This archive report was first published on 6 August 2019.
Published on August 6, 2019, the Kenya Revenue Authority's (KRA) leadership deserves commendation for growing tax revenues at a rate faster than the country's Gross Domestic Product (GDP). However, this growth comes at a cost, as the tax agency's pursuit of revenue may be raising the cost of doing business.
Claims by producers of bottled water, processed juices, and cosmetics that the Excisable Goods Management System (EGMS) set to be implemented next month by SICPA Securities Solutions should be investigated. The contract signed between SICPA and KRA has clauses protecting the Swiss firm against being penalized for underperformance, yet penalizing KRA in the event of partial or full termination.
The EGMS system suffers frequent breakdowns, costing manufacturers up to 1.5% of downtime in production lines, leading to loss of sales. The requirement that manufacturers will have to bring expatriates from Switzerland to install and maintain the EGMS system at their cost will up the production costs, making them uncompetitive regionally.
There should be a consensus in ministries that increasing costs of production is not the right way to power Kenya's industrialization. Instead, we should ramp up exports to spur economic development. The KRA's contract with SICPA should be the first one to be investigated, and a forensic audit of the contract should be extended to the Attorney General's chambers.
