Cast tax net wide to ease burden on us, manufacturers urge State

Speaking during the just concluded manufacturing summit in Nairobi, Kenya Association of Manufacturers (KAM) Chief Executive Officer Phyllis Wakiaga said presently, the sector is reeling from the effects of “extreme taxation.” PHOTO: COURTESY

Manufacturers have urged the Government to widen the tax bracket so as to avoid overburdening the sector with taxes.

Speaking during the just concluded manufacturing summit in Nairobi, Kenya Association of Manufacturers (KAM) Chief Executive Officer Phyllis Wakiaga said presently, the sector is reeling from the effects of “extreme taxation.”

“Even as we embrace the ‘Buy Kenya Build Kenya’ mantra, we urge the Government to look at the crucial area of taxation. Widening the tax bracket will see taxes raised from other sources and the pressure on the manufacturing sector going down,” said Ms Wakiaga, who was flanked by Cabinet Secretary for industrialisation Adan Mohamed.

She added that the sector aims to rejuvenate itself and contribute 20 per cent to the economy by 2020. Presently, manufacturing contributes 11 per cent to the GDP.

Wakiaga further urged players in the sector to improve competitiveness for it to realise its potential.

“Even as we trade, let’s see competition between us turned into a positive force. We should also not wait for procurement tenders from the State, but let’s also buy things from each other,” she said.

CHEAP CHINESE IMPORTS

CS Mohamed told the summit the Government is working hard to lower the cost of production, including logistical costs as well as for electricity.

“You might realise that over the years, some costs, especially transport, have significantly gone down. For example, it now takes four to five days to transport materials from Mombasa to Kampala. Three years ago, it would take 18 to 20 days,” said Mr Mohammed. The CS also put emphasis on the State’s buy Kenya Build Kenya campaign, saying such an initiative is the only sure way of growing the country’s manufacturing sector.

The sector has been shrinking in recent times, With Mr Mohamed pointing out that its contribution to the GDP had shrunk by four per cent in the last five years.

The sector has faced intense competition, especially from cheap Chinese imports, with a 2015 report by the World Bank titled Deal or no Deal: Strictly Business for China in Kenya? Pointing out that cheap Chinese manufactured goods and poor domestic conditions were to blame for the premature decline of the local manufacturing sector.

The report said Kenya was facing a concept called de-industrialisation, which is a process whereby a country experiences a reduction in industrial activity, usually an indicator of a transition to a service economy.

The report cited specifically inadequate infrastructure and poor policies as the reasons manufacturing is losing its shine.