Connect with us

Hi, what are you looking for?

Capital Business
Capital Business


Govt spins incentives for cotton farmers

NAIROBI, Kenya, Mar 30- The government may soon waive Value Added Tax (VAT) on locally produced and ginned cotton as a means of promoting local production.

Agriculture Minister William Ruto disclosed on Monday that he would soon present the proposal to his Treasury counterparts to consider the incentive that can go a long way in revitalising the sector.

“Ginners who buy (cotton) from local farmers have to pay a 16 VAT when they sell it to the spinners. In an industry coming out of a depression, we believe that sufficient incentives need to be put in place and the waiver of duty on locally produced and ginned cotton is a step in the right direction,” he said.

At a press conference, the Minister also announced that cotton seeds would now be produced commercially by the Kenya Seed Company while registered seed merchants would have to be certified by Kenya Plant Health Inspectorate Services (KEPHIS).

The meeting with industry stakeholders on Monday pointed out that the government’s move to provide free seeds like it had done in the past two years was no longer sustainable.

Therefore the meeting agreed that the government should contract the Kenya Agricultural Research Institute to provide the basic seeds while the seed company would produce them commercially.

They also recommended that prices of cotton be maintained at Sh30 per kilo to encourage spinners to buy from local producers.

Mr Ruto also added that there was need to raise funding for the promotion of local products which would involve imposing a levy on imported lint and textile products including second hand clothes.

Although this means that the cost of the clothes, which are popularly known as ‘mitumba’ will soon go up once the government implements the proposal, Mr Ruto said the move would benefit the over 200,000 cotton farmers.

Advertisement. Scroll to continue reading.

Cotton does well in Arid and Semi Arid Areas (ASAL) and the minister saw this as an opportunity to develop these regions by enhancing incomes to the farmers and thus eliminating poverty.

“We have a duty to the farmers and the industry to ensure that we put our ASAL areas into good use by promoting the growing of crops that are drought-resistant like cotton,” he said.

Although he did not clarify what percentage the rates would be, Mr Ruto defended the decision to enforce the charge saying the duty that was already being paid on the used clothes would be directed to the industry.

Traders of these clothes claim the price of imports have gone up three fold in the last few weeks.

He observed that the implementation of these measures would bolster the sector’s turn around, which has already started showing recovery signs after government pumped in Sh750 million in the last three years.

Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...