This archive report was first published on 5 June 2020.
As the government prepares to lift the coronavirus lockdown, a looming tax regime change threatens the survival of Kisumu Breweries Limited, a Sh14 billion investment in Western Kenya.
On May 29, the National Treasury announced plans to eliminate duty remissions enjoyed by the Kisumu plant, which was established in 2018 after a Sh14 billion investment.
The factory, which has remained closed since March 23, is the most significant private investment in Western Kenya in recent years.
Former Finance Minister David Mwiraria introduced tax remission for beer made from sorghum, millet, and cassava in 2006, which was gradually increased to 100 percent between 2006 and 2013 and later revised to 80 percent.
The National Treasury has now served notice that the remission will be reduced to 60 percent, which could make the factory unviable.
The Kisumu plant has introduced new livelihood options in a region where opportunities have dwindled drastically, especially since the collapse of sugarcane growing and tobacco farming.
The company currently has 12,500 tonnes of sorghum in its stores, which it purchased from farmers from last year's crop, and has a value chain that includes 2,608 farmers spread across many counties.
It is estimated that the factory will require nearly 40,000 metric tonnes of sorghum every year to run and maintain its operations.
Western Kenya needs livelihood options away from sugarcane, tobacco, and maize, and the Keg beer value chain also supports the fight against consumption of illicit drinks.
If the National Treasury changes the tax regime that informed the establishment of the factory, the Kisumu plant will eventually die.
