By Milliam Murigi
Despite years of tax reforms intended to make menstrual products more affordable in Kenya, a new report reveals that hidden taxes, levies and regulatory charges continue to keep prices high.
The report dubbed “The Price of Dignity,” by Network for Adolescent and Youth of Africa (NAYA) Kenya reveals that while the government has exempted many menstrual products and raw materials from Value Added Tax (VAT), manufacturers continue to shoulder numerous other charges that ultimately increase the price consumers pay.
“Most people think sanitary towels are expensive because they cost a lot to manufacture. That is not the case. Government taxes, fees and regulations are significantly increasing the final cost of the product,” said Victor Rasugu, NAYA Kenya Executive Director during the report’s launch.
Among the hidden costs identified are an Import Declaration Fee (IDF) of 2.5 per cent, a Railway Development Levy (RDL) of 2.0 per cent and a Maritime Shipping Levy (MSL) of 1.5 per cent. Charges that apply to imported raw materials used in manufacturing menstrual products.
The report found that many manufacturers are unaware of these costs until their shipments arrive at the port, leaving them with unexpected bills that must either be absorbed or passed on to consumers.
“These charges are not illegal, they are simply not well understood by many manufacturers before importation. By the time the goods arrive, manufacturers are forced to pay additional levies they had not factored into their production costs,” notes Rasugu.
The report also highlights another challenge. Strict customs classification rules. Imported raw materials must meet precise Harmonized System (HS) code specifications to qualify for tax exemptions. If the material varies even slightly from the prescribed specifications, manufacturers can be required to pay VAT and other charges.
Industry players argue that these costs undermine the government’s efforts to improve menstrual health and keep locally manufactured products affordable.
“Even under the current VAT exemption regime, most manufacturers are not able to recover the 16 per cent input VAT they pay on production inputs. Those unrecovered costs are then passed on to consumers through higher retail prices,” revealed Rasugu.
The findings come as households continue to spend a significant share of their income on menstrual products. According to the report, Kenyan families spend between 2.17 percent and 3.14 percent of their monthly income on menstrual hygiene products, placing an additional burden on low-income households already struggling with rising living costs.
According to him, that is why one of the report’s key recommendations is for menstrual products to move from being VAT exempt to zero-rate. A zero-rated status would allow manufacturers to reclaim input VAT while ensuring consumers continue paying no VAT on the final product.
There is also need to amend the miscellaneous fees and levies Act, 2016. According to the report, this act imposes import-related charges such as the IDF, RDL and MSL on many raw materials and machinery used in manufacturing, adding to production costs despite the VAT exemption.
“Implementing comprehensive tax reforms could reduce manufacturing costs for large-scale producers from Sh52 to Sh38 per unit, while production costs for small-scale manufacturers could fall from Sh62 to Sh42,” reads part of the report.
Beyond tax reforms, the report says Kenya must also address other structural barriers to affordable menstrual products, including the high cost of manufacturing machinery, expensive raw materials and electricity. For electricity, the report recommends introducing preferential electricity tariffs for local manufacturers to lower production costs.
The report also criticizes the multiple levies imposed by county governments as menstrual products are transported across county borders. It recommends harmonizing these charges so that manufacturers pay county levies only in the county where production takes place, rather than facing duplicate charges in every county through which products move.
“Tax reforms alone will not ensure every girl and woman can access affordable menstrual products. We must also tackle the cost of machinery, raw materials, electricity and duplicate county levies if we are to truly reduce prices,” reads another part of the report.
The report further calls for all menstrual products to be classified as hygiene products, saying the current classification system creates unnecessary tax disparities.
At present, disposable sanitary pads are recognized as hygiene products and benefit from favorable tax treatment. However, menstrual cups are classified as medical devices because they are made from silicone, while reusable pads are classified as textiles because they are made from fabric.
As a result, both menstrual cups and reusable pads face a combine 41 per cent tax wedge for no policy reason, despite serving the same menstrual hygiene purpose as disposable pads.
“The products are being taxed based on the material they are made from rather than the purpose they serve,” Rasugu concluded, calling for a harmonized classification system.
Kenya currently has six large-scale manufacturers of menstrual products, who collectively have the capacity to produce more than two-and-a-half times the country’s annual demand, suggesting that local production is sufficient and supply is not the main challenge.
