This archive report was first published on 10 July 2021.
Published on July 10, 2021, a report by the Kenya Association of Manufacturers (KAM) and KPMG revealed the devastating impact of the Covid-19 pandemic on the manufacturing sector in Kenya.
According to the survey, which was conducted between May 2020 and June 2021, manufacturers are facing liquidity challenges due to delays in payment of tax refunds by the Kenya Revenue Authority (KRA), depreciation of the Kenya shilling against the US dollar, and requests for extension of credit period by wholesalers and distributors.
While 66 percent of surveyed firms negotiated payment plans with their suppliers in 2020, only 27 percent of the surveyed firms have done so in 2021. Similarly, the number of firms that reached out to commercial banks to restructure their loans more than halved in 2021.
“In comparison to 2020, enterprises are currently operating without the economic reliefs that cushioned them last year against the adverse effects the pandemic visited on businesses,” said Mucai Kunyiha, chairman of KAM.
Manufacturers are calling on the government to address demand and liquidity challenges facing businesses, including reducing the cost of electricity to Ksh9/KwH for manufacturers and avoiding any new tax or increase in existing taxes.
“Other challenges facing the manufacturing sector, one year on, are the weakening Kenyan shilling which has driven up the cost of importation, raised cost of doing business because of logistics and the high cost of raw materials and intermediate products,” said Mr Kunyiha.
Even as KAM appealed to the government to issue measures to cushion manufacturers due to the pandemic, MPs increased excise duty on airtime and data from 15 percent to 20 percent.
