MANUFACTURING

Steelmakers want zero rated fees to grow sector

Government spends over Sh60 billion on the importation of steel annually.

In Summary

• The sector has the capacity to export between Sh30 billion to Sh40 billion.

• The industry forms about 13 percent of the manufacturing sector

Westlands MP Timothy Wanyonyi donates iron sheets to City Park traders last year.Photo/chrispinus wekesa
Westlands MP Timothy Wanyonyi donates iron sheets to City Park traders last year.Photo/chrispinus wekesa

The iron and steel sector is under performing due to high taxation imposed over the manufacturing of the product, manufacturers have said.

Speaking during the first ever steel forum, Kenya Association of Manufacturers steel sector chair Bobby Johnson said this has caused the country to spend more on importing the product.

Johnson highlighted that though the sector continues to grow, its full potential still remains unexploited, due to high energy cost, Import Development Fees, Railway Development Levy, and illicit trade.

The manufacturers now want the government to zero rate the Import Development Fees and Railway Development Levy for all industry inputs to improve the competitiveness of the sector.

In addition to zero rating, the steelmakers want clear procedures for smooth implementation of Buy Kenya, Build Kenya and local content – especially for large scale infrastructure projects with a high demand for steel.

According to KAM chair Sachen Gudka, the sector has the capacity to export between Sh30 billion to Sh40 billion.

He noted that the establishment of stronger partnerships with global investors, would be vital to attain the desired growth in the sector and the economy.

“We are at the juncture where our trade deficit continues to widen as a country, and the numbers in Steel are a clear demonstration of that. If we can forge stronger partnerships…we can turn this around in a short amount of time,” He said

The industry forms about 13 percent of the manufacturing sector. Data from the Ministry of Industrialisation shows that the government spends over Sh60 billion on the importation of steel annually.

This is despite the country having a local deposit of iron and coal which are the raw materials for the production of the metals.

Further details from the ministry show that a single steel plant of a capacity to produce 350,000 tonnes of steel per year can generate over 10,000 jobs.

According to the manufacturers, the realisation of the targets set under the manufacturing and affording housing pillars of the governments Big four pillars are likely to remain a pipe dream if the raised issues are not addressed.