A Bill aimed at locking out cheap imports has been introduced in Parliament.
The Bill sponsored by Thika MP Patrick Wainaina seeks to charge a tax that is 10 times the market price of the imports that compete unfavourably against locally manufactured products.
If it is approved by Parliament and gets the President's nod, the SME Amendment Bill 2018 is likely to set the stage for a major trade war with Kenya's leading importers, including China.
“Currently, the country is importing goods worth Sh2 trillion annually and exporting goods worth only Sh500 billion. About 25 per cent of all imports come from China while Kenya only exports 0.5 per cent of total exports to China,” said Mr Wainaina.
Speaking when he opened the Thika Business Trade Fair, the MP asked manufacturers and Kenyans to support the Bill when it comes up for public debate.
“We should not be importing things like toothpicks, matchboxes, spoons, eggs, oranges, mangoes and pans which are produced locally. We need to protect the local manufacturers by discouraging these imports,” he said.
The Bill has received cautious support from the chairman of the parliamentary committee on trade and industry.
“We will look at the Bill favourably, but we will also have to put into consideration some of the country’s regional treaties such as the East Africa Community and Common Market for Eastern and Southern Africa,” said the committee's chairman, Kanini Kenga.
He said the country would not prosper under the current trade deficit and supported higher taxes for imports.
“We need to come up with drastic measures including laws that protect local industries. Local manufacturers should not be competing for the local market with companies from abroad,” he said.
In a recent meeting, manufacturers in Thika - Kenya's manufacturing hub - resolved to push for the amendment of the law to protect local industries.
They said imposing a total ban or higher taxes for imports that were locally available was the only way to safeguard local companies.
Broadways Managing Director Bimal Shah said cheap imports were threatening to drive some manufacturers out of the market.
"The Government should move with speed and protect the local industries by banning the importation of cheap imports since they are threatening the future of many companies, which might soon close shop,” said Mr Shah.
The manufacturers also complained about the high cost of electricity in the country, which they said was pushing them out of business.
They said the recent introduction of cheaper power tariffs for industries had yet to be effected, two months after the Government announced the plan.
“The problem we have in this country is that we have too much talk but less action. There is too much bureaucracy and it is affecting manufacturers," said Shah.
The Energy Regulatory Commission in December last year announced discounted tariffs for large commercial and industrial power users.
The agency also introduced night tariffs for industries.