Kenya axes packaging taxes to boost agricultural exports, packaging industry growth

KENYA – Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe has announced the removal of taxes on packaging materials for agricultural products, a move set to ease production costs and turbocharge Kenya’s export competitiveness.

Speaking at the North America Tea Conference in South Carolina on September 6, Kagwe said the reforms will position Kenya as a more attractive investment destination, particularly for value-added tea exports.

By eliminating the 25% excise duty on kraft paper and kraftliner, exporters will be able to package at source, delivering direct-to-shelf products that meet international standards on freshness, traceability, and sustainability.

“By packaging at origin, we eliminate unnecessary costs, improve competitiveness, and strengthen Kenya’s position in the global tea market,” Kagwe noted.

Packaging costs and export competitiveness

The now-scrapped tax, introduced under the 2025 Finance Bill, had triggered an outcry from exporters and manufacturers after sharply increasing costs.

For instance, the price of a 10kg avocado export box rose by KES26 to KES182, while a flower box increased by KES50 to KES247.

Stakeholders, including the Kenya Association of Manufacturers, had warned that inflated costs would undermine the competitiveness of Kenyan produce in global markets.

With packaging accounting for 30–40% of retail prices, the removal of the tax is expected to lower production expenses across the board, benefiting key exports such as tea, coffee, avocados, and flowers.

A new dawn for Kenya’s packaging industry

Beyond easing costs for exporters, the reform is likely to spark growth in Kenya’s packaging industry.

By making packaging materials more affordable, local converters and carton manufacturers can expect higher demand from exporters seeking tailored, high-quality solutions that meet international market requirements.

Industry experts suggest this could accelerate investments in modern packaging technologies, including eco-friendly materials, digital printing, and smart packaging that enhances traceability.

It also opens up opportunities for small and medium enterprises (SMEs) in the packaging supply chain, potentially creating jobs and strengthening local manufacturing.

Kenya’s tea industry alone generated KES181 billion in 2024, with exports reaching 96 countries.

By shifting from bulk shipments to branded, packaged-at-origin products, the country stands to capture greater value along the supply chain while enhancing its global reputation for quality.

The removal of packaging taxes therefore marks more than a relief for exporters—it signals a strategic step toward building a stronger synergy between agriculture and packaging, two industries central to Kenya’s economic future.

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