- Kenya’s Competition Authority has said the proposal to increase clinker taxes is self-interested and would risk shutting down rival cement plants
- Clinker, a crucial raw material used in the manufacture of the merchandise, is taxed at 10% but Raval wants it to be set at 25%
- Raval argues that it is now possible to increase taxes on imported clinker or to ban its import altogether because Kenya is able to produce the product.
The Kenya Competition Authority (CAK) has called on the government not to implement the proposal by cement company Devki Group, seeking to increase import duties on clinker, a crucial raw material used in the manufacture of raw material.
According to the Authority, the proposal made by the owner of Devki, Narendra Raval, is selfish and leads to the closure of rival cement plants and the increase in the price of the product.
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Currently, imported clinker is subject to a 10% duty under the EAC common external tariff regime for intermediate products, but Raval wants it to be set at 25%.
According to a report filed by Business Daily, the Authority maintains that imported clinker is cheaper, adding that the window to import or produce it locally should be maintained to ensure healthy competition.
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In his proposal, Raval argues that it is now possible to increase taxes on imported clinker or to ban its import altogether, because Kenya is capable of producing this product.
Raval, who enjoys enormous dominance in the cement industry and owns four cement plants under the Devki Group, says the move would help create jobs for Kenyans.
The group owns National Cement, Simba Cement, ARM Cement and Cemtech.
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The opposition of rivals
The proposal was also rejected by rivals who accused the billionaire of using his position as the country’s largest employer to force the government to restrict clinker imports.
According to the publication, rivals among Bamburi Cement and Rai Cement went against the recommendations of the National Independent Clinker Committee which called on players to be granted a four-year grace period before any increase in import duties.
Misfortunes in construction
The Authority’s sentiments come even as the country’s cement manufacturing sector grapples with a 3.3 million tonne clinker shortage, with 59% of the deficit being imported into the country duty-free. Egypt.
The committee observed that even if the two cement grinding and clinker production companies were operating at full capacity, the country would still need to import 40%, according to an East African report.
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Of the 40% of clinker imported into Kenya, 60% comes from Egypt at zero duty.
The manufacturing sector has yet to recover
It comes amid a new discovery indicating that Kenyans working in manufacturing risk losing their jobs as the government continues to implement several new fees and levies on locally made products.
As reported by TUKO.co.keKenya Manufacturers Association (KAM) President Mucai Kuhinya said manufacturers would be forced to restructure and downsize to stay afloat with the ongoing implementation of inflation adjustments proposed by the Kenya Revenue Authority (KRA).
“Currently, excise rates are five times higher in Kenya than in Tanzania and Uganda. Therefore, excisable products in Kenya will continue to be uncompetitive, with higher levels of illicit trade depriving governments of revenue through tax evasion, ”Kuhinya said.