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The East African : Dec 15th 2014
REBASED ECONOMY uganda faces difficult borrowing choices Page 47 BUSINESS DECEMBER 13-19,2014 MIXED FORTUNES By ISAAC KHISA The EastAfrican K enya is projecting a 10 per cent drop in earnings from its flower exports as East Africa’s cut-flower industry registers another year of mixed returns. Uganda expects earnings to stay flat, as growers blame high production costs and taxes on flowers by the European Union. Tanzania, on the other hand, expects a 10 per cent increase in earnings owing to improved market access. The EU had imposed an 8.5 per cent tax on Kenya’s flower exports pending its reinstatement on the list of countries eligible for dutyfree access to the EU market, subsequent to signing the Economic Partnership Agreement with the EAC past the agreed deadline of October 1, 2014. The blocs signed the EPA in mid- October in Brussels. Jane Ngige, the chief executive officer of the Kenya Flower Council, said the country is expecting a 10 per cent reduction in earnings from last year. This is as a result of high production costs following the government’s decision to introduce a withholding tax on consultancy services to the industry, and import duties by the EU. Ms Ngige said the increased costs would result in a 10 to 15 per cent reduction in volumes. “With import duty now being imposed on Kenya’s flower exports for accessing the EU starting October 1, we are unlikely to earn the same income as last year. We anticipate a reduction in earnings as well as the export volumes,” she said. She added that relief would only come after Kenya is reinstated to the list of countries whose products are allowed to enter the European market duty-free. The process is expected to be completed by the end of December. Kenya earned Ksh45 billion ($491.4 million) from 123,000 tonnes of flowers last year, with the European market accounting for 40 per cent of the country’s horticulture exports. Uganda has blamed the oversupply of flowers in the international market for its flat earnings. The executive director of the Uganda Flower Exporters Association, Juliet Musoke, told The EastAfrican that Uganda expects to earn $46 million from 7,000 tonnes of flowers, almost the same volume and value as last year. “Earnings from flower exports are likely to remain the same because business has not been good in the past three months. There’s either Kenya, Uganda flower earnings wilt as Tanzania exports bloom Newly int≥oduced taxes and ove≥supply blamed fo≥ poo≥ pe≥fo≥mance on the inte≥national ma≥ket CAPITAL GAINS TAX KRA lays ground for collection Page 48 45 Finland in Zanziba≥ ho≥ticultu≥e pa≥tne≥ship By ADAM IHUCHA Special Correspondent FINLAND HAS partnered with the Tanzania Horticulture Association (Taha) to exploit the horticultural potential of the Zanzibar Isles. Taha executive director Jacque- line Mkindi said the three-year, $980,000 project will include construction of a $300,000 cold storage facility in Unguja, as well as collection centres for horticultural produce on Unguja and Pemba islands. “The programme’s objective is to have infrastructure that gives farmers better access to domestic, regional and international markets,” Ms Mkindi said. Targeting more than 8,000 small-scale farmers, the project will give processors in Zanzibar access to quality packaging for fresh produce meant for export. Zanzibar’s Minister of Agricul- DUTY-FREE ACCESS The International Trade Committee of the European Parliament has adopted the recommendation for an early non-objection to the Commission Delegated Act reinstating Kenya on duty-free access to the EU market under the Market Access Regulation (MAR). According to Union Fleurs where the Kenya Flower Council is a member, there is now a possibility that Kenya could again benefit from duty-free access to the EU market by end of 2014 under the MAR. The recommendation will be announced to the European Parliament Plenary during its session of December 15-18 in Brussels. If no member of parliament objects, the Delegated Act will be deemed approved by the European Parliament. It is now scheduled that the Council will formally express its nonobjection to the Delegated Act on December 17. a high supply of flowers at the international market or consumers now prefer other types of flowers,” said Ms Musoke. Uganda aims to increase the area under flowers from 250 to 450 ture and Natural Resources Sira Ubwa Mamboya said many farmers on the islands are involved in subsistence horticultural farming, and are keen to commercialise their output. “We need technical support to take horticultural farming to the next level and grow the Zanzibar economy,” Dr Mamboya told The EastAfrican. Ready market Zanzibar’s tourism industry, hectares, and push earnings to $50 million annually. Tanzania is projecting a 10.4 per cent rise in earnings, to $414 million, based on improvements in the economic environment, 8.5pc stems per year, the level of output that will allow it to break into the international market. When those targets are achieved, the country projects earnings of $9.83 million from flower exports. The Rwandan government plans Tax imposed by the European Union on Kenya’s flower exports when October 1 deadline for signing of EPAs passed and Kenya’s move to lift the ban on Tanzania’s flower exports passing through Jomo Kenyatta International Airport last year. Rwanda, which currently produces 1.4 million stems of summer flowers per year, mainly for the local market, is aims to increase production to 54 million to increase the land under flower production to 115 hectares in the next five years, to sustain local and export markets that are growing at 4.4 per cent per annum. According to officials from the Ministry of Agriculture, the large volume of flower production will cushion the economy against the widening export - import gap. “Cut flower exports should reduce the imbalance in trade,” Minister of Agriculture Tony Nsanganira said. Additional reporting by Adam Ihucha and Kabona Esiara which attracts over 200,000 visitors annually to more than 200 hotels, provides a ready market for horticultural produce. “There is high demand for fresh produce like tomatoes, onions, Irish potatoes, bananas and oranges,” the minister said. Data shows that each hotel spends an average of $38,000 every year on vegetables and fruits. Currently farmers in Zanzibar supply only 20 per cent of the horticultural produce demand, with 80 per cent sourced from outside. The project will help farmers embrace good agronomy practices to boost their production. Tanzania’s Minister for Agri- culture and Co-operatives Christopher Hizza said horticulture is the fastest growing sub-sector of the economy, with an average growth of 11 per cent per annum over the past six years.
Dec 8th 2014
Dec 22nd 2014