The Ministry of Investments, Trade and Industry has kicked off public participation for the proposed Export and Promotion Levy 2023.
The process that started on Tuesday presents an opportunity for industry stakeholders to submit their views, representations or written memoranda on the proposed levy that will be imposed on certain imported goods which can be manufactured locally.
Julius Kirima Director of Industries at the State Department for Industry said the proposed levy seeks to cushion the domestic manufacturing sector against unfair trade practices and create a sustainable industrial base.
Kirima said the proposed policy change is among a raft of initiatives that the government has implemented over the past years to create a conducive environment for local manufacturers.
“The industry despite being a key contributor of the country’s GDP faces challenges like inadequate infrastructure and skilled labour. The proposed levy is therefore among other initiatives like, Buy Kenya Build Kenya aimed at promoting local manufacturing,” he said while speaking at a public participation forum held at the Machakos Social Hall.
The director, while rooting for the proposed levy, said big economies across the world have strong domestic industries and Kenya needs to fully support the local manufacturing sector to create a self-sufficient economy.
“The levy also intends to create a level field for manufacturers who face competition from cheaply imported goods and deter dumping of substandard foreign goods,” noted Kirima.
Manufacturers however expressed varied opinions on the proposed levy with a majority asking the ministry to reconsider the move saying the proposed levy may ward off potential investors further hurting the economy.
Frank Obure General Manager AAA Growers Limited said the proposed levy will lead to an increased cost of production especially for local industries that import consumables to process their goods or products.
Obure noted that many manufacturers were already reeling under the impact of rising costs of production some occasioned by the levies paid to different regulatory bodies and imposing of another levy will hurt the already struggling sector.
“The many levies we pay are already taking toll on the efficiency of the businesses reducing the profit margins significantly; another levy will not attract investors into the country. The ministry is also not clear on the rates of the proposed levy,” noted the general manager.
Obure also noted that the proposed levy will hurt trade between Kenya and other countries especially the European market and asked the government to instead look for other sources of revenue to support manufacturers
“Kenya is no longer a preferred market due to the high cost of production. Infact most countries are looking into countries like Morocco,” he added.
Abel Kamau the Trade Policy Manager at the Kenya Association of Manufacturers (KAM) opposed the move saying any additional costs will scare away investors.
Kamau said the government should instead seek to reduce the many levies charged on manufacturers and remove impediments like high cost of electricity by introducing a cheaper tariff.
“We are going to a world market regime and we should strive to make our country competitive. The proposed levy is punitive,” he said.
Officer in charge of Industrialization and Investment in the County Government of Machakos Muema Wambua underscored the need to protect local manufacturers from cheap imports.
He however noted that startups should be exempted from the levy.
By Roselyne Kavoo