Kenyan MPs suggest tax break for large textile firms

01 May '12

2 min read

The Budget Committee comprising of Members of Kenyan Parliament has suggested the Government should give a 10-year tax holiday for large textile companies that use only domestic workforce in production and also manufactures goods only from locally available raw materials.

The recommendations have come at a time when textile manufacturing companies in Kenya, and other African countries, are nearing the September 2012 deadline of third country fabric provision under the African Growth and Opportunities Act (AGOA).

The Budget Policy Statement drafted by the parliamentary committee chaired by Maragua MP Elias Mbau also asks the Government to address the shortfalls in the Contingencies Fund, the Equalisation Fund and the Constituency Development Fund (CDF) in the 2012-13 Budget.

Textile industries in Kenya import around 90 percent of the 180,000 cotton bales or semi-finished fabrics to produce apparels for export to US.

Kenya is the largest textile and apparel supplier to the US under AGOA. At present, export processing zones (EPZs) in Kenya depend on developing countries like India, Bangladesh, China and Malaysia for their raw material supply. According to experts, this dependence has denied the vital backward linkage with local farmers for the Kenyan textile industry.

In case the third country provision is not extended in September 2012, it could result in a massive flight of capital from Kenyan textile industry, worry experts.

Fibre2fashion News Desk - India

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