A political and fiscal storm has erupted at the National Treasury as scrutiny intensifies over a large-scale import duty waiver on rice that critics say may have cost the Kenyan exchequer billions and unfairly advantaged select importers. Allegations of irregular tax reliefs have drawn the attention of Parliament, the Auditor-General, civil society and farmers’ organisations, creating a test of government accountability and President William Ruto’s anti-corruption commitments.

The Duty-Free Rice Decision

In mid-2025, the Cabinet Secretaries for the National Treasury (John Mbadi) and Agriculture issued a gazette notice permitting the importation of 500,000 tonnes of Grade 1 milled rice on duty-free terms until December 31 2025, purportedly to cushion consumers against rising food prices. However, the High Court in Kerugoya granted an injunction suspending that duty-free rice importation after a petition by farmers, citing a lack of proper public participation and questioning the legal basis for the waiver in the absence of an officially declared emergency. 

Farmers argued that the tax exemption would “tank” the price of locally grown rice, undermining their livelihoods and depriving the Treasury of revenue without sufficient legal justification. They also contended the decision breached the East African Community Customs Management Act by extending duty-free treatment without a valid emergency. 

Allegations of Irregular Waivers and Revenue Loss

While detailed government figures on total revenue waived remain opaque, media and public commentary have framed the situation as politically sensitive due to the scale involved and the perception that exemptions disproportionately benefited well-connected importers. There is no direct public record yet of a specific KSh 6 billion waiver in reputable reporting, but Treasury tax waiver powers have been controversial, with legislators previously resisting proposals to centralise waiver authority in the executive and demanding gazette publication and parliamentary oversight on waivers. 

The Kenya Revenue Authority (KRA) itself acknowledges instances of irregular tax clearances and tax fraud related to rice imports — including the interception of 161 rice containers cleared without proper tax payment, putting revenue worth KSh 123 million at risk before recovery. 

Political and Legislative Tension

Parliament’s Public Accounts Committee (PAC) and other oversight organs have signalled intent to query why exemptions were granted without transparent justification and appropriate gazette notices, which are legally required to signal extraordinary tax relief or emergency measures. The committee is expected to summon officials from the National Treasury and KRA to account for the exemptions and the process followed.

The episode revives earlier clashes between the Treasury and MPs over taxation powers, including proposals that would have empowered the Cabinet Secretary and KRA Commissioner-General to waive difficult-to-collect taxes — a measure that was met with resistance from lawmakers who insisted on publication and oversight of tax waiver decisions. 

Impact on Farmers and Local Producers

Rice farmers, particularly in Mwea and other paddy-producing regions, have protested the duty-free importation, asserting that cheap imports undercut local produce and destabilise domestic markets. Farmers and farm representatives have described the policy as unfair, arguing that imported rice with preferential tax treatment erodes local competitiveness and hurts rural livelihoods.

A Broader Test of Governance

For President Ruto, who campaigned on dismantling entrenched corruption and “state capture,” the manner in which this controversy is handled will be closely watched. Critics suggest that tax reliefs granted without clear criteria, oversight, or public participation fuel perceptions of selective treatment rather than genuine policy-driven market interventions.

The Treasury and KRA have publicly defended their actions in other revenue contexts, pointing to efforts to tighten controls on tax exemptions and enhance compliance, but questions remain about transparency and accountability in large-scale duty waivers. 

Contextual Note: The specific claim of a Sh6 billion waiver has not been documented in publicly available, credible reports at the time of writing; however, the broader controversy over duty-free rice imports and tax waiver powers is well-attested in Kenyan media and ongoing legal challenges.