low-income earners and small-scale traders, often referred to as ‘hustlers’ and ‘mama mbogas’.

Projected Impact on Prices

The association elaborated on the ripple effect this tax could have on a range of products:

• Bread: Estimated to increase from Ksh70 to Ksh80.
• Soap: Projected to rise from Ksh180 to Ksh270.
• Margarine: Anticipated to jump from Ksh160 to Ksh300.
• Other products: Mandazis, chapatis, and chips would also see significant price hikes.

Broader Economic and Social Implications

EOMAK warned that the proposed excise duty would disproportionately affect Kenya’s most vulnerable populations, exacerbating the already high cost of living and plunging millions into deeper financial distress. The price increases on essential goods would strain household budgets, particularly for those living on the margins.

Impact on Local Industry and Employment

The association also emphasized the potential damage to the local edible oil production sector and broader agribusiness value addition efforts. They cautioned that the tax could undermine the government’s agenda to promote local manufacturing and value addition, posing a risk to the growth of this sector.

If the bill is passed, it could threaten over 40,000 jobs, with companies potentially forced to downsize, thereby worsening the country’s unemployment rate. The edible oils sector, which directly employs about 10,000 people and indirectly supports over 30,000 jobs, could face significant disruptions.

Calls for Action

Given these concerns, EOMAK is urging the government to reconsider and scrap the proposed excise duty. They argue that the potential humanitarian crisis resulting from such a drastic policy change would far outweigh any fiscal benefits the government might hope to achieve.

In summary, while the Finance Bill 2024 aims to generate additional revenue, its impact on the cost of essential goods and the broader economy could be detrimental. Lawmakers are being called upon to weigh these consequences carefully to avoid pushing millions of Kenyans into deeper financial hardship and destabilizing a critical sector of the economy.