KAM urges counties to attract business by revising tax regimes

Investors want county governments to restructure their tax regimes in order to make the devolved units more attractive to business.

Speaking at the ongoing Governors Summit in Naivasha on Thursday, Kenya Association of Manufacturers (KAM) chairman Pradeep Paunrana said there were countless business opportunities in counties but most investors are repulsed by unnecessary taxes imposed by county governments.

Hard-pressed by ballooning wage bills and demand for services by the public, some county governments have resorted to imposing levies even on basic services as they scavenge for more revenues.

“As KAM, we have met with governors of various counties and discussed the opportunities we see in their regions. However, in most cases the county governments have imposed too many unnecessary taxes that end up discouraging investors. This is a major issue that they need to think through so that they don’t end up locking out investment,” Mr Paunrana said.

He said that devolution had opened up more investment opportunities which will benefit both investors and citizens of far-flung areas which were previously considered too remote for business.

“The promise of devolution was a promise of new opportunities to the private sector.

‘‘As manufacturers, these opportunities have come in a large way but we still feel that more can be done,” Mr Paunrana said at the forum on Thursday.

Nation Media Group (NMG) chief executive Linus Gitahi said that devolution is a positive development which has unlocked numerous opportunities for investors and improved Kenyans’ lives.

“We can actually create opportunities that can change the lives of Kenyans. We are partners in the journey of transforming this country.’’

The government, whether at the national or county level, needs to work together with the private sector to deliver on the promise of development,” Mr Gitahi said.

The summit, now in its second edition, is convened by NMG as a forum where governors can meet with members of the private sector to chart the country’s development path.

Basic services

Mr Gitahi said that most Kenyans now have access to basic services which were previously out of reach, thanks to devolution.

Mr Isaac Ruto, the Bomet governor and chairman of the Governors Council, said that governors were committed to dialogue with the private sector to see how the two sides can work together to fast-track development.

He dismissed a report by the World Bank which criticised county governments for prioritising salaries and operations in their spending at the expense of development.

‘‘It was a total misrepresentation of the real situation,’’ he said.

‘‘All counties met the 30 per cent threshold required by law. What happened is that development projects budgeted for in that period had not taken shape by the time the report was compiled due to bureaucracy in public procurement,” Mr Ruto said.

Another major hindrance to the establishment of industries in the counties, according the manufacturers lobby, is the high cost of land.

Mr Paunrana said that land is overvalued in most places in the country, to a level that sometimes “doesn’t make economic sense”.

“To this end, we have urged all counties to set up at least one industrial park within their borders. This would make it easy for an investor to come in and set up operations,” he said.

Kenya Power chief executive Ben Chumo said that they plan to significantly increase power connectivity beyond the current 37 per cent countrywide.

He said that Kenya Power was investing Sh10.45 billion in the construction of 36 substations with the aim of reinforcing the country’s electricity network.

Half of the money will be paid to local contractors to improve power distribution with focus on unserved and poor counties, he said.