Kenyan manufacturers in uproar over new taxes

Kenyan manufacturers are facing significant challenges as global supply chain disruptions and new taxes add to the strain caused by the ongoing pandemic. Mucayi Kunyiha, the chairman of the Kenyan Association of Manufacturers, highlighted the sector's resilience in the face of adversity but emphasized the sector-specific impact of the crisis. While some industries have managed to navigate the challenges, others have been hit hard by reduced demand, production capacity constraints, and cash flow limitations. The withdrawal of government support measures, such as tax reductions, has further compounded the situation for businesses across the manufacturing sector. The impact of the pandemic and the subsequent increase in manufacturing costs have created a ripple effect, affecting both producers and consumers. Rising oil prices have elevated transportation costs, while global supply chain disruptions have led to delays and increased logistics expenses. The surge in commodity prices, including steel and chemicals, has put pressure on local manufacturers, forcing them to pass on the additional costs to consumers. As a result, inflationary pressures are expected to impact the market as businesses strive to maintain operations amidst mounting challenges. The implementation of new taxes, coupled with the government's heavy borrowing and revenue constraints, has further strained the manufacturing sector. With an emphasis on productivity and competitiveness, Kunyiha underscored the need for supportive policies and infrastructure to enhance the sector's performance. However, recent tax changes targeting inputs like raw materials and packaging have hindered productivity and investment incentives. The reduction of investment deductions and limitations on interest cost claims have deterred potential investors, creating a challenging environment for businesses looking to expand and innovate. Despite government initiatives and investments in the manufacturing sector, achieving the goal of contributing 15% to GDP by 2022 appears increasingly elusive. Concerns about shrinking GDP figures raise questions about the sector's competitiveness and the government's implementation capacity. As the current administration approaches its last 12 months, the window for significant structural changes narrows, prompting a reevaluation of strategies and priorities to drive growth and sustainability. Looking ahead, opportunities in the African Continental Free Trade Area (AfCFTA) present a potential lifeline for Kenyan manufacturers to explore new markets and expand production. However, realizing these opportunities requires a concerted effort to address fundamental challenges such as infrastructure, financing, and investment incentives. As the industry navigates the complexities of the post-pandemic era, the call for long-term vision and strategic planning becomes more urgent than ever to harness the potential for growth and success in a rapidly evolving global landscape.