Kenyan manufacturer calls for tax-cuts for fair EA competitionJune 18, 2019
NAIROBI, Kenya, Jun 18 –Manufacturing is one of President Uhuru Kenyatta Big Four Agenda but imposition of excise duty on Kenyan products in other East African countries goes against the common external tariffs which make it costly to operate.
Local manufacturers have on several occasions called for tax-cuts to ensure a level-playing ground with other companies in other Eastern African countries.
Rajul Malde, Commercial Director of Pwani Oil Company which is one of the biggest manufacturers of edible vegetable oils and fats, laundry and toilet soaps in the African continent says, cost of production is high in Kenya than in Tanzania, Rwanda and Uganda.
“We are charged 2 per cent on the raw products we import; our counterparts are not forced to pay this. If the government could remove that cost of production will go down, and consumers will pay less,” said Malde.
Malde says the government also needs to re-look its tax policy on importation of raw materials that cannot be found in the country and further help in ensuring that the business environment is conducive and allows local manufactures to thrive.
“We cannot meet the demand of the market because we are short of supply of raw materials. For instance, we require at least 5,000 tonnes of coconut oil for our soap production but we can only get 1 200 tonnes a month from our local farmers and that in a year translates to a gap of 55,000 tonnes between demand and supply,” said Malde.
Rajul however said they are working with Kenya Agriculture Research Institute and Kilifi County Government to come up with hybrid coconut plants which can grow within a year rather than the five years of natural coconut trees.
A 10 per cent levy Uganda imposed on manufactured goods from Kenya has made the imported goods uncompetitive, hence making Pwani Oil products especially the Sanyu soap specifically meant for the Ugandan market expensive.
This has slowed the firm’s move to expand to the region.
“We used to make four trucks of soaps to Uganda but this has gone down to two since the excise duty came into effect in April this year,” said Malde.
Pwani Oil was conceived in 1981 in Mombasa and it has since expanded its range of goods also catering the hospitality industry with production of small sized, round shaped hotel soaps.
Some of the widely used Pwani Oil products in the market include Whitewash bar soap, Whitewash extra-which is three in one laundry soap, Popco bar soap, Diva bathing soap, the SAWA bathing soap, Salit oil, Mpishi Poa cooking oil and fats and Fresh Fri cooking oil .
In the 2019/2020 budget, the manufacturing sector was allocated a whopping Sh1.1 billion to further this agenda, these funds according to Treasury Cabinet Secretary Henry Rotich is to help SMEs as well as develop Kenya’s textile sector and reduce reliance in importation.
This comes at a time when the East African region has been seen to recommend high taxation on imports aimed at driving consumption of locally produced goods, spurring the growth of manufacturing and creating jobs that ultimately improve the living standards.
The proposed measures are in line with the East African Region industrialization plan that seeks to transform the region into a globally competitive manufacturing player.