Manufacturers call for stimulus programme to boost output, jobs

Manufacturers are seeking the introduction of a stimulus package to revitalise industries sector, create jobs and improve Kenyan’s earnings.

This is in the wake of a continued pressure on households spending power, which has denied them benefits of a drop in inflation, which is at a 14-year low, captured at 2.8 per cent in November.

The recent raid on payslips by government (statutory deductions) to fund the Social Health Insurance Fund and affordable housing is among levies blamed for reducing employee’s take-home pay, amid a myriad of tax measures that are impacting businesses.

This is in addition to PAYE, and NSSF deductions with up to 30 per cent of salaries now going to taxes, with Treasury CS John Mbadi this week acknowledging that high taxes on salaries are among three key reasons Kenyans have no money in their pockets despite an improved economy.

Mbadi attributed the high taxes to a huge budget deficit that was initially at above Sh900 billion which forced the government to enhance domestic revenue mobilisation after ruling out more debt.

Speaking at the launch of the FinAcess Survey 2024 by the Central Bank of Kenya (CBK), Kenya Bankers Association (KBA) and FSD, the CS promised to ask the Cabinet to consider easing Pay-As-You-Earn as the budget deficit shrinks.

Firms have been sending employees packing citing a tough business environment even as the government maintains the economy has greatly improved.

At least 40 per cent of employers under the Federation of Kenya Employers (FKE) had by December last year indicated they were planning to reduce the number of employees this year, to meet the increasing costs of operating in Kenya.

One of the recent to issue a notice of redundancy was private security firm–G4S (Kenya) that said it planned to send at least 400 employees home.

Others are Tile and Carpet Centre and WPP Scangroup that are undergoing restructuring processes. Tropikal Brand Africa in February this year also issued a redundancy notice.

Media company Standard Group in July this year announced it was sending home 300 employees as part of restructuring.

Other recent lay-offs have been at Copia which cut off 25 per cent of its staff, Wire Product Limited which sent home 178 employees and vehicle dealer Simba Corp which last month also announced plans to lay off.

The Kenya Association of Manufacturers (KAM) said while it acknowledges improvements in the macroeconomic environment as evidenced by low inflation rates, a stable exchange rate regime, decline in debt stock and fiscal deficit, the public is not getting value for money with businesses still struggling where some are operating in losses.

“Despite economic growth exceeding five per cent, the overall economic conditions remain fragile. KAM recommended introducing a stimulus program and strengthening the public finance management system to ensure that the public gets value for money,” chairperson Jane Karuku said.