Alcohol makers reject new Nema fees set to cost Sh32bn in additional costs
 Collection of alcoholic beverages. Abak said the fees are disproportionately high, as they fail to consider the economic realities currently faced by the manufacturing sector.
Alcohol industry members have opposed the imposition of stiff fees by the environment watchdog through the Sustainable Waste Management Regulations 2024.
The Alcoholic Beverages Association of Kenya (Abak) wants the National Assembly’s Committee on Delegated Legislation to revise punitive fees, which will translate to a 70 percent increase in the cost of production for alcohol products.
The association told MPs the financial impact is estimated to be over $250 million (Sh32 billion) in added cost of production for the alcohol industry.
Abak, an umbrella body that brings together Kenya’s leading manufacturers and distributors of alcohol beverages for adults, told MPs that the increased cost of production will be passed on to consumers.
The alcoholic beverages lobby said the fees proposed by the National Environment Management Authority (Nema) affect materials used by manufacturers, importers, brand owners, repackagers, refilters and rebranders.
The punitive fees are contained in the Sustainable Waste Management (Extended Producer Responsibility) Regulations, 2024 published by the Cabinet Secretary for Environment, Climate Change and Forestry.
The regulations seek to impose Sh150 on packaging for non-hazardous products such as plastics, aluminum, composite, paper and its corrugates, glass, cardboard, and cartons.
Hazardous products’ packaging for industrial chemicals, oil and lubricants, pharmaceuticals, agrochemicals, veterinary, cosmetics, paints and solvents, treated wood, and agricultural films will also attract Sh150.
Fees for electrical and electronic equipment, mercury auto switches, thermostats, batteries, and accumulators have been pegged at Sh150.
Importation of end-of-life motor vehicles, automobiles, aircraft, locomotives will also attract Sh150 while non-packaging items including plastics, glass, paper, cardboard, furniture except wooden, rubber and tyres, leather, artificial hair, diapers, and sanitary towels will attract Shh150.
Zack Munyi, the head of Public Policy at the Kenya Breweries Limited (KBL), told the committee that the regulations require alcohol industry members to register with the National Environment Management Authority (Nema) under the Extended Producer Responsibility and pay multiple fees.
“The legislation will affect manufacturers, importers, brand owners, repackagers, refilters, rebranders and converters,” Mr Munyi said.
“Some of the contentious provisions in the regulations were introduced after public participation. We object to certain provisions in the regulations which target packaging materials such as glass, aluminum, paper and its corrugates cartons.”
Mr Munyi said the requirement for importers of certain finished products including glass, aluminum, and plastic cartons to pay a fee of Sh150 per item is highly punitive for producers.
He said alcoholic industry members will pay Sh150 per item including glass, aluminum cans and barrels, and plastics at the point of importation and apply for an Extended Producer Responsibility certificate.
Mr Munyi told the committee chaired by Ainabkoi MP Samuel Chepkonga that the imposition of Sh150 per item would translate to 70 percent in the cost of production for alcohol products.
“Alcohol industry cost of production is going to increase by 70 percent if this regulation is passed in its current form,” Mr Munyi told MPs.
“This excludes the impact of other levies that have also been proposed the Extended Producer Responsibility regulations, including the requirement to register all individual and collective Producer Responsibility Organisation (PROs) at Sh5,000, payment to Nema amounting to five percent of the amount paid by producers to PROs for collection of waste and an annual operating license fees per PRO of Sh100,000.”
Abak said the fees are disproportionately high, as they fail to consider the economic realities currently faced by the manufacturing sector.
The lobby said the industry is experiencing an unprecedented increased cost of doing business, and increased demand to borrow loans to pay taxes, amid declining sales driven by reduced disposable income.
“Given the magnitude of the impact we expect from the implementation of EPR regulations, a regulatory impact assessment by the Ministry of Environment and Forestry should have been conducted to justify charging the proposed fees in the regulations. However, this has not been done.
“While we support the regulations’ intended purpose to promoting sustainable waste management practices in Kenya, some of the provisions will constitute a heavy financial burden to the manufacturing sector, with the risk making businesses untenable.”
Abak Chairman Eric Githua, in a written submission, told the committee that the regulations will bring about additional administrative burden and costs, in the form of PRO registration fees and annual subscription levies, to industry members who have already established individual PROs through self-regulation to collect items such as glass.
Mr Chepkonga promised to engage Nema and the Ministry to ensure that fees are revised downwards to ensure that the cost of doing business in the country is reduced.
