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Agri exporters set to earn billions as gov’t ends VAT Refund Bottlenecks

Dennis Lubanga by Dennis Lubanga
January 22, 2026
in Agriculture, Business, News
Reading Time: 4 mins read
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NAIVASHA, Kenya – Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe has announced sweeping new government interventions for agricultural exporters, to be anchored in the Finance Bill 2026 that will be tabled in Parliament in March, in a major boost for Kenya’s export-led growth strategy.

Agriculture and Livestock Development CS Mutahi Kagwe, with a group of agricultural exporters. Photo, courtesy.
Agriculture and Livestock Development CS Mutahi Kagwe, with a group of agricultural exporters. Photo, courtesy.

Speaking during the official launch of the Flamingo Group Investments (FGI) Expansion Project in Naivasha, Kagwe said the new measures are designed to unlock reinvestment, protect jobs and restore exporter confidence after years of cash-flow pressure caused by delayed VAT refunds, high levies and rising logistics costs.

“We are fixing the exporter ecosystem deliberately and permanently. The Finance Bill 2026 will ensure that exporters of agricultural produce are competitive, liquid and able to reinvest in Kenya,” Kagwe said.

The Cabinet Secretary revealed that the Finance Bill 2026 will introduce targeted tax and regulatory relief for exporters of agricultural produce, including:

What is the impact of the Finance Bill 2026?

  • Reduction of input VAT from 16% to 8% for exporters
  • Removal of excise duty on packaging materials, including kraft paper, used by agricultural exporters to eliminate unnecessary domestic taxes on export inputs
  • Removal of export promotion levies
  • Removal of excise duty and export promotion levies on packaging materials, including kraft paper.
  • Faster offsetting of VAT refunds against future tax liabilities
  • Special treatment for long-standing 100% exporters to operate like EPZs and SEZs, eliminating VAT on local purchases
  • Rationalisation of regulatory levies
  • Expanded air freight capacity through Kenya Airways and new international carriers, including Turkish Airlines

The reforms are expected to unlock billions of shillings in stalled exporter capital and accelerate reinvestment in horticulture, tea, coffee, fresh produce and livestock value chains.

What has the Flamingo Group launched?

The announcement coincided with Flamingo Group’s launch of a Sh2 billion expansion programme, involving annual investments of Sh644 million for the next three years, the creation of 500 new direct jobs, and expanded value-added bouquet production for export to Europe and the UK.

Sustainable flower farming creates jobs & strengthens Kenya’s export competitiveness 🌹🌷💐

Today, 🇬🇧 British business Flamingo Flowers broke ground to expand their Naivasha site.

This supports our bloomin' big ambition to double Kenya-UK trade by 2030!#GoFarGoTogether pic.twitter.com/kjd3Oi62qD

— UK in Kenya 🇬🇧🇰🇪 (@UKinKenya) January 21, 2026

Flamingo Horticulture Kenya currently employs over 12,000 Kenyans directly and supports 6,000 more jobs in its supply chain, exporting more than 750 million flower stems annually to global markets. Kenya exports an estimated six million roses daily, making the sector one of the country’s largest foreign exchange earners.

Kagwe acknowledged the long-standing VAT refund backlog that has affected exporters, citing Flamingo’s KSh 1.8 billion outstanding refund balance. He confirmed that KSh 470 million has already been disbursed, with further payments scheduled.

“These refunds are not losses to the government. They are reinvestment capital for farms, jobs and technology,” he said.

The reforms were reinforced by Principal Secretary for Investment Promotion, Abubakar Hassan Abubakar, who stated that the government is fully committed to removing bottlenecks that undermine investor confidence.

“Kenya’s competitiveness depends on how fast we convert policy into action. Exporters are central to our growth story, and we will support them,” Abubakar said.

The event drew senior government officials, regulators, industry leaders and diplomats, including the Acting British High Commissioner, His Majesty’s Trade Commissioner, Invest Kenya leadership, KEPHIS, KEPROBA, and exporter associations.

AGRI EXPORTERS TO UNLOCK BILLIONS AS GOVERNMENT ENDS VAT REFUND DELAYS.

The government has unveiled wide-ranging tax and regulatory reforms for agricultural exporters under the Finance Bill 2026, set to be tabled in the @NAssemblyKE in March, pic.twitter.com/i90xX2Bs0o

— Cabinet Secretary Agriculture & Livestock Dev't (@CS_MoALD) January 22, 2026

Bottom-Up Economic Transformation Agenda

Kagwe said the Flamingo investment demonstrates the success of the government’s reform agenda under the Bottom-Up Economic Transformation Agenda, which positions agriculture as a modern, export-driven industry.

“When exporters reinvest in Kenya, communities grow, jobs multiply, and the economy strengthens. That is the Kenya we are building,” he said.

With the Finance Bill 2026 set for debate in Parliament in March, the government expects the new exporter interventions to accelerate rural industrialisation and cement Kenya’s position as Africa’s horticultural powerhouse.

Tags: bubakar Hassan AbubakarFinance Bill 2026FlamingoKEPHISKEPROBAMutahi KagweNaivashaTurkish Airlines
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Dennis Lubanga

Dennis Lubanga

Dennis Lubanga is a seasoned journalist with over 15 years experience. He has a rich and extensive focus on politics, climate change, environment, and food security. He has previously held positions at Y News Digial (Editorial Lead), TUKO.co.ke (Current Affairs Editor) and Nation Media Group (News Correspondent). He is affiliated with respected journalism programs such as The Nature Conservancy African Journalism Programme, Thomson Reuters Foundation, and African Uncensored Investigative Journalism Programme. His work has been honored in the Annual Journalism Excellence Awards (AJEA) among other platforms.

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