What's Happening?
The Kenya Bureau of Standards (KEBS) has announced a proposal for a 0.2 percent levy on all locally manufactured goods, as detailed in the Standards (Standards Levy) Order, 2025. This levy is intended to be calculated based on the monthly turnover of manufacturers,
excluding Value Added Tax (VAT), excise duty, and discounts. Manufacturers with an annual turnover below Sh5 million will be exempt, while the maximum annual levy is capped at Sh4 million for the first five years and Sh6 million thereafter. KEBS aims to use the levy to bolster its regulatory capacity, improve market surveillance, and enhance product testing, thereby reducing reliance on government funding. The proposal has sparked concern among analysts who warn that the levy could increase production costs for mid-sized manufacturers, those with annual turnover between Sh5 million and Sh500 million, who will pay the full 0.2 percent without reaching the cap.
Why It's Important?
The introduction of this levy by KEBS is significant as it represents a shift towards self-sustaining regulatory practices in Kenya. By establishing an internal revenue stream, KEBS aims to enhance its ability to enforce product standards and conduct quality audits, which could lead to improved consumer protection and fair trade practices. However, the potential increase in production costs for mid-sized manufacturers could impact their competitiveness and profitability, possibly leading to higher prices for consumers. This development is crucial for stakeholders in the manufacturing sector, as it may influence business strategies and operational costs.
What's Next?
Manufacturers are invited to submit feedback on the proposed levy, and KEBS has urged them to register with the Bureau by completing Form SL/1. The feedback process may lead to adjustments in the proposal before implementation. Manufacturers need to familiarize themselves with the new law to ensure compliance, as failure to do so constitutes an offense under the Standards Act, Cap 496. The industry will be closely monitoring the impact of this levy on production costs and market dynamics.
Beyond the Headlines
The proposed levy could have broader implications for Kenya's economic landscape. By reducing dependency on government funding, KEBS may gain more autonomy in its operations, potentially leading to more stringent enforcement of standards. This could drive innovation and quality improvements in the manufacturing sector, but also pose challenges for smaller businesses struggling to absorb additional costs. The move may also influence other regulatory bodies in the region to adopt similar self-funding mechanisms.
