Manufacturers urge government to lower cost of doing business

NAIROBI, Kenya, Nov 5 – Kenyan manufacturers have urged the government to reduce the cost of doing business through lower electricity prices, predictable tax policies and the removal of multiple licences and levies that increase production costs. The Kenya Association of Manufacturers (KAM) made the call during the fourth Kenya Industrialisation Summit in Nairobi on Wednesday, where President William Ruto outlined plans to raise manufacturing’s contribution to 20 percent of GDP and create one million jobs by 2030. KAM Board Chairperson Hitesh Mediratta said manufacturers needed a stable policy and regulatory environment to encourage investment, expand production and create jobs. He called for closer coordination between national and county governments to eliminate overlapping permits, licences and charges, warning that their cumulative effect raises the cost of operating businesses. Mediratta also urged the government to review tax policies across the manufacturing value chain, saying differences in duties on raw materials, intermediate goods and finished products could discourage local production. He cited differences in tax and duty arrangements among East African Community member states, saying they could influence decisions on where companies establish manufacturing plants. The association also raised concerns over the cost of electricity, which remains higher in Kenya than in several regional markets. Average business electricity prices between 2023 and 2025 stood at Sh23.70 per kilowatt-hour in Kenya, compared with Sh16.02 in Uganda, Sh12.52 in Tanzania, Sh10.10 in Rwanda and Sh2.56 in Ethiopia. President Ruto acknowledged the high cost of electricity, saying the government plans to increase power generation capacity from the current 3,000 megawatts to 10,000 megawatts using geothermal, hydro, wind and solar resources. He said the expansion would support factories, industrial parks, mineral processing and emerging industries, while investments in transmission and distribution would improve power reliability. Ruto also cited the establishment of 36 Special Economic Zones and said investors had applied for nearly 7,000 acres at Dongo Kundu. He said the government was pursuing seven legislative reforms and the elimination or reduction of 85 levies to lower the cost of doing business. The proposed licensing changes are expected to save businesses Sh300 million annually. Mediratta further called for faster payment of verified value-added tax refunds, saying delays were tying up manufacturers’ working capital. He said verified VAT refunds stood at about Sh50 billion, against monthly claims of Sh5 billion and allocations of Sh2.5 billion. KAM wants monthly allocations increased to Sh5 billion to clear outstanding claims. The association also wants the government to implement Section 47 of the Tax Procedures Act to allow eligible tax credits to be offset against other tax liabilities, including VAT on imports. It further called for excise duty paid on inputs used to manufacture export goods to be refunded or exempted. Mediratta said illicit trade was costing the economy between Sh800 billion and Sh1 trillion annually, affecting legitimate manufacturers, government revenue and jobs. He called for stronger enforcement against counterfeit goods, undervalued imports and products brought into the country without paying the required taxes. The summit was held alongside the ninth Changamka Kenya Shopping Festival, which runs until November 7 and features 400 exhibitors showcasing locally manufactured products. The event brought together government officials and industry representatives to discuss ways of increasing local production, attracting investment and expanding manufacturing jobs.