Exporters are gradually reducing their business operations due to poor policy implementation which has pushed them into debt.
During the launch of the 2019 Kenya Export Development Programme, exporters raised concerns that policies created by government were not being actualised, crippling their businesses and forcing some to close shop.
A number of manufacturers in the export business have had to reduce their dealings with other countries by more than half over the past 10 years.
They might have to reduce this further if the government does not attend to issues weakening the industry.
“Ten years ago we were exporting to 34 countries. We have had to reduce the number to 14 countries and are considering reducing this number further,” Kenafric Industries vice chairman Bharat Shah said.
Shah, who manages one of the country’s largest confectionery manufacturers, said the move to increase Kenya’s exports, although welcome, would not work if issues were not tackled.
Three of the main issues dampening export business were cited as failure to implement the export formula introduced two years ago, the current six per cent withholding tax as well as government’s failure to institute VAT refunds.
According to Kenya Association of Manufacturers, 23 firms are owed more than Sh3.6 billion in outstanding refunds. Shah said Kenafric Industries had about Sh400 million stuck in refunds.
“For manufacturers, it is a crime to be an exporter. The government now needs to walk the talk,” he said.
KAM has already met with the Kenya Revenue Authority and agreed upon necessary changes required to ease the refund of VAT. This includes the reduction of the Withholding VAT from six to two per cent.
The revised formula on VAT refunds scheduled to be published by National Treasury before the end of this month will also include introduction of an automated platform for reclaiming VAT refunds through iTax.
During the launch, Industry, Trade and Cooperatives CS Peter Munya reassured exporters that government was aware of the current issues and was working on creating a better environment for exporters.
“The failure we have is government institutions, especially regulatory bodies not working together,” he said.
To achieve the government’s ambitious Big Four Agenda of increasing manufacturing to 15 per cent by 2022 from the current 8.4 per cent.