By Mr KK Mutai, Chief Executive Officer– Kenya National Chamber of Commerce and Industry (KNCCI)

The Kenya National Ch amber of Commerce and Industry (KNCCI) acknowledges that the current fuel pressure are occurring within a broader global context, particularly the escalating tensions involving Iran, which have disrupted global oil supply chains and contributed to rising international crude oil prices. As a net importer of petroleum products, Kenya remains highly exposed to such global shocks.

KNCCI notes the recent downward adjustment in fuel prices following the removal of the additional 8% VAT by EPRA, resulting in revised pump prices.

KNCCI welcomes this intervention as a timely and necessary step towards cushioning households and businesses from the sharp increases previously experienced. This action demonstrates Government’s responsiveness to the economic pressures arising from both global and domestic factors.

This increase places immense pressure on businesses and households already facing a high cost of living.

“Kenyan businesses cannot absorb another fuel shock of this magnitude without serious consequences for jobs, prices, and economic stability.”

To Kenya’s economy fuel is more than a commodity but backbone of every sector of our economy.
However, while the reduction provides short-term relief, fuel prices remain elevated relative to pre-adjustment levels, and broader cost pressures across the economy persist.

The surge has been driven by global factors, including the Middle East conflict, which has caused: a 41.5% increase in petrol landed costs, a 68.7% increase in diesel landed costs.

At the same time, global oil prices have risen by over 25–40% during the conflict period, significantly raising the cost of fuel imports for energy-dependent economies like Kenya.

Kenya imports nearly all its petroleum products, meaning these global shocks translate directly into domestic inflation, higher transport costs, and increased cost of doing business.

The impact is already being felt across the economy:

  • Transport costs are rising sharply, with fares increasing by up to 25%
  • Logistics and freight costs, where fuel accounts for up to 50% of expenses, are escalating rapidly
  • Production costs in manufacturing and agriculture are rising by 15–30%, threatening business sustainability

At the same time, disruptions in key global shipping routes such as the Red Sea and Suez Canal are increasing delivery times and costs, further straining Kenya’s supply chains and export capacity.

Kenya’s trade exposure to the Middle East, valued at over KSh 700 billion annually, means that prolonged instability will directly affect key exports such as tea, horticulture, meat, and coffee, undermining foreign exchange earnings and market access.

Without urgent intervention, this crisis will translate into higher food prices, reduced export competitiveness, and slower economic growth.

This situation is further compounded by the domestic fuel pricing structure, where taxes and levies account for nearly 45% of the pump price, significantly inflating the cost borne by businesses and consumers.

KNCCI calls for immediate and coordinated action:

  • A comprehensive review of fuel taxes and levies to reduce the cost burden and improve transparency
  • Institutionalized public-private sector dialogue to ensure consultation before major pricing decisions
  • Targeted support for transport operators, SMEs, and export sectors most affected by rising fuel and logistics costs

“Kenya cannot continue to manage fuel shocks through short-term measures. Structural reforms are now unavoidable.”

The private sector stands ready to partner with Government to stabilize prices, protect jobs, and safeguard Kenya’s economic competitiveness.

The time to act is now.