Manufacturers want Gov’t to cut import levies amid Hormuz crisis
NAIROBI, Kenya, Apr 20 – Manufacturers are urging the government to suspend key levies on industrial imports to cushion the sector from rising production costs linked to global supply chain disruptions triggered by instability in the middle east.
The Kenya Association of Manufacturers (KAM) says the sector is already under significant strain, with increased shipping costs, delayed inputs, and worsening raw material shortages feeding into higher cost of doing business following the closure of the strait of Hormuz.
KAM is pushing for the easing of several levies that directly affect import and production costs, including the Railway Development Levy (RDL), Import Declaration Fee (IDF), and VAT on fuel used in production and logistics.
KAM argues that these charges are amplifying pressure on manufacturers at a time when global freight rates are already rising due to uncertainty in key maritime routes.
According to a recent KAM survey, over 78.6 percent of firms report being affected by the ongoing crisis.
Sea freight costs have surged, with 35.7 percent of manufacturers indicating increases of more than 30 percent, further squeezing margins across the sector.
The survey also shows severe disruptions in supply chains, with 92.9 percent of firms experiencing delivery delays.
Average shipment timelines have nearly doubled from 28.2 days to 59.3 days, while the same proportion of manufacturers report raw material stockouts that have disrupted production schedules.
Industry players are now warning that continued exposure to such external shocks could undermine competitiveness unless fiscal interventions are introduced.
“We have put forward key recommendations aimed at easing the cost pressures facing the sector. These include consideration of targeted tax relief on imported industrial inputs, particularly on levies such as the Railway Development Levy (RDL), Import Declaration Fee (IDF), and VAT on fuel, all of which have a direct impact on production and logistics costs,” said its CEO Tobias Olando.
“In addition, we have emphasized the need to avoid introducing any new taxes or regulatory measures that could further increase the cost of doing business during this period of heightened global uncertainty.”
The appeal comes as tensions in the Middle East continue to disrupt global shipping confidence, with heightened military activity and restrictions around the Strait of Hormuz raising concerns over the stability of one of the world’s most critical trade routes.
The Strait remains a key passage for global oil and container shipments, including cargo destined for Kenya and the wider East African region, making the local manufacturing sector highly vulnerable to any prolonged disruption.