For Kenya to become a competitive manufacturing and export hub, policy must be designed to be an enabler of growth rather than a barrier to production.
Kenya's Finance Bill 2026 reclassifies manufacturing inputs to VAT-exempt, raising production costs, while Sh35 billion in refund backlog drains cash flows. Regional supply chain costs escalate for manufacturers and tech assembly—affecting sourcing and capex decisions across East African infrastructure.
By
Tobias Alando
Kenya Association of Manufacturers
The Finance Bill 2026 presents an opportunity to build the foundations of a globally competitive industrial sector capable of driving long-term economic growth and job creation.
Policy measures should be designed to enhance competitiveness, attract investment and encourage value addition. Instead, some of the Finance Bill proposals could increase the cost of doing business and weaken the sector’s ability to create jobs and expand exports.
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