Kenya’s agricultural exporters are set for a major financial boost following the unveiling of wide-ranging tax and regulatory reforms under the proposed Finance Bill 2026, aimed at ending chronic VAT refund delays and lowering the cost of doing business.
Speaking during the launch of Flamingo Group Investments’ KSh 2 billion expansion project in Naivasha, Agriculture and Livestock Development Cabinet Secretary Sen. Mutahi Kagwe said the reforms are central to the government’s export-led growth strategy and are designed to restore confidence among exporters.
“For years, delayed VAT refunds and high levies have constrained cash flows for our exporters, limiting reinvestment and growth. These reforms are meant to ease that pressure, unlock stalled capital and ensure exporters can compete effectively in global markets,” Kagwe said.
The Finance Bill 2026, which is set to be tabled in the National Assembly in March, proposes a reduction of input VAT from 16 per cent to 8 per cent, the removal of excise duty and export promotion levies on packaging materials, and faster VAT refunds through an offsetting mechanism.
Long-standing 100 per cent exporters will also be granted Export Processing Zone (EPZ) and Special Economic Zone (SEZ)-like treatment, eliminating VAT on local purchases.
According to Kagwe, the changes are expected to unlock billions of shillings tied up in VAT refund backlogs, freeing up capital for expansion across key agricultural value chains.
“When exporters get their refunds on time, that money goes straight back into farms, factories, jobs and new markets. This is how we strengthen horticulture, tea, coffee and livestock, and cement Kenya’s position as Africa’s horticultural powerhouse,” he said.
The government is also moving to address logistics bottlenecks by expanding air freight capacity through Kenya Airways and new international carriers, a step Kagwe said is critical for perishable exports destined for Europe and the UK.
During the same event, the Kenya Plant Health Inspectorate Service (KEPHIS) highlighted the strong compliance record underpinning Kenya’s floriculture success. In a message posted on X, KEPHIS said Kenya’s flower industry exports over 60 million stems daily, with only five interceptions recorded since May 2025, underscoring the sector’s adherence to international phytosanitary standards.
“Kenya’s floriculture industry has built a strong reputation for quality and compliance, exporting over 60 million flower stems daily, with only five interceptions recorded since May 2025,” KEPHIS said in the post.
KEPHIS noted that this strong compliance foundation has enabled Flamingo Global Investment — a global horticultural and fresh produce business with 43 years of operations in Kenya — to take the next step in its growth. The agency confirmed that Flamingo broke ground on the expansion of its Naivasha operations on January 21, 2026, following the release of part of its VAT refund.
The ground-breaking ceremony was attended by Kagwe, accompanied by the Managing Director of KEPHIS, with the CS seeking assurances on how the agency is supporting exporters to meet increasingly stringent international standards.
During the event, Kagwe confirmed that the Treasury has already paid KSh 470 million of Flamingo Group’s KSh 1.8 billion VAT refund backlog, with further disbursements scheduled.
“We are demonstrating that this is not just policy on paper. We have already released KSh 470 million to Flamingo, and we will continue clearing verified claims so that exporters can plan with certainty,” Kagwe said.
Flamingo Group’s Naivasha expansion is expected to create 500 new jobs and expand value-added flower production for export to Europe and the UK, highlighting the potential impact of the reforms on employment, foreign exchange earnings and investor confidence.
Industry players say the measures could mark a turning point for Kenya’s agricultural exports, long burdened by high taxes and delayed refunds, and accelerate investment across the sector as confidence returns.
