MURANG’A – In the rolling green hills of Murang’a County, where tea is more than just a crop, Kenya is rolling out a fresh economic brew this time in the form of tax relief.
Speaking on International Tea Day at the Gacharage Tea Factory, Agriculture Cabinet Secretary Mutahi Kagwe announced a series of tax incentives designed to revitalize the country’s tea sector. The proposals, embedded in the 2025/26 Finance Bill, are aimed at easing the cost of processing and helping farmers earn more from their leaves.
“Tea is not just a beverage, it is a cornerstone of our economy,” Kagwe told the crowd, standing before sacks of freshly plucked green leaves. “These measures will make it more affordable for our factories and processors to package and export value-added tea.”
Among the key incentives: the scrapping of excise duty on tea packaging materials and the removal of VAT on exports of processed tea. The aim is to shift Kenya’s tea economy from bulk exports of raw leaves to higher-value products such as flavoured blends, instant tea, and specialty brews.
“This is about putting more money in farmers’ pockets,” Kagwe said. “We are supporting direct tea sales and encouraging factories to take control of their value chain.”
Kenya is the world’s third-largest tea exporter, but the bulk of its exports remain unprocessed sold cheaply in bulk and often rebranded abroad. Despite tea contributing nearly a quarter of the country’s foreign exchange earnings, many small-scale farmers remain trapped in a cycle of low returns and rising production costs.
Currently, over 650,000 smallholder farmers depend on the crop. Many of them operate through the Kenya Tea Development Agency (KTDA), which manages over 60 factories across the country.
KTDA Chairman Chege Kirundi welcomed the tax proposals, calling them a “necessary step toward farmer empowerment.”
“We’re turning farmers into entrepreneurs,” Kirundi said. “They won’t just grow tea. They’ll own the brands, the packaging, and the market value.”
KTDA has been piloting grassroots value-addition efforts, including small-scale specialty tea processing, farmer-owned branding, and tea-based product innovation. Kirundi said such efforts are already showing promise in global markets where consumers are willing to pay more for ethically sourced, traceable, and premium teas.
Analysts in Nairobi say the plan makes economic sense, but warn that incentives alone won’t be enough. The sector also faces structural hurdles fluctuating global prices, climate pressures, and ageing infrastructure.
“Tax breaks help, but we need investment in irrigation, training, and market access,” said Beatrice Njoroge, an agricultural economist at the University of Nairobi. “Otherwise, we’ll just be exporting the same problems in shinier packaging.”
Still, for farmers gathered at Gacharage, the tone was hopeful.
“I’ve sold tea for 20 years,” said James Mwangi, a farmer from Kangema. “For the first time, I feel like I’m not just growing tea for someone else’s profit.”
The Finance Bill, which includes the proposed tax cuts, is expected to be debated in Parliament next month. If passed, it could usher in a new phase for Kenya’s tea industry one rooted not just in tradition, but in fairer trade and farmer ownership.
For now, the promise has been planted. The harvest, as always, will take time.
