Manufacturers might have to layoff staff after Trump tariffs, KAM says

Employees of Hela Intimates EPZ Limited in Athi River, Machakos County. [File, Standard] Days after U.S. President Donald Trump imposed a ten percent tariff on all goods exported from Kenya and other African countries, the manufacturing sector is facing potential job cuts. This is according to Tobias Alendo, Chief Executive Officer of the Kenya Association of Manufacturers (KAM), during an interview with the Standard last week. Alendo stated that businesses would have to absorb the tariffs, which would likely lead to workforce reductions until they can adjust to the new U.S. market conditions. "There are already contractual agreements at 0 percent, so the additional 10 percent will increase our costs. The only way to manage this is to reduce the number of employees until we can sustain our presence in those markets at the new rate," Alendo explained. Other African countries affected by the 10 percent tariff include Rwanda, Burundi, Eritrea, South Sudan, Sudan, Ethiopia, and Uganda. Despite these new tariffs, Alendo emphasized that Kenya's business environment remains more favorable compared to its competitors on the continent. He noted that the cost of accessing the U.S. market would still be lower compared to similar countries trading with the U.S. market. Alendo highlighted that other African competitors face higher tariffs-South Africa at 37%, Lesotho at nearly 50%, and various Asian countries above 50%-which makes Kenya slightly more competitive. Trump also imposed higher tariffs on Nigeria (14%), Malawi (17%), Zimbabwe (18%), the DRC (11%), Zambia (17%), and Mozambique (16%). According to Alendo, one of Kenya's major exports to the U.S. is apparel, meaning that farmers and textile workers are likely to bear the brunt of Trump's latest tariffs affecting Kenya-U.S. trade relations. The sector employs nearly 200,000 Kenyans. Despite the challenges posed by these tariffs, Alendo remains optimistic that the Kenyan government has a negotiating opportunity to maintain duty-free access under the African Growth and Opportunity Act (AGOA), which is set to expire this September. "If AGOA remains duty-free, it directly employs over 100,000 people and indirectly affects another approximately 150,000. We cannot afford to lose that market. We hope the government will negotiate to keep AGOA at 0%," he added. For the past 25 years, Kenya has enjoyed tariff exemptions when exporting to the United States under AGOA. The U.S. has provided duty-free access for many Kenyan goods, including apparel. Kenya primarily exports denim jeans, trousers, and knitwear to American brands and retailers like Levi Strauss and Walmart. Export Processing Zones (EPZs) in counties such as Nairobi and Machakos play a crucial role in producing these exports. On the domestic front, various counties have been imposing their levies on goods and services crossing their borders. This situation has created trade barriers that lead to higher costs for both businesses and consumers, discouraging investment and the movement of goods, services, capital, and labor. Alendo addressed the ongoing concerns regarding double taxation among businesses, stating that efforts to resolve these issues are underway. "A year ago, the Uniform Procedure Act was passed, and we are now awaiting the guidelines. These guidelines will clarify what counties need to impose and at what rates," he noted. Additionally, Alendo highlighted that other forms of over-taxation from different state bodies are creating significant challenges for many businesses. "The cost of doing business is steadily increasing due to fees-not only from county governments but also from various ministries, departments, and agencies that are introducing their own charges," he remarked. Alendo urged stakeholders involved in the budget-making process to take into account the burden of taxes that have substantially increased operational costs for businesses. Jeremiah Nzioka, KAM Chair for the Lower Eastern Region, pointed out the disconnect between county governments and business leaders. "There is a tug-of-war between us and the counties, and they often seem unwilling to listen. We can agree, but behind the scenes, they continue their agendas," Nzioka explained. He added that there have been numerous complaints from KAM members, with many unresolved issues dating back some time. Nzioka expresses his concern about being excluded from the county legislative process. Even when they are included, he feels that their voices are not heard, primarily because public participation events draw people from various sectors and may not adequately address specific industry issues. To improve this situation, he suggests organising public participation at the county level sector by sector to ensure that all relevant issues are captured and addressed effectively. "We, as an industry, have been advocating for a forum with the finance team before they implement any policies that affect us. We need to discuss industry matters with them, but they have never agreed to this." Nzioka mentioned this in the context of Machakos County, which, along with Kajiado County, is part of his jurisdiction. He expressed optimism following a meeting with Machakos Governor Wavinya Ndeti in March. "If she follows through on what she said, we may be making progress," he noted, adding that she agreed to include some industry representatives in the County Executive Committees.

Manufacturers might have to layoff staff after Trump tariffs, KAM says

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