Africa-Press – Kenya. MANUFACTURERS want the government to reduce power tariffs, remove taxes on industrial inputs and create a predictable regulatory environment to make Kenya competitive.
In addition, they have called for a reduction in taxes and levies on fuel products and structures that will promote agro-industry value chains to help cut export of raw material and increase Kenyan exports.
This as the Kenya Association of Manufacturers moves to champion industrial growth under a fresh Manufacturing Priority Agenda (2026).
It focuses on four key pillars of global competitiveness, export- led industrialisation, MSMEs development and agriculture for industry.
They argue that high production costs continue to erode margins, undermine export competitiveness and discourage fresh investment, even as Kenya seeks to position itself as a regional manufacturing hub.
According to KAM, achieving Kenya’s ambition of becoming a high middle-income economy under Vision 2030 is not feasible without a strong manufacturing base.
The industry’s current contribution to the GDP remains in a single digit of 7.3 per cent, falling far behind 2030 target of 20 per cent.
“Energy costs remain a major pain point. KAM is urging the government to remove VAT on levies imposed on fuel prices, scrap the six per cent growth requirement under the time of use tariff and open up the electricity market to competition beyond Kenya Power,” KAM CEO Tobias Alando said.
On competitiveness, KAM is calling for strict adherence to the National Tax Policy which creates a predictable tax environment.
It also wants a full review and implementation of the National Industrial Policy and mandatory regulatory impact assessments before introducing new taxes or legislation.
Manufacturers also want import declaration fee (IDF) and railway development levy (RDL) rates on industrial inputs reduced to 1.5 per cent, and the removal of domestic taxes, fees and levies on both locally available and imported inputs.
The local industries are keen to tap opportunities in the continent under the African Continental Free Trade Area, Europe and the US under trade agreements such as AGOA and the EU-Kenya Economic Partnership Agreement.
“Kenyan manufacturers must produce competitive products. One of the reasons undermining competitiveness of manufactured export is excise duty, fees, levies and charges,” said Alando.
Kenya continues to lag behind continental competitors with data from the 2023 Competitive Industrial Performance Index by the United Nations Industrial Development Organisation ranking Kenya 112th globally.
This is compared with South Africa at 53 and Egypt at 68. Kenya is ranked seventh in Africa with Egypt , South Africa and Nigeria topping the list.
“We need to see how private sector and government can collaborate over the next one year to ensure that manufacturing increases, we create jobs. We must trade with Africa,” KAM board vice chair, Hitesh Mediratta, said.
Manufacturers also want continued improvement of infrastructure-roads, rail and ports, improvement on VAT refunds to improve liquidity and payment of pending bills.
MSMEs Development PS Susan Mangeni, reaffirmed the government’s commitment to strengthening local industries.
She termed manufacturing “a driver of inclusive growth and national prosperity”, assuring that the government would consider their proposals based on macroeconomic environment.
“With the right support, our local industries remain the cornerstone of job creation and sustainable growth. We must commit ourselves to building, creating and adding value locally ” she said.
She said manufacturing is central to the Bottom-Up Economic Transformation Agenda, which aims to raise manufacturing’s contribution to GDP to over 20 per cent by 2030.
It also targets to increase exports by the industry to 30 per cent and attract up to $10 billion (Sh1.29 trillion) in foreign direct investment through value addition, SME empowerment and industrial parks.
Industry leaders have warned that without deliberate policy alignment and sustained public-private collaboration, Kenya risks being sidelined as larger producers such as Egypt, South Africa and Nigeria capture the biggest share of Africa’s industrial growth.
Some of the reasons Egypt is leading, KAM notes, is that the government provides rebates and subsidies for exports, in addition to cheap power, which Kenya could emulate.
