Manufacturers in Kenya have outlined eleven critical areas aimed at enhancing the sector’s contribution to the country’s gross domestic product (GDP) to 20 per cent by the year 2030. Under the leadership of the Kenya Association of Manufacturers (KAM), the industry urged the government to alleviate regulatory burdens, ensure access to quality resources, and provide affordable and reliable energy.
Additionally, manufacturers also advocated for reduced transportation costs, sustained efforts against illicit trade, and the promotion of a prompt payment culture. During the launch of the Manufacturing Priority Agenda (MPA) 2024, Anthony Mwangi, CEO of KAM, emphasised the importance of collaborative policymaking with the private sector to foster industrial growth. “The real question about industrial policy is not whether it should be practiced, but how,” Mwangi stated.
KAM highlighted concerns over electricity pricing and availability, citing significant cost increases impacting production. For instance, the electricity unit cost per kWh charged to cement manufacturers surged by 58.9 per cent from January 2021 to January 2024. Additionally, frequent stoppages in production have led to substantial financial losses for cement manufacturers.
Moreover, the government’s tax regime on excisable goods has inadvertently encouraged illicit trade, resulting in revenue loss. KAM emphasised the need for a review to deter illicit traders and safeguard government revenue. Delays in value-added tax (VAT) refunds further exacerbate challenges for manufacturers, affecting their cash flow and operational stability.
According to the 2024 Budget Policy Statement, outstanding national government pending bills amounted to Ksh. 567.7 billion as of June 30, 2023. This includes refunds claimed by manufacturers, with Ksh. 16.34 billion pending reimbursement, comprising income tax and VAT refunds.
As the manufacturing sector navigates various challenges, collaboration between the government and industry stakeholders becomes increasingly crucial to drive sustainable growth and achieve economic targets.
