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The National Assembly Departmental Committee on Finance and National Planning has reiterated its commitment to strengthening Kenya’s manufacturing sector. During a stakeholder engagement session in Machakos, the Committee Chairperson, Hon. Kimani Kuria (Molo), assured industry representatives that the Finance Bill, 2024, would support local manufacturing rather than hinder it.
Hon. Kuria addressed concerns raised by stakeholders, particularly regarding the introduction of excise duty on locally produced plastics. Stakeholders argued that such measures could make Kenya less competitive compared to neighboring countries. The current market conditions in Uganda, Tanzania, and Rwanda, where plastic products are zero-rated for excise duty, pose a significant challenge if Kenya introduces similar taxes.
“I want to assure you that we have all intentions to protect our manufacturers. We want to make Kenya a manufacturing country rather than a trading one,” Hon. Kuria affirmed.
One of the prominent voices during the session was Coca-Cola Beverages Africa Proprietary Limited. The company urged the Committee to reconsider the 10 percent levy on locally manufactured plastics, arguing that it would raise production costs and make local goods more expensive than imported ones. John Mwendwa, the Public Affairs, Communications, and Sustainability Director, highlighted the potential negative impacts on both businesses and consumers if the duty were imposed.
“By imposing excise duty on locally produced plastics, this will increase the cost of production and thus increase the cost of goods that require use of plastic packaging. Coupled with other proposed levies on plastic packaging, this will result in multiple taxation on the same product, further increasing the costs of businesses and consumers,” Mwendwa said.
Additionally, Coca-Cola called for the removal of the proposed eco levy of Kshs. 150 per kilogram on all plastic packaging materials, arguing that it would exacerbate inflationary pressures and deter investment. The company also requested an exemption for commercial and agricultural vehicles from the proposed 2.5 percent car circulation levy, suggesting instead a lower rate of one percent.
Other stakeholders, such as Tile & Carpet Centre Limited, requested exemptions for specific materials critical to their production processes. They highlighted the absence of local producers for certain raw materials, like white cement, which is essential for tile adhesives and other products.
Technology Service Providers of Kenya (TESPOK) and Wananchi Group also made significant submissions. They urged the Committee to reconsider the proposed increase in excise duty on telephone, internet, and data services from 15 percent to 20 percent. TESPOK argued that Kenya’s tax contribution from these services is already higher than the Sub-Saharan average, advocating for a reduced rate to enhance connectivity and ICT growth.
In response to these appeals, Hon. Kuria assured stakeholders that the Committee would carefully consider their inputs to avoid measures that could stifle the manufacturing sector. He emphasized the need for a balanced approach that supports economic growth without overburdening local industries.
Supporting this dialogue, Umul-Kheir Kassim (Mandera County) called for continuous stakeholder engagement beyond the Finance Bill deliberations to assess the law’s impact on the economy. “Do not just engage with us during the consideration of the Finance Bill. Let us engage regularly to assess the impact of the approved law so it can inform how we approach the next Finance Bill,” she urged.
The Committee has so far engaged 105 organized groups, with 71 others set to have their memoranda reviewed. Public hearings will continue, with a session scheduled at the Kenyatta International Convention Center (KICC) on Monday, June 6, 2024.
Adding another perspective, Charles Kimani, Founder and CEO of Jamii Products, advocated for stricter measures on plastic manufacturers to ensure environmental sustainability. “Considering plastic manufacturers don’t have the best approach to collect and recycle the waste plastics, I recommend the Act for 10 percent levy to be approved. Our environment is suffering, and stricter regulations are necessary to compel companies to adopt a circular economy approach,” Kimani stated, pointing out the dire condition of the Nairobi River as a case in point.
The ongoing deliberations reflect a critical juncture for Kenya’s manufacturing sector, with the Finance Bill, 2024, set to play a pivotal role in shaping the future economic landscape.
