Kenya: KNCCI Warns of Economic Strain As High Fuel Costs Hit Transport Sector

Nairobi — The Kenya National Chamber of Commerce and Industry (KNCCI) has warned that persistently high fuel prices are straining the transport sector and could spill over into broader economic instability if urgent support measures are not introduced.

In a statement, KNCCI said rising pump prices--despite recent tax cuts--continue to drive up operating costs for businesses, threatening jobs, pushing up consumer prices, and eroding competitiveness.

The concerns follow recent price adjustments by the Energy and Petroleum Regulatory Authority, which initially raised fuel prices sharply due to global oil market pressures before a government intervention through a VAT cut led to a partial reduction.

"Kenyan businesses cannot absorb another fuel shock of this magnitude without serious consequences for jobs, prices, and economic stability," said KNCCI CEO KK Mutai.

Despite the downward adjustment, fuel prices remain elevated compared to previous months, reflecting global supply disruptions linked to geopolitical tensions in the Middle East.

KNCCI said the impact is already being felt across the economy, with transport fares rising by up to 25 percent, while logistics costs--where fuel accounts for a significant share--continue to increase.

Production costs in key sectors such as manufacturing and agriculture have also climbed by between 15 and 30 percent, raising concerns over business sustainability and inflationary pressure.

The chamber noted that Kenya's reliance on imported petroleum leaves it highly exposed to global shocks, particularly disruptions along critical shipping routes such as the Strait of Hormuz.

It also flagged the domestic pricing structure, where taxes and levies account for nearly 45 percent of pump prices, as a major contributor to the cost burden.

KNCCI is now calling for a review of fuel taxes and levies, alongside targeted support for transport operators, small businesses, and export-oriented sectors.

It warned that without coordinated intervention, sustained high fuel costs could drive up food prices, weaken export competitiveness, and slow economic growth.

Read the original article on Capital FM.