Manufacturers have identified eleven key areas crucial for the sector to improve its contribution to Kenya’s GDP to 20 per cent by 2030.
- Through the industry umbrella body, Kenya Association of Manufacturers (KAM), the sector wants the government to reduce the regulatory burden on manufacturers, promote access to quality, and facilitate affordable and reliable energy.
- They also want the government to reduce transport and logistics costs and to sustain the fight against illicit trade.
- Among other recommendations include incentivising a prompt payment culture, providing affordable long term credit, and enhancing environmental and sustainable regulatory compliance and pro-industry skills development.
“We appeal the government to work closely with manufacturers, among other private sector players, when developing industrial policies to ensure that they promote rather than stifle industrial growth,” said Anthony Mwangi Kenya Association of Manufacturers (KAM) Chief Executive Officer, during the launch Manufacturing Priority Agenda (MPA) 2024, “The real question about industrial policy is not whether it should be practiced, but how.”
KAM faulted the government on electricity pricing and availability impacting negatively on the cost of production with the burden passed on to the consumers. A unit electricity cost per kWh charged to a cement manufacturer increased from Ksh 15.8 in January 2021 to Ksh 25.1 in January 2024, a 58.9 per cent increase in just three years. Last year, cement manufacturers also experienced 111 stoppages leading to significant financial losses.
Pending Bills
“The government has been reviewing the tax regime on excisable goods upwards to increase its revenue. One of the impacts has been incentivizing illicit trade which inevitably reduces government revenue through tax evasion. It is therefore important for the government to relook excisable goods tax regime to deter from incentivizing illicit traders. A case in point is the continued shrinking of the alcoholic beverages and cigarette industry in Kenya due to illicit trade,” KAM said during the launch of MDA.
“Delays in VAT refunds have serious implications on the manufacturing sector as majority of them rely on timely tax refunds to maintain their cash flow,” noted Job Wanjohi, Head of Policy and Advocacy, Kenya Association of Manufacturers.
- According to the 2024 Budget Policy Statement, the total outstanding national government pending bills as of 30th June 2023 amounted to Ksh 567.7 billion.
- The sum comprises of Ksh 443.8 billion for State Corporations and Semi-Autonomous Government Agencies, and Ksh 123.9 billion in respect to Ministries, Departments and Agencies.
- KRA had reported refund claims amounting to Ksh 16.34 billion as of 31st October 2023, comprising of Ksh 2.75 billion income tax and Ksh 13.58 billion VAT.
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