In a recent appeal to President William Ruto, Kenyan manufacturers have urged the government to implement measures that will enhance the competitiveness of the local manufacturing sector.
This call comes amid rising concerns over high production costs and unfavorable trade conditions that threaten the viability of local businesses.
Key Takeaways
- Manufacturers are requesting tax cuts on inputs for manufactured products.
- The impact of international tariffs, particularly from the U.S., is affecting local competitiveness.
- A conducive business environment is essential for the growth of the manufacturing sector.
The Current Manufacturing Landscape
Kenya’s manufacturing sector has been facing significant challenges, particularly in the wake of increased production costs and external tariffs.
Local manufacturers argue that without government intervention, the sector may struggle to compete both regionally and internationally.
Rajul Malde, Commercial Director of Pwani Oil Company, highlighted that the cost of production in Kenya is significantly higher than in neighboring countries like Tanzania and Uganda.
He stated, “We are charged 2% on the raw products we import; our counterparts are not forced to pay this. If the government could remove that cost, production will go down, and consumers will pay less.”
The Impact of Tariffs
The introduction of a 10% export tariff by the U.S. has further complicated matters for Kenyan manufacturers.
This tariff, imposed by former President Donald Trump, has led to increased costs and reduced competitiveness for Kenyan goods in the U.S. market.
The Kenya Association of Manufacturers (KAM) has expressed concerns that this tariff could disrupt Kenya’s export market, particularly affecting products that previously enjoyed tax-free access under the African Growth and Opportunities Act (AGOA).
Recommendations for Improvement
To address these challenges, manufacturers have proposed several key recommendations:
- Tax Cuts: Implement tax reductions on inputs for manufactured products to lower production costs.
- Review of Tariffs: Engage in discussions with the U.S. government to review the 10% export tariff and seek a return to tax-free status under AGOA.
- Support for Local Production: Enhance support for local farmers and producers to ensure a steady supply of raw materials, which is crucial for manufacturing.
- Macroeconomic Measures: Introduce broader economic policies that create a more favorable business environment for manufacturers.
Conclusion
The call from Kenyan manufacturers for President Ruto to take decisive action reflects a growing urgency to revitalize the manufacturing sector.
By addressing the high costs of production and navigating international trade challenges, the government can help ensure that local manufacturers remain competitive and capable of contributing to the country’s economic growth.
The future of Kenya’s manufacturing industry hinges on these critical interventions, which could pave the way for a more robust and resilient economic landscape.
