Flower Producers in Kenya Consider Ethiopia Industry Incentives

Flower Producers in Kenya Consider Ethiopia Industry Incentives

Written by Moses Michira | From Standard Digital

Kenya’s flower industry is a lucrative one, worth over Sh80 billion in revenues a year, but the recent collapse of Karuturi with billions in unpaid obligations could be the clearest indicator yet that the ground is shifting.

There is consensus among flower producers that Ethiopia has an edge over Kenya in tax incentives and better access to new markets to the US owing to the direct flights it operates through its national airline.

And now the European Union has made a new demand that could further hurt flower exports, especially after Parliament declined to enter an economic partnership with the bloc. Starting October 1, flower exports to the EU will attract an import duty of 8.5 per cent, which will push up prices of Kenyan flowers and reduce their competitiveness in the market.

The same taxes will not affect the other Eastern African countries, including Ethiopia, Rwanda and Tanzania, which are classified as least developed while Kenya is not. Kenya sells more than 70 per cent of its flowers to the EU, mostly through auctions in the Netherlands and direct sales to resellers such as supermarkets. It is these emerging challenges that could have informed Karuturi’s collapse, say insiders.

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