South Africa and China have replaced Sudan and Iran as the leading markets for Kenyan tea. Trade Minister Lee Kinyanjui says that import duty waivers have been concluded in an effort to improve the competitiveness of the country’s largest agricultural export amid growing uncertainty in traditional markets.
The Kenyan tea sector has been threatened with the loss of millions of dollars in export earnings due to its dependence on a small number of overseas buyers, as well as rising domestic logistics costs which continue to undermine its competitiveness.
Mr Kinyanjui said that Kenya had learnt costly lessons from recent disruptions in key export destinations such as Sudan and Iran, whose instability had exposed the vulnerability of relying heavily on a few markets.
Speaking at a meeting with tea traders at the East African Tea Trade Association (Eatta) in Mombasa, Mr Kinyanjui said removing the 35 per cent duty for South Africa and improving market access plans with China are key steps in broadening Kenya’s export footprint. “Kenya has learnt painful lessons from the loss of markets such as Sudan and Iran. As a government, we intervened and successfully secured the removal of the 35 per cent duty imposed on Kenyan tea in South Africa in November 2025. This granted the products market access under the Southern African Customs Union tariff offer. We have also concluded similar market access arrangements with China,” he said.
However, he added that this alone was not enough, noting that Kenya could no longer afford to rely on a small group of export destinations. “We cannot continue depending on only a few countries for our tea exports because any political instability, conflict or economic disruption in those markets immediately affects our foreign exchange earnings,” he said.
Read:Farmers’ losses mount as Sudan-bound tea piles up in Mombasa
The South African concession is expected to boost bilateral trade and help to narrow the trade imbalance that has traditionally favoured Pretoria. Officials said the move also reinforces broader commitments under the African Continental Free Trade Area (AfCFTA), which aims to boost intra-African trade by reducing tariff and non-tariff barriers.
Tea remains Kenya’s largest agricultural export, earning the country more than $1.37 million annually and supporting millions of smallholder farmers, factory workers, brokers, transporters, and exporters. Despite maintaining its position as the world’s leading exporter of black tea, Kenya’s export profile remains highly concentrated.
Pakistan accounts for around 40 per cent of Kenya’s tea exports, followed by Egypt with 19 per cent, the US with nine per cent, and the UAE with five per cent. These four markets absorb nearly three-quarters of Kenya’s tea exports.
This level of concentration leaves the industry vulnerable to geopolitical shocks, foreign exchange restrictions and changes in trade policy.
Recent conflicts in the Middle East and political instability in parts of North Africa have disrupted trade flows, delayed payments and complicated shipping logistics. Mr Kinyanjui said that Kenya must take advantage of the AfCFTA and bilateral trade agreements to expand its exports across Africa, while also exploring new opportunities in Asia. “Intra-African trade currently stands at only about 17 per cent. Kenya should leverage the AfCFTA and existing bilateral agreements to increase its tea exports within Africa. Diversifying our markets is no longer optional; it is an economic necessity,” he said.
However, while the government is opening up new markets abroad, exporters argue that doing business at home is becoming increasingly expensive.
Tea traders informed the minister that the cost of transporting tea from processing factories in the highlands to the Port of Mombasa continues to increase due to multiple county levies, licensing requirements and transport charges imposed along the Northern Corridor.
These concerns have renewed calls for the harmonisation of county taxes in order to preserve Kenya’s competitiveness in international markets.
Mr Kinyanjui acknowledged the complaints and pledged to engage with the Council of Governors to accelerate the implementation of the County Licensing (Uniform Procedures) Act 2024. This legislation is designed to standardise business permits and licensing procedures across all counties. “We cannot promote exports while businesses are subjected to multiple licences and levies every time products move from one county to another. We’ll engage with the county governments to ensure the law is implemented as intended,” he said.
Industry leaders argue that inconsistent taxes and county charges are increasing transport costs and discouraging investment in added value.
Eatta managing director George Omuga said that the tea trade is also facing challenges arising from taxes imposed on tea originating from other East African Community member states before it is auctioned in Mombasa.
Currently, tea imported for sale through the Mombasa Tea Auction attracts a 25 per cent excise duty and a further 16 per cent transit tax, even though it is re-exported after auction.
Mr Omuga argued that these taxes contradict the EAC Customs Union Protocol, risking the undermining of Mombasa’s position as Africa’s premier tea trading hub. “If this continues, there is a real risk that tea volumes will shift to competing auction centres outside Kenya, weakening Mombasa’s strategic position,” he warned.
The concerns come as regional competition for commodity trading intensifies, with neighbouring countries investing heavily in logistics infrastructure and export facilitation.
Tea exporters are also seeking urgent clarification on implementation of tax incentives introduced under the Finance Act 2025/26.
Although Parliament approved zero-rating of packaging materials for locally packed tea, traders say no operational guidelines have been issued.
At the same time, imported packaging materials continue attracting a combination of taxes: 35 percent import duty, 25 percent excise duty, 3.5 percent Import Declaration Fee, 1.5 percent Railway Development Levy and 16 percent value added tax.
Processors argue that the cumulative tax burden makes Kenyan packaged tea less competitive than products from neighbouring countries where similar materials are exempt from excise duty.
Industry players also expressed concern over growing bureaucracy at the Port of Mombasa. Exporters said government agencies continue conducting overlapping inspections and documentation processes, delaying cargo clearance and increasing storage costs.
