Kenyan households are bracing for a surge in commodity prices following a hike in the Railway Development Levy (RDL), which rose from 1.5% to 2% on December 27, 2024. This increase comes after President William Ruto signed the Tax Laws (Amendment) Bill 2024 on December 11. The rise in the RDL, a charge on goods imported for local use, is part of broader amendments across several tax provisions.
The RDL was initially introduced in 2013 to fund the construction of the Standard Gauge Railway (SGR) from Mombasa to Kisumu, raising billions annually. However, the increased levy has sparked concerns among businesses, especially with Kenya’s heavy reliance on imports. The Shippers Council of Eastern Africa (SCEA) expressed frustration, warning that the additional cost would ultimately burden consumers, especially given the country’s status as a net importer.
Agayo Ogambi, CEO of SCEA, called on the government to reconsider the hike, suggesting a reduction in levies like the Import Declaration Fees (IDF) and corporate taxes to ease the strain on businesses. The council emphasized that increased taxation would hamper expansion and job creation, urging the government to adopt a more balanced approach to fiscal policies.
Compounding the situation is ongoing congestion at the Port of Mombasa, leading shipping companies to introduce surcharges. Mediterranean Shipping Company (MSC), one of the largest shipping lines in the region, announced a Congestion Surcharge of $500 per container, translating to approximately Sh64,650. MSC controls nearly 19% of the port’s container volumes, and other major shipping lines are expected to follow suit.
Additionally, disruptions in the Red Sea, caused by attacks on ships, have forced shipping lines to reroute vessels around the Cape of Good Hope, further increasing transit times and freight costs. These developments exacerbate the strain on Kenyan traders, as high international freight rates and insurance costs continue to affect exports and imports.
The combination of higher taxes, surcharges, and logistical disruptions signals difficult times ahead for Kenya’s consumers and businesses.
