How shrewd foreign gemstone traders in Kenya evade tax

Kenya losing millions of shillings annually to shrewd foreign gemstone traders

Kenya is losing millions of shillings annually to unscrupulous dealers who evade taxes by using shortcuts to ship high-value gemstones out of the country.

Shrewd agents from Asia reportedly come in as tourists, but end up buying gemstones from artisanal miners at the Coast without trading licenses and work permits.

Taita Taveta Artisanal Miners Association chairman David Zowe Wednesday said the foreigners buy the minerals at low prices in Voi town, instead of the state-approved Gemstone and Value Addition Centre.

“They are denying the government millions of shillings in revenue. If they follow the laid down regulations, we won’t have a problem doing business with them,” he said.

The Mining Act stipulates that a person cannot engage in mineral dealing without a mineral license or a permit.

Despite laws and regulations that govern the sector, shrewd dealers continue to conduct illegal activities due to corruption among law enforcement agents and loopholes within customs and immigration.

The mining sector contributes more than Sh67 billion to the GDP. Mr Zowe urged the government to keep a registry of all foreign dealers and deport those flouting the law.


In July, a multi-agency team raided Voi town and deported 23 Sri Lankans who were allegedly dealing in gemstones. Some of their accomplices fled to Nairobi, Mombasa and Taveta.

Taita Taveta sits on a mineral-rich belt and has over 40 types of high-value gemstones, including garnet, rubies, sapphire, tourmaline and quartz.

The county is a world leader in the production of tsavorite, which was discovered in 1971.

Tsavorite prices vary according to size and quality but at the top retail end, they may fetch as much as US$8,000 (about Sh890,000) per carat. It’s one of the most popular and expensive garnets in the world.

“Kenya could borrow a leaf from Ethiopia, which has enacted stringent regulations to govern the trade and shut out Sri Lankan cartels. We have good quality stones but we are not benefitting because of these illegal traders,” said a gemstone dealer, Mr Jason Mwadime.

The construction of the value addition centre has given hope to local miners who will be able to sell their processed stones at good prices.

“The government should launch the centre. We are losing a lot of business,” said Mr Mwadime.

Stop illegal business

The centre manager, Mr Edward Omitto, said the facility would be opened soon to prevent foreigners from conducting illegal business. It will regulate prices and help miners in marketing their stones.

“Once the facility is open, all foreigners will be compelled to do business at the centre,” he said.

Mr Davis Tayo of Africa Social Financing Centre said there’s need to address key issues that have hampered its growth.

“Mining business is being controlled by cartels that control prices. The artisanal miners are losing out on various opportunities because of delayed issuance of the dealers’ licenses,” he said.

Africa Social Financing Centre has partnered with Taita Taveta Artisanal Miners Association to form the Tsavorite Market and Auction Centre. It will help artisanal miners to access markets.

“Many miners have no idea how to access the international markets and don’t know the value of their stones. That is why they are taken advantage of,” said Mr Tayo.

Due to their desperate situations and the need to make ends meet, he said, the miners sell their high-quality gemstones at throwaway prices to unscrupulous dealers.

“The dealers are the ones that control the market and set the prices. They cannot travel to Nairobi or outside the country to sell them. They don’t have any option but to sell to the brokers,” said Mr Tayo.

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