Furniture import bill stays high despite tax increase

Kenyans shrugged off steep levies imposed on furniture to retain their high appetite for imports, dealing a blow to efforts aimed at lifting local production.

Official data shows the value of furniture, and related items including bedding and mattresses, declined only marginally to Sh6.23 billion in the first nine months of 2019 compared to Sh6.47 billion in the same period the previous year.

The billions of shillings have been spent on foreign firms despite campaign that saw the Treasury raise import declaration fee on finished goods such as furniture from two to 3.5 percent in the financial year starting July 2019.

The 2019/20 financial year saw the government retain an ad valorem rate of import duty at 25 percent charged on the value of furniture production while cutting duty on raw timber from 10 percent to zero.

Kenya sources most of the furniture from Asia and the Middle East.

Kenya’s total orders from the region (including non-furniture) declined 11.1 percent in the nine months to September to Sh242.40 billion from Sh272.70 billion in the same period in 2018.

The huge import bill for furniture is a blow to the local jua kali sector that has been looking to the fiscal measures to change its fortunes.

The current import volume, however, pales in significance compared to the periods before the State imposed the 25 percent import duty on furniture.

In 2015, a report by World Bank Group in conjunction with Industrialisation ministry released showed that furniture imports grew at almost 24 percent between 2009 and 2013, compared to a 10 percent growth for the overall furniture market in Kenya, as Kenyans shunned local products commonly displayed on roadsides, opting instead for imported pieces stocked in malls and supermarket chains.