Kenya’s manufacturing sector has sounded the alarm over proposed tax measures in the Finance Bill 2026, with industry leaders warning that planned levies on goods imported from East African Community partner states could trigger widespread job losses and force some factories to shut down permanently.
The Kenya Association of Manufacturers says the proposed charges contradict the EAC Common Market Protocol, which guarantees free movement of goods across member states including Uganda, Tanzania, Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo. Imposing fresh duties on intra-regional imports, manufacturers argue, would effectively unwind decades of trade integration.
Kenya’s manufacturing sector contributes roughly eight percent of GDP and employs an estimated 300,000 people directly, with millions more in upstream and downstream supply chains. Industries particularly exposed include food processing, textiles, and fast-moving consumer goods — all of which source inputs or sell finished products across EAC borders.
Business leaders warn that if the bill passes in its current form, companies facing higher input costs will be left with three options: absorb losses, raise consumer prices, or downsize. Several mid-sized processors that operate on thin margins say they would have little choice but to reduce headcount or relocate operations to more cost-competitive EAC jurisdictions.
The government has defended the bill as part of a broader revenue-raising strategy aimed at reducing Kenya’s fiscal deficit, which stood at above five percent of GDP in the last financial year. Treasury officials have indicated some provisions remain open to amendment following public participation.
Manufacturers are pressing Members of Parliament to reject or substantially revise the bill before it reaches its third reading, scheduled for later in the parliamentary session.
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