Kenyan Manufacturers Threaten To Close Shop, Move To Tanzania Over High Taxation

• The government proposed new tax measures in the Finance Bill 2024 to raise funds for the fiscal year 2024/25 budget
• Kenya Association of Manufacturers warned that the proposals contained in the Bill will hurt their members' business operations
• KAM members operating in the cement and still sectors warned of potential collapse as others threatened to move to Tanzania
• KAM chief operating officer (COO) Tobias Alando explained to TUKO.co.ke that the new taxes will make production in neighbouring countries cheaper than Kenya

TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

Kenyans should brace for tough economic times if the proposals of the Finance Bill 2024 are passed.

The Kenya Association of Manufacturers (KAM) warned that the proposed taxes would cause their businesses to collapse.

Why Kenyan manufacturers oppose Finance Bill 2024

Presenting their memoranda before the National Assembly Committee on Finance, KAM members said they would have no option but to move to Tanzania if the tax proposals remain.

"If we continue on this path, we will be shutting down factories and moving into Tanzania. Business is about making money. If we cannot make money in Kenya, we will go and make money in Tanzania," said a KAM member.

In an exclusive interview with TUKO.co.ke, KAM chief operating officer (COO) Tobias Alando explained manufacturers are considering relocating to neighbouring countries since there are no additional taxes that will raise their production costs.

Alondo noted that it would be economical for manufacturers to produce in Uganda and Tanzania and then sell to Kenya.

"The proposals make products from other regions under EAC cheaper. Since there are no additional taxes in Uganda and Tanzania, for that matter, it will make economic sense for our manufacturers to move to those countries produce and sell to Kenya.

"The Kenyan government and policy makers need to look at the impact of these taxes on our competitiveness and the bigger picture of manufacturing growth," Alando urged.

How Finance Bill 2024 will affect manufacturers, Kenyans

KAM chief executive officer (CEO) Anthony Mwangi warned that the move will reverse gains made in the sector, making Kenya a supermarket in East Africa.

"Before 2024, Kenya imported 100% of diapers. But now we have over six manufacturers needing the one billion demand and exporting to other regions. The eco-levy proposed in the Finance Bill 2024 will take us back to pre-2014 because diapers will go up by 30%," said Mwangi.

If passed into law, the Bill will see a jumbo pack of diapers retail at KSh 971 up from the current price of KSh 750.

A single diaper selling KSh 20 will now retail at KSh 25 and above.

Mwangi warned that more than 3,000 Kenyans working for the factories that would likely shut down operations risk losing their jobs.

Increase in cooking oil prices

They protested increased tax on cooking oil and packaging materials that would see prices shoot by over 70%.

KAM members raised issues with several tax proposals they say will negatively impact local manufacturing.

Mwangi noted that the Bill proposes four taxes on edible oil, which will see the cost of production transferred to consumers.

Proofreading by Asher Omondi, current affairs journalist and copy editor at TUKO.co.ke.