Tax incentives key to enhanced competitiveness in manufacturing sector – ReportJuly 3, 2019
NAIROBI, Kenya, Jul 3 – Tax incentives and reduced cost of production have been cited as leading factors that could improve competitiveness in the manufacturing sector for both local and export markets, a new report commissioned by SYSPRO and Strathmore University has shown.
According to the study upgrading current technologies and increasing production efficiency could also boost competitiveness for manufacturers in the country.
SYSPRO’s Head of Channel, Pravir Rai who spoke during the launch of the report on Wednesday said keeping Information Technology costs low is crucial for businesses particularly Small Medium Enterprises.
“A lot of software solutions in the market are unaffordable because they come with inbuilt capabilities that a business may not necessarily need at a given time,” Rai said.
More than half of the manufacturers also felt that the government could still do more to make the sector competitive and attractive to potential investors.
As such, the development of infrastructure, provision of exemptions, grants, and subsidies as well as purchasing guarantee from the government were highly rated.
Support for apprenticeship, graduate internships and technical courses in universities were identified as a major initiative that would make local manufacturing an attractive business venture.
Over 50 percent of the respondents interviewed during the study also felt that Kenya’s manufacturing sector would have difficulty competing with counterparts in other developed countries that have advanced education and training systems.
Data from Kenya Association of Manufacturer (KAM) shows the sector’s share of GDP has remained stagnant with only limited increases in the last three decades, contributing an average of 10 percent from 1964-73 and rising marginally to 13.6 percent from 1990-2007 and averaging below 10 percent in recent years.
KAM, however, notes that there is renewed interest in the sector through the Big 4 Agenda, a national government development plan which seeks to increase the GDP contribution of the sector to 15 percent by 2022.