By Patricia Mollyne Mataga
The Kenya Association of Manufacturers (KAM) has expressed concerns over some of the proposals contained in the already controversial 2024 Finance Act.
KAM Chief Executive Officer Anthony Mwangi said some of the proposals, if implemented, shall hinder initiatives aimed at driving manufacturing sector growth.
The Kenya Kwanza administration has set a target of ensuring the manufacturing sector’s contribution to the Gross Domestic Product (GDP) is increased from 7.8% to 20% by 2030.
Among the proposals singled out by the manufacturers is the Export Investment Promotion Levy (EIPL).
“This levy shall be detrimental to the competitiveness of local industries in both local and export markets through the increased cost of production,” KAM said.
It also noted that a similar levy was imposed on industrial raw materials such as kraft paper, steel billets, and cement clinkers in 2023, ostensibly to support local manufacturing.
However, the association said the levy has had a negative impact with the cost of construction going up by at least 40%.
Other proposals KAM has warned might have a negative impact on the manufacturing industry are the introduction of eco-levy on selected goods manufactured in Kenya or imported into Kenya, a proposal to increase the Import Declaration Fund (IDF) from 2.5% to 3.0% and the proposed 25% excise duty on vegetable oils.
“In addition, the proposal to introduce a 10% excise duty on plastic products will increase the cost of products like basins and mugs used by Mwananchi. For instance, the cost of a basin will increase from Kes.110 up to approximately Kes. 200 due to this proposal combined with other levies such as eco levy,” the KAM boss.
The association is now asking Members of the National Assembly to consider the views of all stakeholders, including citizens and the business community, before adopting the proposals in the Finance Bill, 2024.
Several sections of the bill have already received objections, even as Parliament prepares to start public participation forums.
“With Mwananchi still recovering from the adverse impact of the fiscal changes imposed in 2023, we strongly believe that the focus as a country must be on supporting the manufacturing industry to reduce the cost of locally produced products and services, to drive job and wealth creation, boost productivity, as a result, it will lower the cost of living for Mwananchi and create prosperity for Kenya,” KAM said.