The 2018 budget had initially set the wood based furniture manufacturing industry in a downward trajectory. Taxes on intermediate wood based panels were increased to 35 per cent whilst at that time the same duty was applied on imported finished furniture.
There was a fundamental distortion in the value chain as both inputs and finished products resided on the same duty band. This had gone against industry consensus proposals prepared by value chain stakeholders who had proposed a differential in duty along the value chain.
Through the Kenya Association of Manufacturers, Furniture manufactures immediately raised the issue with the relevant Governmental authorities.
Thanks to representations by the Kenya Association of Manufacturers (KAM) on behalf of the timber and furniture sector. Under the leadership of the CEO Phyllis Wakiaga and the Chairman Sachen Gudka, KAM held constructive engagements with the relevant ministries.
This led to a correction of this distortion and in December 2018 the industries position was adopted by Government. Duties on inputs were reduced and this has set the foundations to incentivize value addition in Kenya for which KAM thanked the Government for being responsive and taking quick action.
KAM Chairman Sachen Gudka commented “The Furniture sector should be given a priority status by the government. Furniture manufacturing answers to two pillars under the big four agenda, that is Manufacturing and secondly the Affordable Housing Programme (AHP). It has great potential to increase employment and offers forward sub-contracting linkages to the SME sector who are key to delivering the AHP”.
“In order for the benefits to accrue to this sector, the Government should ensure that it creates an enabling environment, by helping to reduce the cost of furniture inputs, promoting the competitiveness of locally made furniture, refraining from issuing developers with duty and tax exemptions on locally produced goods. The supply of joinery and cabinets to the AHP should be allocated solely to local manufacturers that add value in Kenya”