Kenya’s flower industry risks losing billions in earnings as companies halt exports due to a shortage of documents for facilitating trade with Europe.

Exporters said last week that a shortage of the Euro 1 and GSP forms supplied by the Kenya Revenue Authority (KRA) is hurting exports, with the taxman saying it could take four more weeks for the documents to be available. The documents allow preferential entry of goods into the European market.

Red Lands Roses, an exporter of roses, is one of the firms hit by the scarcity of the forms. “We are not shipping flowers to some countries because we do not have the forms, having used the last one on Friday 26,” said Red Lands managing director Isabelle Spindler.

According to Ms Spindler, although in the EU some countries allow goods worth less than 6,000 euro ($7,980) to be imported without the documents, operations have become more expensive because they are shipping many small orders. “Luckily, this is the low season; I don’t want to imagine what a crisis it would be if this were the high season,” she said.

“The forms are not there, but we are trying to get them from other sources and we hope that within the next four weeks we shall be able to provide them,” said head of marketing and communications at KRA Kennedy Onyonyi.

Flower industry experts said the lucrative industry could lose up to Ksh150 million ($1.7 million) daily.

“There has been a continued shortage of Euro 1 Forms at KRA since 2010 but the situation has reached a crisis level, threatening loss of revenue and jobs,” said Kenya Flower Council chief executive officer Jane Ngige, adding that 590,000 people risk losing their jobs while the livelihoods of two million people could suffer if other markets follow suit.

READ: Shortage of vital document slows down EU exports

Ms Ngige said Scandinavian markets like Sweden and Finland have for the past two weeks shunned the country’s flowers. The Kenya Flower Council on Friday last week wrote to KRA demanding immediate action or compensation for the losses but by close of business, no response had been forthcoming.

Flower exports

Experts fear the problem could affect Kenya’s flower exports to the Holland market, through which 65 per cent of its flowers enter the European Union market, while 23 per cent go to the UK.

Oserian Development Company sent its last form on Tuesday, July 24. T G Ruli, the company’s director of operations, said buyers will have to incur import duty and then claim the expense when the forms are available.

“This will effectively make the business more expensive and it will not be long before frustrated buyers look for supplies elsewhere. We cannot ship out small quantities going by the size of our farm and export orders and so, unless these forms are available immediately, we will have to accommodate duty in the price until the papers are printed,” said Mr Ruli.

Over the past two years, exporters have been getting the forms from different KRA offices around the country. “We have been forced to travel to Nakuru and even Mombasa to look for the forms and at times we don’t get them. Now we don’t have any,” said Ms Spindler.

Another looming problem for the flower sector is the long awaited Economic Partnership Agreement between the East African Community and the European Union (EU), expected to be sealed in October next year.

READ: EAC, EU trade deal hits a snag

The Euro 1 is issued for goods originating from all Africa, Caribbean and Pacific (ACP) countries and destined for the EU market. It is applied in accordance with the ACP/EU Cotonou Trade Agreement of 2000.

Kenya currently enjoys preferential access to the EU market thanks to an interim trade deal the five EAC members signed with Europe in 2007 to guarantee continued duty-free and quota-free access to the latter’s market following the expiry of the non-reciprocal trading arrangement based on a World Trade Organisation waiver granted in 2001.