Kenya is set to witness a sharp increase in timber prices following recent changes to permit fees, which have significant implications for both the furniture industry and construction sector. As of July 13, the Kenya Forest Services (KFS) has revised its timber movement permit fees, leading to a substantial rise in costs for timber imports and, consequently, for consumers.
Under the new regulations, individuals and businesses transporting timber across borders are now required to pay Sh25,570 for a permit, a dramatic increase from the previous fee of Sh2,000. This new fee structure includes Sh20,000 for consignment charges, VAT at 16 percent, a movement permit fee of Sh2,000, and an eCitizen transaction fee of Sh50. Similarly, charcoal movement permits now cost Sh30 per bag, while non-wood forest products are charged Sh2 per kilogramme, with VAT and eCitizen fees applicable.
These changes, announced in a memo from the KFS’s Malaba One Stop Border Post office on July 10, are expected to ripple through the supply chain, affecting furniture prices and construction costs. The heightened fees for timber transport will likely lead to increased prices for timber products, including mahogany, pine, and roofing cypress.
A recent spot check reveals that timber prices had already risen earlier this year, with current prices showing an average increase. For example, mahogany (12 by 12 beam) now costs approximately Sh300 per foot, up from Sh280 earlier in the year. Smaller dealerships report prices of Sh320 per foot for the same type of timber. Pine and roofing cypress prices have also risen, reflecting the broader trend of increasing timber costs.
Timber yard owners and retailers are already grappling with the impact of these price hikes. Cyprian Kimanthi, who runs Starmark Designers in Nairobi, noted that the prices of timber have been unpredictably rising, forcing him to pass on the increased costs to customers who are already facing financial strain. Similarly, John Okoth, a wholesale timber seller, expressed concerns about the sudden price increases affecting his customers’ budgets, who may not be prepared for such abrupt changes.
The new permit fees are likely to exacerbate the existing issues in the timber market, where demand significantly outstrips supply. According to Alfred Gichu, head of forest conservation at KFS, the current demand for wood products stands at 45 million cubic meters, while the supply is limited to 30 million cubic meters. Kenya imports a substantial portion of its timber from neighboring countries like Tanzania, Uganda, and the Democratic Republic of Congo (DRC), with Tanzania being the largest supplier.
The recent Economic Survey 2024 indicates a notable increase in timber sales from government forests, rising from 378,000 cubic meters in 2022 to 1.5 million cubic meters in 2023. The sale of softwood timber surged from 4,200 cubic meters in 2022 to 148,500 cubic meters in 2023, largely due to the lifting of the logging ban. Similarly, sales of fuel wood and charcoal more than doubled over the same period.
As Kenya navigates these new regulatory changes, the construction and furniture industries face a challenging landscape. The increased costs associated with timber procurement are likely to be passed on to consumers, affecting affordability and potentially slowing down projects that rely on timber. Stakeholders across the industry will need to adapt to these changes, exploring alternative solutions and cost-management strategies to mitigate the impact on their businesses and customers.
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