Manufacturers say midway policy changes hurting economy

Manufacturers are calling on President Uhuru Kenyatta to intervene on the policy changes made by the public servants without their involvement.

Kenya Association of Manufacturers (KAM) chairman Pradeep Paunrana said midway changes on key policies without consulting the industry stakeholders had a negative impact on the economy.

Mr Paunrana gave an example of the packaging and converting industry that is currently suffering from a change of policy where duty on paper was increased from 10 per cent to 25 per cent just four months after the East African Community (EAC) budget.

“Kenyan companies are now at a disadvantaged position due to this policy change as it is now cheaper for the companies to print things like labels in other EAC countries that charge a lower tax and import them to Kenya,” said Mr Paunrana.

The chairman noted that such a move was not promoting local industries as products have become uncompetitive compared to others from EAC member states that levy a lower tax on papers.

“This is clearly halting our progress for industrialisation and job creation,” he said Tuesday during the opening of KAM's new offices in Westland, Nairobi.

He also noted that increase in duty on products like Senator Beer was a move aimed at discouraging investments in the country, noting that East African Breweries Limited, which manufactures the brand, had invested massively on the product.

Mr Paunrana said that it was not only EABL that suffered a blow but rather the entire value chain that comprises farmers who have been planting the sorghum crop for the manufacturing of the brand.

READ: Drop in Senator sales hits 20,000 sorghum farmers

Mr Kenyatta, who officiated the function, noted that the government was keen in promoting the local manufacturers and that it was keen on removing the obstacles that hinder the growth of the industry in the country.

The president pointed out that he had advised the Cabinet secretaries to start buying goods that are made locally other than importing them.

“In the promotion of our local industries, I have instructed all my ministers to start embracing our locally made goods other than importing and I have told them to table in the next presidential round table meeting the percentage of goods that were bought locally,” said Mr Kenyatta.

The president noted that the cost of power, which has been a major obstacle to the manufacturers, is already being addressed with the injection of cheap geothermal power in the national grid.