Manufacturers seek exemption from new levy

Kenyan manufacturers want to be exempted from the one per cent levy on imported raw material coming into the East African region. The new levy was recently introduced by the chairperson of the East African Community (EAC) Council of Ministers and is contained in the EAC 2015/16 Budget speech read on May 13, 2015 to the East African Legislative Assembly.

The request to have manufacturers exempted from the levy was put forward by the manufacturers’ lobby, the Kenya Association of Manufacturers (KAM), during a meeting chaired by Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed Monday in Nairobi.

The meeting had been convened to review the 2015/16 Budget outcomes and post-budget proposals. EAC issues were discussed during this Sectoral Council of Industry, Trade, Finance and Investment (SCITFI) meeting.

“During the last SCTIFI meeting held on May 2015, we realised a number of positive gains for local industry. These included approval of implementation of the revised EAC rules of origin, adoption of Kenya’s position to split the Anti-Counterfeit law and Competition law and referring the Anti-Counterfeit Bill and Policy to a meeting of experts,” said KAM Chief Executive Phyllis Wakiaga.

EAC budget

Other matters discussed at the event included transforming Kenya’s manufacturing industry into a competitive hub. Given that about 70 per cent of the EAC budget is to be funded by Development Partners and other revenue, the EAC has planned to have a more sustainable funding mechanism to the EAC budget requirements.

There are fears that the one per cent levy will increase the cost of doing business in the region, especially given that most raw materials are imported. This will mainly affect the manufacturing sector that imports most of its raw materials. Manufacturers say the levy will be harder for local producers to compete with cheaper and similar finished products from Turkey, China, Middle East, among other countries.

Ms Wakiaga also called on the Industrialisation and Enterprise Development ministry to address pending EAC issues that include the Non-Tariff Barriers Bill 2015 and Implementation of Article 25 of EAC Customs Union Protocol.