Kenya begins levying import duties as regional deal kicks in

Kenya began collecting import duties on everything from diapers to peas as part of a regional pact that remains unaffected by President William Ruto’s decision to scrap a plan to raise domestic taxes. 

The import levies are part of an agreement reached with East African Community member states, which are negotiated by the trading bloc every year as part of efforts to achieve a common external tariff regime. They took effect July 1 and include levies on mobile phones, palm oil, LPG cylinders and apparel.

The expected revenue from these measures is estimated at about 44 billion shillings ($343 million) — not enough to make up for the more than $2 billion in new taxes that Ruto had to scrap after anti-government protests killed at least 41 people. Moody’s Ratings on Monday cut the East African nation’s credit rating deeper into junk following the withdrawal of the levies. 

The government will now borrow an additional 169 billion shillings and cut spending by 177 billion shillings. The budget deficit for the period through June 2025 will widen to 4.6% of gross domestic product, compared with an earlier estimate of 3.3%, Ruto said.