Closure and relocation of local Industries: Meeting with the Parliamentary Committee on Finance, Planning and Trade
Members of the Kenya Association of Manufacturers (KAM) today (30 Oct.) appeared before the Parliamentary committee on Finance, Planning and Trade to discuss the recent spate of closure of local industries. Eveready, Cadbury and a number of local companies have recently shifted their operations to other countries and the committee sought to understand the reasons for these closures.
KAM was represented by the CEO, Ms. Betty Maina, accompanied by board member, Mr. Polycarp Igathe and the CEO of partner BMO KEPSA, Ms. Carol Kariuki. Representatives of member organisations that are sorely affected by unfriendly regulations were also present such as General Motors and Ndume Agricultural and the Edible Oil Sub sector (EOSS) was represented by Mr. BJK Karingithi,
Ms. Maina presented the challenges leading to the relocation of multinational companies which included the high cost of production that is hurting industry.
She also talked of the lack of the right infrastructure to support sophisticated manufacturing. "While the cost of power has started to come down with quantity increasing to 5000 MW, other areas that do not require substantial resources continue to hurt us," she said. The tax administration has been particularly harmful since Tax rates have a differential impact such as the exempt vs zero rated VAT status which has been difficult for certain sectors such as the pharma sector.
Market access in the region has also been deeply impacted by the delay in signing of EPAs and other hindrances in the East African market such as the duty regime continue to dog exporters.
She also spoke of substandard, counterfeit and illicit goods which contributed greatly to the departure of Eveready. The failure to fight counterfeits means that these companies can no longer compete in a level playing field.
Mr. Karingithi in addition explained that these same challenges are now affecting the Edible Oil sector that they are no cutting down on their staff while Mr. Igathe added that cartels in the country were selling fake LPG cylinders.
Mr. Benjamin Langat, chairman of the Parliamentary committee, committed to scrutinise factory closures and relocation from Kenya. He promised that the committee will meet with the different regulators and make enquiries to see what is being done to stem this tide. They also promised to engage the Treasury and to make proposals to correct VAT anomalies. Part of the scrutiny will also involve in the long term, an enquiry into Industrialisation as the key to advancing manufacturing in the country.