Business

Manufacturers facing hurdles in implementing ‘big 4’ agenda

18/09/2018
Fahad

Manufacturers now say the government’s Big Four development agenda will remain a pipe dream if a number of roadblocks standing on its way are not properly addressed.

The Kenya Association of Manufacturers (KAM) said their contribution to the national economy might fail to reach 15 per cent as envisioned since key factors of production are yet to be addressed.

“There is need to reduce the cost of power to USD 0.09/kwh, in line with this year’s budget where all taxes and levies on power bills for manufacturers will be removed. Restructure the time of use for the 50 per cent cut in tariff at night to incorporate more industries, especially small and medium enterprises,” KAM told Smart Company.

Manufacturers said more needs to be done on development and maintenance of roads especially within industrial zones to facilitate faster movement of goods. They also faulted preference for imported goods among local consumers.

“Preference of imported products has eroded local manufacturers market share. The ‘Buy Kenya Build Kenya strategy’ remains a pipe dream since operational guidelines requiring government ministries, departments and agencies to dedicate 40 per cent of their allocations for local purchases is yet to be effected,” they said.

The Institute of Quantity Surveyors (IQSK) of Kenya Chairman Peter Kariuki said increase in fuel prices would hurt the Big Four development agenda as the costs of doing business are bound to go up.

Mr Kariuki said project costs will have to be reviewed upwards with studies undertaken on site to help financiers and project owners re-plan on how best to carry on with the projects.

“Starting at the quarry where diesel-operated stone cutters are to transport trucks as well as at the construction site where petrol-driven machines abound from rollers, pulleys, vibrators, hydraulic drills, concrete mixers, water pumps, tippers and trucks, businesses will be hard hit,” he said.

The IQSK chairman said the rise in fuel prices will deal a severe blow to the government-fronted affordable housing plan as all costs incurred by developers as well as material manufacturers will be passed on to the final buyers of the housing units. “The disposable income for low income Kenyans has been hard hit. We have increased electricity costs for them, matatu transporters have hiked fares and food prices are also exorbitant. This means the planned government housing units will be bought by the rich,” he said.


In the Big Four, housing, healthcare, food and manufacturing have been earmarked for facilitation to promote enhancement of services and delivery of goods at much lower costs. The government is the largest buyer of goods and services that are largely sourced from foreign markets adversely affecting cash flow for local firms.

KAM lamented that this denied Kenyan companies an opportunity to also grow their expertise and monetary muscle to enable them bid for big-ticket jobs.

The industries are also calling for a revision on the 1.5 per cent Railway Development Levy (RDL) and 2 per cent Import Declaration Fees (IDF), downwards saying this increased the cost of production that was later passed on to consumers.

“A Waiver of the two on imported raw materials and intermediate inputs will increase competitiveness of Kenyan-made products locally as well as across Africa,” they said.

Companies are also calling for closer harmonisation of East African standards to facilitate free flow of goods and services saying Kenyan goods and service companies were still finding it impossible to access some markets.

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