Economy

KAM warns Kenya risks investor flight on rigid regulation

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KAM Chief Executive Phyllis Wakiaga. FILE PHOTO | NMG

A manufacturers’ lobby has accused Kenyan regulators of overreaching their enforcement mandate and warned that such action could destroy fledgling businesses and scare off investors.

The Kenya Association of Manufacturers (KAM) pointed yesterday to recent moves by President Uhuru Kenyatta’s administration to enforce compliance of taxation measures as well as the introduction of a raft of levies as an emerging threat to local businesses.

Chief Executive Phyllis Wakiaga said while firms are mandated to comply with laws and regulations of the land, creating an “unpredictable” environment for business would hurt Kenya’s economic prospects.

“We’ve seen a lot of regulatory overreach in the last few months. This proves to be a very unpredictable business environment,” she said yesterday in Nairobi.

“If investors feel uncertain about their future, they invest less in the business.”

The Kenya Revenue Authority has stepped up a crackdown on local firms over allegations of tax evasion, which has led to a wave of company closures.

Among firms that are battling claims of tax evasion include Keroche Breweries and Africa Spirits Limited owned by billionaire businessman Humphrey Kariuki.

Ms Wakiaga said while there is a positive sentiment among players within the sector on Kenya’s economy, a worsening operational environment would hurt those prospects.