Kenyan manufacturers push for removal of 25% excise duty on kraft liner used in export packaging, warning of 17% cost increase

KENYA – Kenya Association of Manufacturers has urged the government to remove a proposed 25% excise duty on kraft liner used in export packaging, warning that export costs could rise by as much as 17%.

The sector remains one of Kenya’s largest private-sector employers, accounting for 16.3% of formal jobs according to the Kenya National Bureau of Statistics. 

KAM argues that kraft paper is not locally produced and has become a critical input for packaging export-bound goods, especially in agriculture. 

Taxing raw materials without local substitutes creates distortions in the manufacturing value chain and weakens Kenya’s competitiveness against regional exporters. 

In its submissions on the Finance Bill 2026, the lobby argues that without targeted tax reforms, Kenya risks eroding gains in industrialisation, export growth, and job creation.

The Kraft Paper Problem

Kraft liner is the outer layer of corrugated boxes, providing the strength needed to stack pallets of fresh produce for export. 

Kenya does not produce kraft liner domestically; all supply is imported. A 25% excise duty on an imported input for which there is no local alternative is, in effect, a tax on exports. 

For a Kenyan avocado farmer shipping to Europe, the cost of the corrugated box is a direct expense; a 25% duty on the kraft liner from which that box is made increases the exporter’s costs, making Kenyan avocados more expensive than those from Tanzania or South Africa.

The current tax regime has already pushed packaging costs up significantly, with estimates showing export costs could rise by as much as 17%.

Diapers and Sanitary Towels

Manufacturers are also pushing for the exemption of diaper and sanitary towel producers from excise duty on polyethylene film under tariff code 3920.10.90. 

KAM says the material is a key input in producing essential hygiene products and should not be subjected to additional excise taxation, especially given government efforts to reduce the cost of essential goods. 

Removing the duty would directly lower production costs for diapers and sanitary towels, making them more affordable for households. 

Such products are essential for infant and female hygiene and should be protected from cost increases that could reduce access for low-income families.

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