Investments, Trade and Industry Cabinet Secretary Lee Kinyanjui has raised concerns about the reliability of data provided by manufacturers, even as they advocate for tax reductions on inputs. Speaking at the launch of the Manufacturing Priority Agenda 2025 by the Kenya Association of Manufacturers (KAM), Kinyanjui acknowledged the unfavorable tax regime but questioned the accuracy of the data presented to the government for decision-making.

Kinyanjui pointed out the common practice of businesses maintaining multiple sets of books, presenting different versions to banks, the Kenya Revenue Authority (KRA), and the government. He noted discrepancies between the data presented and the actual situation in the manufacturing sector. While data indicated a decrease in manufacturing's contribution to GDP, the value of manufacturing output has increased. Specifically, manufacturing output rose by 13.1% to Sh3.6 trillion in 2023 from Sh3.2 trillion in 2022, and jobs in the sector increased to 362,300 in 2023 from 343,700 in 2017. Employee compensation also grew to Sh283.1 billion in 2023 from Sh258.4 billion in 2022.

KAM Head of Policy and Regulatory Advocacy, Miriam Bomett, highlighted that the manufacturing sector grew by 7.6% in 2023, compared to 11.3% in 2021. She attributed the double-digit growth in 2021 to incentives introduced by the previous administration, emphasizing the correlation between reduced taxes and sector growth. Bomett asserted that the sector could generate Sh1 trillion in taxes for the government with the right support, suggesting the elimination of taxes on inputs as a key strategy, advocating for taxation on finished products instead.

Bomett cited the example of the 25% tax on finished imported furniture introduced in 2022, which led to a 5.5% increase in domestic production and a 27% rise in furniture exports. She cautioned against taxing raw materials, noting the adverse effects of levies on white sugar for agro-processing industries, which she stated are not locally available. She explained that increased excise duty and Sugar Development Levy have made it difficult for firms to plan investments and recoup capital.

CS Kinyanjui stressed the importance of credible data for informed decision-making, citing inconsistencies in cement production data. Official figures indicated a decline in cement production over the past four years, despite significant construction projects like skyscrapers and the Nairobi Expressway. He questioned the reliability of current data collection methods and emphasized the need for accurate information to guide policy decisions.

Kinyanjui acknowledged the unpredictable tax regime, which changes yearly, contrasting with the long-term facilities offered by banks. He highlighted the challenge this poses for investors, who require clarity and stability in tax policies. He also pointed out that the country’s planning structure is often short-term, which is not conducive to long-term investments. He concluded by stating that addressing these mismatches is crucial for progress.