alexa Hidden parts of Budget that could add value to our lives - Daily Nation

Hidden parts of Budget that could add value to our lives

Sunday July 1 2018

The contribution of the manufacturing sector to GDP has, right from the 80s, been erratic and stagnant.

It dropped significantly in the 1990s to below 10 per cent, and only seemed to have recovered in 2005 to a high of 15 per cent, and in 2010, but dropped again to 9.2 per cent in 2016.

In this year's Budget, the Government has picked key areas such as leather, textile, blue economy and agro-processing to boost manufacturing and, by extension, value added exports.

The Budget shows the Government is working on a new package to encourage exports.

The key focus is non-traditional and value added exports to hopefully increase the contribution of the manufacturing sector to GDP to 15 per cent by 2022, by adding $2bn to $bn to our GDP.

This could be achieved through establishment of leather parks and textile industries, reviving and transforming industries such as the blue economy, manufacturing of construction materials and re-establishment of the automobile industry.


Some Sh575 million was set aside for aquaculture technology development and innovation transfer, further supporting the blue economy.

To make exports more competitive in East Africa, especially in Tanzania, there is a plan to establish a framework for implementation of EAC Non-Tariff Barrier Act 2017,in addition to establishment of a line report mechanism. Cost of production has been touted as a factor that makes our products less attractive.

To stem this, the cost of off-peak power will be cut by half, while the cost of energy will be slashed to about US cents 9 per kilowatts hour for selected investors.

To protect local iron and steel industries, a proposal was made to increase the rate of import duty from 25 per cent to 35 per cent.


On paper production and value addition, the rate of import duty was raised from 25 per cent to 35 per cent to boost local industries.

Foot wear and textile have lately been key areas for job creation. Kenya imports close to 30 million pairs of shoes annually, yet it has large herds of livestock. Closing cheap imports and encouraging local production and job creation will be bolstered by introduction of higher import duty. The allocation of Sh0.4 trillion for leather industries park and Sh0.4 billion for textile industry development, will come in handy.

Oil and oil products could soon join our exports. Hence the plan to harmonise the rate of excise duty.

Meanwhile, there are measures to retain raw materials like scrap metals, with the introduction of a 20 per cent export levy on copper waste and scrap metals.

Theuri Paul, via email