By George Munene
According to the Kenya Flower Council (KFC), the industry is struggling and might be headed for collapse if the government doesn’t address the ever rising cost of doing business in the country.
“Today, the industry is struggling. The margins are shrinking by the day. Growers are struggling to supply the market and maintain Kenya’s position as a key producer of cut-flowers,” observed KFC CEO Clement Tulezi.
Between 2020 and 2022 8 flower farms had gone out of business due to increased recurring expenditures. “We expect to see curtailed growth this year and due to a prevailing harsh business environment there is no incentive for investors in our sector” he added.
Increased taxation coupled with high freight rates has seen a decline in the volume of exports by about 15,000 tonnes in 2022 from 210,000 tonnes in 2021 which earned the country Sh158.1 billion.
“The cost of freight in Ethiopia, for example, is 1.5 dollars per kilogram, in Tanzania it’s about 2.2 dollars per kilo, in Zimbabwe it’s about 2.3 dollars a kilo. In Kenya shockingly we are at 2.9 dollars a kilo. This is a shocking number considering we export 40 per cent of the flowers Europe consumes,” explained Tulezi.
According to the body that represents 80% of the flower industry in Kenya the floriculture sector paid 45 levies yearly to the government. “Almost every week now there is a new levy or a new tax cropping up,” observed the CEO.
Added to this, the Water Resources Authority in February implemented new water levies that increased the cost of doing business by 400 per cent. Water charges rose from 50 cents to between two and six shillings for irrigation and commercial uses.
It is estimated that Kenya’s floriculture industry employs over 200,000 people directly and a further one million in the supply of goods and services, thus impacting over four million livelihoods.