The government is planning to ban importation of goods which can be manufactured in the country, especially steel and iron products, starting next year to protect local industries.
President William Ruto said the government is in the last stage in drafting a policy framework to ensure available raw materials are exploited and local manufacturing companies are protected.
The President said steel and iron mills are among companies which have faced stiff competition from imported manufactured products.
“In the past five years, 16 steel mills in the country have been closed due to stiff competition caused by few individuals working on behalf of foreign companies,” Dr Ruto said.
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"I have instructed Cabinet Secretary Trade and his team to work on a policy framework to ensure we increase our industrialization percentage of GDP which had dropped from 9 percent to 7 percent. With these laws, we intend to increase the industrialization percentage in the country to 30 percent by 2030," he said.
He spoke after opening the Sh30 billion Devki Steel Mills in Samburu, Kwale County. The rising cost of steel and iron is set to come down in the coming months since the company will use modern technology in its production.
The new plant, billed to be the second biggest in Sub Saharan Africa after the South African Steel Mill Company, will end the region's reliance on imported materials to produce assorted iron products.
Different types of steel ranging from steel billets, coils, wire rods, steel plates, sheets and pig iron will be manufactured in the plant using iron ore, ending the use of scrap metal.
To ensure there is supply of steel and metals manufactured by Devki, the company has been connected to the Nairobi-Mombasa meter gauge railway making the cost of transport to other parts of the country and in the region relatively low.
It is expected to generate 1,500 direct jobs and another 9,000 indirect jobs.
Trade Cabinet Secretary Moses Kuria said he will ban importation of steel and iron products manufactured in Kenya by imposing duty on such products.
"As from January next year, we shall ban importation of raw materials available in Kenya and products being manufactured in the country to protect our companies," said Mr Kuria.
Devki Group chairman Narendra Raval estimated once they are fully operational by next February, close to a million tonnes of steel and iron products will be manufactured at the Samburu plant.
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"The plant is expected to play a role in the industrialization drive. But the government needs to support the local steel industry by slapping high duties on the imported materials that are produced by local manufacturers such as Devki," said Mr Raval.
Mr Raval said his company will also produce its own electricity to run the plant thus cutting the cost of production by more than a half.
“The company is the first in East Africa to make steel from iron ore and not from recycling scrap metal which in turn will reduce vandalism of infrastructure in our country.
The plant will also cut its cost of production by producing 55 megawatts clean energy by tapping heat released from their kilns,” said Mr Raval.
Mining and Blue Economy CS Salim Mvurya said the ministry is drafting a law to ensure Kenya stops importation of minerals and other industrial products.
"We have a bill and we are asking the support from members of Parliament to pass the law to end importation of manufactured iron and steel products to protect local manufacturers," said Mr Mvurya.
The local steel industry heavily relies on imported raw materials such as iron ore and coal, due to the lack of investment locally.
According to the Trade ministry, the local deposits of such minerals are yet to attract commercial interest.
Iron ore also exists in Taita, Meru, Kilifi and other regions in the country, prompting the government to encourage industrialists to tap into this readily available raw material.
The East African region has witnessed increased demand for steel and iron products, evident by data of such commodities handled through the Port of Mombasa.
For the past five years, iron and steel imports have recorded a steady rise, registering a compounded annual growth rate of 10.9 percent from 1.63 million metric tons handled in 2017 to 2.47 million metric tons in 2021, according to the Kenya Ports Authority (KPA).
In 2021, Kenya imported iron and steel worth Sh35 billion from China alone which is attributed to an increasing number of massive infrastructure developments being undertaken by Chinese contractors which has led to an increased demand for the commodity.
Other countries where East African states import iron and steel through Mombasa port include South Africa, Japan and India.