Cost of doing business to reduce, say manufacturers

Manufacturers have welcomed this year’s Budget, saying it has paid attention to development of infrastructure that is central to manufacturing.

According to the Kenya Association of Manufacturers chief executive Betty Maina, the Budget speech that was presented by Cabinet Secretary for the National Treasury Henry Rotich on Thursday highlighted several measures that are meant to improve the infrastructure which will lead to a reduction in the overall cost of doing business.

“We are quite happy with the Budget. There is a continued investment in infrastructure which is a key area in the process of manufacturing,” said Ms Maina.

In his Budget speech, Mr Rotich announced the introduction of a 1.5 per cent railway development levy on all imported goods and allocated Sh15 billion to fund construction of a standard gauge railway line from Mombasa to Kisumu.

The spotlight

The announcement came at a time when the country has come under the spotlight as being among countries in which it is most costly to do business in the region, lagging behind smaller economies like Rwanda.

The Budget speech also featured an increase of import duty on welding electrodes and that of plastic tubes for packing toothpaste and cosmetics from 10 per cent to 25 per cent, a move that is aimed at cushioning local manufacturers from cheap imports.

Mr Rotich also allocated Sh12.5 billion for development of geothermal electricity and Sh23.8 billion to aid development of electricity transmission while Sh3.7 billion will go towards development of the first three berths at the proposed Lamu port.

According to Mr Kaushik Shah, director of the Mabati Rolling Mills, overall, this year’s Budget was good as it laid focus on job creation, infrastructure development as well as social protection for children and the elderly.

However, he cautioned that should levies be introduced on exports, the move may discourage foreign investors.

“Putting up a railway line will definitely be of benefit to all of us. However, levies should not be introduced on materials going for export but instead there should be a domestic tax to support local infrastructure projects,” said Mr Shah.

Former chairman of the Kenya Private Sector Alliance Patrick Obath argued that in his speech, the National Treasury secretary failed to give adequate allocations towards development of roads.

He also said that the Budget speech lacked a focus on developing cheap electricity sources such as hydro power.

“The National Treasury has tried to balance the manifesto and focused on the right areas of development such as security, food security and infrastructure. However, the amount of money allocated to energy is small and the allocation does not focus on development of cheap electricity which is still a challenge to manufacturers,” said Mr Obath.

The Budget has also been criticised for failing to adequately cater for exploration and development of mineral resources as the ministry of mining has only been allocated Sh574 million out of about Sh3 billion it had requested.