Kenya’s government is set to implement a series of incentives within the tea sub-sector, aiming to boost value-addition initiatives and unlock the global potential of the industry.
Mr Linturi said the Ministry, in collaboration with the Tea Board of Kenya, has devised a concept note to encourage tea value addition by offering tax incentives and other measures to enhance the attractiveness of local value addition.
The concept note has received approval from the National Treasury, clearing the way for the rollout of these incentives to stimulate further tea-value addition initiatives across the sub-sector.
The move aligns with the government’s decision to eliminate Value Added Tax (VAT) on tea acquired from factories or auction centers for value addition and subsequent export, as outlined in this year’s budget. The objective is to improve cash flows for tea exporters engaged in local value addition.
“In line with the recent government directives on tea value addition and production diversification, my ministry through the Tea Board of Kenya has developed a concept note to incentivise tea value addition,” said Mr Linturi.
The announcement was made by Agriculture and Livestock Development Cabinet Secretary, Mithika Linturi, during the annual directors’ conference of the Kenya Tea Development Agency (KTDA) in Nairobi.
The incentive scheme not only aims to encourage value addition but also to prompt factories to diversify production into specialty teas, known for fetching higher prices at auctions.
CS Linturi urged KTDA-managed tea factories to capitalise on these incentives, highlighting the importance of focusing on orthodox tea manufacturing and value addition at the factory level.
Furthermore, the Cabinet Secretary expressed the government’s commitment to supporting KTDA tea factories in accessing additional markets for specialty teas, including leveraging opportunities presented by the African Continental Free Trade Area (AfCFTA).
Enos Njeru, Chairperson of KTDA Holdings Limited, said the organisation’s commitment is to diversifying operations for cost-effectiveness and increased returns for smallholder tea farmers.
He highlighted the incorporation of technology to achieve operational efficiency.
Currently, 11 KTDA tea factories are producing orthodox teas, with additional facilities in the process of installing orthodox lines.