Edible oil manufacturers have maintained their opposition to the planned importation of duty free cooking fat by state owned Kenya National Trading Corporation (KNTC).
The government plans to import finished edible oils saying this will cushion consumers from high cost of living on increased prices of basic essential commodities.
It plans to import about 125,000 metric tonnes for a period of one year.
In a statement, the Kenya Association of Manufacturers says while it is commendable that the government is keen on easing the cost of living, the move will promote unfair competition to local manufacturing.
“The local oil manufacturing capacity is adequate to supply local market requirements, and is currently operating at 60 per cent of the installed capacity,” KAM says.
It said going the temporary importation route means the government will stand to lose revenue of up to Sh3.5 billion and occasion lay offs of about 40,000 people in the market.
KAM wants the government to further engage the sector players and find a long-lasting solution.
Kenyans have been faced with an increase in the price of various basic commodities forcing the new administration to come up with strategies to fulfil its campaign pledge of bringing down the cost of living.
There has been a consistent rise in edible oil prices since February 2022. Averagely, a litre moved from Sh346 in February, Sh430 in March, Sh408 in April to Sh455 in June.
This from an average of Sh303 in 2021 and Sh206 in 2020, meaning the prices more than doubled over the past two years.
However, there was some respite during the second half of last year as a spot check by the Star in July and part of August noted the price had started easing with some brands retailing at between Sh400 and Sh451 per litre.
Other brands' prices dropped from Sh418 per litre to retail at Sh389.
This was on the back of improved global supply of crude palm.
KAM said the increase in oil prices was majorly driven by internal and external factors that push up the cost production with manufacturers forced to pass the cost to consumers.
The country mainly imports crude palm from Malaysia and Indonesia where the raw material is volatile to factors such as global freight cost, supply disruptions, palm oil export ban by Indonesia and the introduction of the Malaysian export levy.
“Therefore, the proposal on backward integration to start from growing palm oil trees locally to secure the source of palm oil is a welcome move, although its a long term initiative of at least six years,” KAM says.
This, it says will protect the local industries and empower them to grow as the country seeks to increase the manufacturing sector's contribution to GDP from 7.2 per cent to 20 per cent by 2030.