KAM backs four year freeze on clinker import duty hike

The Kenya Association of Manufacturers (KAM) has backed recommendations that a four-year grace period be considered before any increase of import duty subjected on clinker, a key raw material used in cement production.

The decision emanates from a report by the National Independent Verification Committee constituted by KAM in order to assess clinker production and consumption capacities in Kenya.

In the current budget cycle, clinker attracts an import duty of 10% which some stakeholders had argued should be raise to 25% in the wake of increased clinker production by cement manufacturers in Kenya, among them Bamburi Cement, National Cement, East African Portland Cement.

Attempt by industry stakeholders to lobby for increased duty of the raw material has been futile amid surge in cement production as well as consumption with some arguing it would distort the market.

Latest data from the Kenya National Bureau of Statistics (KNBS) indicate that construction sector grew 11.8% last year as cement production rose 21.3% last year to reach 7,473,600 tonnes from 6,163,000 tonnes in 2019.

On the other hand, cement clinkers import rose to 2 million tonnes from 1.8 million tonnes the previous year while total value rose from Kshs. 8.4 billion to 8.6 billion.

“Industry’s capacity has grown exponentially from 6.9 million tonnes in 2016 to 14 million tonnes in 2020 while the demand decreasing, from 6.7 million tonnes in 2016 to 5.97 million tonnes in 2019. The increase in clinker production mimics production capacity growth,” said Kunyiha.

According to the committee finding, 40% of clinker is imported from around the world while the balance, 60% originates from Egypt at a Zero Tariff Rate.

“The 4-year grace period will enable the non-integrated companies and those with ongoing expansions to set up and operationalize their clinker facilities to achieve self-sufficiency for clinker production in terms of quantity and quality,” said the committee in the report.

KAM is also calling for development of a national clinker standard by the Kenya Bureau of Standards (KEBS) to harmonize quality specifications in line with industry requirements and enable enforcement of the same to trade in clinker within the country.

The standard should also take into account the requirements of special cements and white cement.

KAM also wants price of locally produced clinker not to be pegged on imports.

The lobby group says locally produced clinker is currently 15-30% cheaper than imported clinker.

The government has been urged to develop a policy that will ensure increased production and uptake of locally produced cement.

The committee which had representatives from the Ministry of Industrialization, Trade and Enterprises Development, Ministry of Petroleum and Mining, The National Treasury, Kenya Bureau of Standards (KEBS), a representative from the grinders, clinker manufacturers and KAM started its work on April 22, 2021 and completed the verification task on September 15, 2021.

  

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