Flower companies face a grim future owing to delayed tax refunds that have now risen to Sh3 billion.
Kenya Flower Council chief executive Clement Tulezi said companies were experiencing financial difficulties that were hurting their operations and derailing planned expansion drives.
“Flamingo planned to open up 60 hectares for flower-growing this year but the government still owes it Sh700 million. Kenya is hurting prospects to create more jobs as well as increase flower exports for higher revenues for the country,” he said.
Mr Tulezi said flower companies have turned to costly commercial loans to fund operations, further cutting back their profit margins.
Noting that the refunds have been accumulating since 2009, he said the payment had been frustrated by a change of information systems at the Kenya Revenue Authority that made the former customs’ information system, SIMBA incompatible with the new iTax system.
“Before flower companies required a C17B document to demand refunds but the current system where each flower shipment requires its own Certificate of Export is cumbersome and impossible. Flower companies ship out numerous consignments a day and a demand by the KRA for such documentation is unworkable,” he said.
Quality of flowers
Primarosa Flowers managing director Bobby Kamani said the quality of flowers being exported was also in jeopardy since farms lack cash to power their operations for optimum results.
Mr Tulezi said Kenya should support flower companies that last year earned Kenya Sh153 billion, the third highest foreign exchange earner after remittances and tourism.
The sub-sector, he said, also needs fresh incentives to ease fertiliser costs that have increased from $0.4 (Sh40) per kilogramme to $0.8 (Sh80) per kilogramme thereby hurting the competitiveness of Kenyan roses in the global market.
“Plastic ban imposed a year ago has hurt availability of polythene for use in packaging flowers with the few licensed polythene wrapping material manufacturers increasing their prices.We are also pushing for lower energy costs as the profit margin are very minimal,” he said.
On fertiliser, Mr Tulezi said Kenya should decide whether to inspect fertiliser consignment at country of source by an appointed inspection firm or upon arrival by the Kenya Bureau of Standards.
“The double inspection mechanism is costly and anti-development. It is hurting margins while making fertiliser unreachable to many small-scale flower growers,” he said.