Anthony Mwangi, the CEO of the Kenya Association of Manufacturers (KAM) raised the alarm over the potential collapse of the country's production and manufacturing sectors if the proposed Finance Bill, 2024 is passed.
Speaking on Tuesday during an interview with Citizen TV, Mwangi warned that the bill’s extensive levies on raw materials and production services would severely cripple the sector.
Mwangi warned that the proposed changes in taxes could render up to 3,000 Kenyans working in various factories jobless.
“All the 3,000 people who are working for those factories, their lives are at risk or their jobs at risk. And this cuts across many products. That's what I'm saying, policymakers before you make these proposals, please discuss them with the industry. Come and visit the factories,” stated Mwangi.
Mwangi highlighted that the manufacturing industry is a crucial pillar of Kenya’s economy, providing the majority of jobs and a significant portion of revenue.
He criticised the government's decision to impose taxes on essential inputs and financial services that drive production, arguing that such measures would discourage investment. “The proposal in the Act is to tax and not to encourage production,” Mwangi stated, stressing the need to expand the tax base through increased production rather than punitive taxation.
Citing the adverse effects of the 2023 Finance Bill on paper exports, Mwangi expressed concerns that the Finance Bill would render Kenyan goods less competitive in East Africa and beyond.
He noted that increased production costs would make imported goods more attractive, undermining local manufacturers. “In Finance Act 2023, we were exporters of paper and packaging materials from Kenya; but by just adding a 10 per cent export investment and promotion levy, we are now importers,” he lamented.
He added, "Let us do a regulatory impact assessment to see how that impacts the country very soon. If you're not careful, we will be the biggest supermarket in Eastern Central Africa because we're a big market but will not be able to compete. Our power is extensive in comparison with our neighbours. Our taxes are expensive, and we have sat with the government and said, if you have a product, you're moving from Mombasa to Malaba, you have to pay when you cross the boundaries of every county. And this is an irony."
The 2024 Finance Bill, sponsored by Molo MP Kimani Kuria, proposes several new levies, including a motor vehicle circulation tax and increased excise taxes on various goods and services.
Mwangi urged the government to conduct a thorough impact assessment of the 2023 Finance Act before proceeding with the 2024 bill, stressing the importance of consulting with industry stakeholders to prevent policies that could devastate the manufacturing sector.
The Departmental Committee on Finance and National Planning had invited the public and stakeholders to submit written views on the Bill by May 18, 2024 and is currently listening to stakeholders and other Kenyans on their proposed changes to the Finance Bill 2024.
