KAM Urges Stable Taxes to Strengthen Manufacturing Sector

Kenya Association of Manufacturers (KAM) has called on the government to maintain stable business taxes, saying predictable fiscal policies are essential to attract long-term investment.

At the launch of the Manufacturing Priority Agenda (MPA) 2026 on Tuesday, the KAM said frequent tax changes undermine investor confidence, complicate long-term business planning, and threaten the competitiveness of Kenyan exports.

Manufacturing contributes about 7.3 per cent to Kenya’s GDP and supports thousands of jobs. However, high production costs, regulatory hurdles, and delayed VAT refunds continue to challenge the sector, worsened by shifting tax regimes.

KAM Board Vice Chair Hitesh Mediratta urged the government to prioritise predictability in business policies to attract investment and boost industrial output.

“Countries that prioritise manufacturing reap tangible economic benefits. Kenya must take the cue and decisively strengthen support for its manufacturing sector by enhancing competitiveness and advancing export-led growth,” he said.

He highlighted that in 2024, Kenya exported goods worth over Ksh 1.1 trillion, with 38.3 per cent of those exports going to African markets, showing the continent’s importance for locally manufactured products.

The MPA 2026 outlines key policy recommendations, including maximising benefits from the African Continental Free Trade Area (AfCFTA) and the East African Community (EAC), reducing non-tariff barriers, and lowering production costs to boost intra-African trade.

KAM Chief Executive Tobias Alando said the MPA 2026 is a results-oriented roadmap for transforming the sector.

“The Manufacturing Priority Agenda 2026 is not simply a policy document. It is a structured articulation of what must happen if manufacturing is to play its rightful role in Kenya’s economic transformation,” he said.

Alando added that improving competitiveness, strengthening export capacity, integrating SMEs into value chains, and aligning agriculture with industry will create a domino effect that accelerates investment, job creation, and sustainable growth.

Industry leaders also noted that manufacturing’s contribution to GDP has fallen from over 11 per cent in 2010 to about 7.3 per cent today, and stronger policy support is needed to reverse this trend.