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The 2024 Finance Bill will undermine manufacturing in Kenya, the sector’s leaders have warned.

 The bill proposes imposing taxes on raw materials and financial services that drive production.

Consumer goods

Kenyans should be prepared for higher prices for consumer goods if the National Assembly approces the bill, said Kenya Association of Manufacturers CEO Antony Mwangi.

 The 2023 Finance Act raised duty on imported raw materials and paper, resulting in higher production costs for the affected products.

 This not only affected manufacturers but also other businesses in the grain sector as they use paper for packaging.

The taxes also raised the prices of these products in the local market. As a result, paper and packaging materials exports collapsed, forcing Kenya to import cheaper products.

Declined products 

According to the Kenya National Bureau of Statistics (KNBS), The production of paper and paper products declined in the previous year and prices increased by 2.9 percent.

“The new taxes will increase the cost of manufacturing and force these companies out of Kenya, and the country will be left importing more commodities,” Mwangi said in an interview.

“The government is only taxing; it is not encouraging production.”

He proposed that the government encourage production instead, so that it can raise more tax revenue from the final products.

The commodities likely to be affected include cooking oil, which will increase by 5.6 percent per litre; bread to Sh74 from Sh65; milk; powder detergent; and cement.