Kenya’s manufacturing industry is chocking under the overlapping mandates between agencies of national government and counties threatening contribution to the country’s overall economy, the industry’s lobby has said.
- The manufacturing sector’s contribution to GDP has dropped from 11.08 per cent in 2011 to 7.8 per cent in 2022.
- Kenya hopes to reverse the trend to a strong 20 per cent contribution to GDP by 2030.
- According to the Kenya Association of Manufacturers (KAM), reducing the regulatory burden is crucial to foster a more business friendly environment.
“Counties, in an attempt to raise own source revenue, have imposed heavy burden on business. The structure of national and county-level government institutions should be critically evaluated to eliminate overlapping and duplicative mandates,” Job Wanjohi, Head of Policy and Advocacy at KAM says, “Standardizing fee structures not only simplifies financial planning for businesses but also fosters a more equitable economic environment.”
In addition to counties, the current landscape often has businesses grappling with varying fees, charges, and levies, imposed by different government agencies, and regulatory bodies. For example, institutions such as the Kenya Bureau of Standards (KEBS), National Environment Management Authority (NEMA), Departments of Weights and Measures and specific agencies have overlapping mandates in regulating, labelling, and inspection within the manufacturing sector.
Food and beverage processing is also regulated by NEMA, County governments, Kenya Bureau of Halal Certification, and Kephis. County Governments and NEMA also share the regulation of the license to transport waste. The registrar of companies, county governments also have overlapping mandate in regulating business registration and licensing.
A 2020 Kenya Association of Manufacturers (KAM) study to assess regulatory burden established some of the high compliance costs facing manufacturers.
- According to the study, the Chemical and allied sector parts with an average annual levy of over KSh1 Million on business permits, licenses, and environmental audits.
- The compliance costs facing manufacturers in food and beverage sector was between KSh 1.2m -KSh2.2M, while those in paper and paper board paid KSh 1.1M.
- Manufacturers in pharmaceuticals pay an average of KSh850,000 annually.
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