A proposal by the Treasury to impose a 10 percent levy on imported clinker — a material that contains 60 to 70 percent inputs for cement production — has awakened a vicious battle between billionaire cement maker Narendra Raval and smaller industry players.
Mr Raval, who is said to have close ties with President William Ruto’s administration, owns National Cement and has for long been pushing for enhanced duty on clinker as he eyes some Sh8.3 billion that factories without grinders pay to import the crucial raw material.
Last week, manufacturers through their umbrella body, the Kenya Association of Manufacturers (KAM), issued a statement calling on the government to reconsider the proposal, saying it poses serious negative economic and social ramifications including a possible loss of more than 100,000 jobs.
Citing a report published by a committee composed of Treasury, Trade and Mining ministries and the Kenya Bureau of Standards (Kebs), industry players and KAM itself in September 2021 accused the government of reneging on a joint understanding that duties on clinker could not be imposed until 2026.
“In a meeting held on January 26 between the Trade Ministry, KAM and cement manufacturers, the companies committed to an accumulative investment of circa Sh100 billion in clinker manufacturing within the period if the current taxation regime that affords them quality imported clinker is maintained as is,” said KAM.
“However, the proposed import levy will do less to protect the local clinker producers and, instead, it will lead to the importation of cheaper finished cement from EAC partner states which may lead to the loss of over 100,000 jobs.”
The push by the government confirms a long-held perception that Mr Raval, who also has a strong grip in the steel sector through his Devki Group, was being given an ear by the new administration as it crafted its first budget for the fiscal year starting July.
The Athi River-based National Cement, which has the largest limestone deposits, the main material for clinker production, wanted import duty on clinker raised to 25 percent.
In its argument, the firm stated that the country had sufficient capacity to produce clinker.
The proposal saw five other cement manufacturers, including Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot Limited, protest, arguing that the imposition would tinker with the principle of a level playing ground as only National Cement and Mombasa Cement have a dominant share in the industry.
The smaller players have continued to insist they are operating within the four-year grace period lapsing in 2026 to build their grinders.