Egypt lifts punitive tax on Kenya cigarettes after Comesa lobbying

Egypt has reversed a December tax increase on cigarettes imported from Kenya, which had threatened to lock out local manufacturers from the vast market.

In a decree issued by the Egyptian President Mohamed Morsy raising taxes on consumer goods, import duty on foreign cigarettes went up by 85.3 per cent to Sh33 per packet from Sh17.8 per packet.

However, lobbying by the Kenya government though the Common Market for Eastern and Southern Africa (Comesa) forum has seen this reversed in Kenya’s favour.

Decree set aside

“We took up the issue with Comesa, and it took up the matter with the office of the (Egyptian) President. I can now actually tell you that this decree has been set aside. This decree is not there anymore,” Kenya’s Trade permanent secretary Abdulrazaq Adan said during a Kenya Association of Manufacturers luncheon held on Thursday.

In 2010, BAT Kenya says its tobacco exports to Egypt amounted to over Sh10 billion, with over half generated through sale of its Rothmans cigarettes. Mastermind is also a key exporter of cigarettes to Egypt.

KAM chief executive Betty Maina said President Morsy’s decision would have impacted negatively on the two firms as they are the only foreign firms in Egypt’s cigarette market from Africa.

“Mastermind and BAT mainly produce their cigarettes for the region. We protested the move because it was anti-Comesa,” she said on the sidelines of the luncheon held in Nairobi.

The function brought together heads of various corporations and organisations to discuss the impact of the forthcoming elections on the local businesses.

Apart from cigarettes, Egypt is the biggest consumer of Kenyan tea, importing about 22 per cent of total exports by 2010. Other major imports by Egypt from Kenya include chemicals, meat and cut flower.

The standoff between Kenya and Egypt over the raise in tariffs echoes similar spats that the two have had over the years.

In 2001, Egypt imposed a 30 per cent tariffs on Kenyan tea until a truce was struck by both governments; while in December 2000 the two wrangled over toilet paper market.

The Kenya Bureau of Standards declined to release a consignment of Egyptian toilet paper on the grounds that the internal tube on which the toilet papers were rolled were smaller than that required by a Kenyan regulation.

Egypt is the leading destination of tea from Kenya, and in the month of June last year, the country exported 6.3 million kg of local tea, equivalent to 21 per cent of all Kenyan tea exported.