Investors are now pleading with the Government to pay back VAT as it hinders expansion and growth of their flower farms.
Despite the rosy performance of the sector last year, flower farms are claiming that the Government has delayed in paying back the VAT that has accumulated over the past 12 months and this in turn is stifling the expected growth.
According to Primarosa Flowers Limited managing director Bobby Kamani, delay in VAT refunds will impact earnings of sector players while lack of fertiliser could lead to reduced yields of the top foreign exchange earner.
Mr Kamani called for intervention from the government, warning that if the situation persists consumers should expect to dig deep into their pocket to buy flowers. “Delays in recovering VAT from the government go back to over 12 months, impacting cash flow and increasing the cost of operating,” Mr Kamani said in a statement yesterday.
He expressed concern that the quality of flowers exported will be compromised if the issue of fertiliser shortage is not adequately addressed. “Fertilisers are vital to our product and shortage has resulted in traders doubling prices, leaving the farmers helpless as there are no other options,” he said.
The Kenya Flower Council has previously hit out at the Kenya Revenue Authority over delays in re-imbursing tax refunds as well as the taxman’s punitive tax regime. The industry lobby has also blamed a harsh business environment for the relocation of some investors to other regional markets such as Ethiopia which have subsidies on freight and parcels of land.
Kenya is the world's third largest exporter of flowers.
Horticulture earnings hit Sh153 billion last year making it the third top foreign exchange earner after diaspora remittances (Sh272 billion) and tourism (Sh157 billion).
Flowers made the bulk of the earnings, bringing in Sh113 billion.