Kenya Film Classification Board's ban on the "Rafiki" film has ignited a sibling rivalry between it and the Kenya Film Commission.
The two agencies are under the Ministry of Information.
KFCB banned the controversial film on grounds of containing material that advocates for lesbian practices.
The film directed by Wanuri Kahiu features how the silent minority are suffering in the society for fear of expressing their sexuality.
KFCB said the film violates production laws.
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But on Friday, Kenya Film Commission chairman Christopher Foot said KFCB has no mandate to regulate the film industry as that is the sole mandate of the KFC.
He criticised the ban saying it defeats gains made in the push for the industry's growth.
"It is a ridiculous notion that you ban a movie because it contains an illegal subject matter. It is entirely different if the movie was pornographic, it would be entirely different to do a documentary about two lesbians."
"This was a movie that involved acting, the nature of acting is that you are playing roles, you should be able to see the ridiculous nature about that. This is about the freedom of expression, the freedom of media, freedom to tell stories, and all this is set out in the constitution," Foot said.
He said that KFCB's actions are hindering film industry's growth through retrogressive rules.
The chairman admitted there is tension between KFC and KFCB but noted that "even families have tensions and I think it is something that we can work through".
"We dialogue and deep down we should have heart for our industry as a common name and I believe we can achieve that," the film commission chair said.
Foot said Rafiki is a classic example where the two agencies ought to hold talks and take a common position instead of acting unilaterally.
"Who has seen a production in Kenya that does not have theft, murder, terrorism corruption in it? What a ridiculous premise to have? or we want to see sanitised movies where we are all doing the right things, living like angels? of course not as the premise is intellectual, completely invalid," Foot said.
"If you speak to international and local producers and see the comments on social media, the frustrations are very clear. The industry as a whole is frustrated with barriers that brought up and costs that have been put up, it is a very difficult working environment."
"That is why as KFC we will endeavour to work with other state departments to remove these barriers," Foot said.
He said the uncertainties around film licensing discourages international filmmakers who have planned to come and spend hundreds of millions of dollars in Kenya.
Foot said there is a discussion about it [film licensing and regulation] which involves other stakeholders including Attorney General's office in the interpretation of what is law and in the next two few we will have a clear answer to remove this confusion.
"We will never compromise the interests of our industry and stakeholders and we will not be compelled to do that," Foot said.
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