NAIROBI, Kenya, May 29 – The Kenya Association of Manufacturers (KAM) has voiced concerns about the proposed Finance Bill 2024, warning that it may be detrimental to the country’s manufacturing sector.
The Chief Executive Officer (CEO) of KAM told Capital Business Wednesday that the bill’s new taxes and levies could exacerbate the challenges already faced by local industries, driving up costs and reducing competitiveness.
Mwangi emphasised that a lack of predictability in Kenya’s tax environment and frequent amendments to tax regulations hinder investment and growth within the sector, which is crucial for Kenya’s economic transformation agenda.
“We operate within the East African Community’s (EAC) common external tariff, meaning we are a customs union. The taxes are common across the region,” he said.
“In this competitive environment, each country tries to be more competitive than the other. We have been advocating for Kenya to remain competitive, and we don’t need anything from the government in terms of money; we just need an environment that is predictable first from a taxation point of view.”
Commenting on the adverse impacts of the Export Promotion Investment Levy introduced in 2023, Mwangi noted that it had already caused significant harm to key sectors, particularly the paper industry.
“The paper sector is almost collapsing. By levying the 10 per cent excise duty on raw materials, the tax rate increased to nearly 70% in Kenya compared to 26% in other EAC countries. As a result, our export market disappeared,” he lamented.
“Now, our imports of products like tea bags and fruit packaging boxes are coming from countries like Sri Lanka, China, and India—items we could produce domestically.”
Mwangi criticised the government for extending the levy to 60 additional products instead of abolishing it.
“They see an opportunity to make money but are killing sectors like cement and steel in the process. For 2024, the proposed measures are just adding fuel to the fire. We expect the same downward trajectory, like a flight going down without a course correction.”
The Finance Bill 2024 also proposes a 25 percent excise duty on vegetable oils, a move Mwangi described as destructive to the Sh100 billion edible oil industry.
He warned that if passed in its current form, the price of cooking oil would increase by 80 percent, impacting consumers.
“This sector is one of the most vibrant in our economy. Why kill it without an alternative? We could import cooking oil from Egypt or Malaysia, countries eager to add value and export finished products. Yet, we are undermining our own industry.”
Mwangi further warned that if proper taxation policies are not put in place, Kenyans will continue to go through difficult times.
“Yesterday, we told members of parliament that if this trajectory continues, you are going to kill Kenyans with your own hands. You are the leaders; you are supposed to help grow this economy. Why do we have this penchant for making the wrong decisions? It is baffling and goes against basic economic theory.”
The KAM CEO underscored the complexity of the Kenyan economy and the need for sound policymaking.
He emphasised that manufacturers are not asking for tax relief but for a stable macroeconomic environment and predictable taxation policies.
“This is not much to ask—predictability and certainty in the market. Government interference should be limited to necessary areas like competition, health, standards, and environmental protection. Interfering with the marketplace otherwise collapses the market.”
