‘Katiba’ at 15: What works and what doesn’t from a manufacturing perspective:

Governance—opinion:

By Tobias Alando

Fifteen years ago, on 27th August 2025, Kenya promulgated her new constitution and it brought renewed hope for progressive governance and a citizen-centered system of government after years of clamor for new laws.

Since then, we have been through various development blueprints all geared towards the same goal – transforming Kenya into a trade and investment hub, and transforming the business environment, in a bid to steer the country into prosperity.

Looking back, the 2010 constitution came with a mixed bag of goodies for the manufacturing sector. Indeed, the local industry has recorded remarkable wins and faced surmountable challenges. Nevertheless, the sector has demonstrated resilience and remains optimistic that Kenya will one day grow to become an industrial-led economy.

A key win was the promise of stability and predictability in the tax policy. Article 209 outlines the taxes that can be imposed by the national and county levels of government. The national government may impose Income Tax, Value-Added Tax, Customs Duties and other duties on import and export goods; and Excise Tax. On the other hand, the county governments may charge property rates, entertainment taxes and any other tax authorized by an Act of Parliament. This separation of the taxes that may be imposed by the two levels of government was intended to bring clarity and predictability, which is crucial for manufacturing and businesses at large.

Additionally, Article 209 (5) states that taxation and other revenue-raising powers of a county shall not be exercised in a way that prejudices national economic policies, economic activities across county boundaries or the national mobility of goods, services, capital or labour. This provision protects manufacturing, which includes the production of goods and the logistics of moving the goods to where they are needed, either for consumption or export.

Additionally, the constitution calls for accountability and proper use of public funds. Article 226 mandates the Auditor General to audit the accounts of all governments and state organs. This was put in place to ensure that taxes collected are utilized in a fair and accurate manner for the benefit of all citizens.

Undoubtedly, the biggest win from the 2010 constitution was the formation of the county governments and the devolution of powers. The devolved system of government aims to promote democratic and accountable exercise of power, gives powers of self-governance to the people and enhances the participation of the people in the exercise of the powers of the State and in making decisions affecting them. It (the Constitution) promotes social and economic development and the provision of proximate, easily accessible services throughout Kenya; and enhances checks and balances and the separation of powers. Whereas the Constitution ushered in renewed hope for development, some challenges still remain particularly for manufacturers.

The Fourth Schedule to the Constitution provides the different functions of the National and the County governments. For manufacturing, county governments were put in charge of trade development. This includes the promotion of manufacturing activities within the counties, and which has enabled county governments to develop policies and structures to support value addition.

Public participation is clearly outlined as one of the National Values and Principles of Governance in Article 10. Specifically, Article 10 (2) states that the national values and principles of governance include patriotism, national unity, sharing and devolution of power, the rule of law, democracy and participation of the people.

Moreover, Article 118 mandates Parliament to conduct its business in an open manner and to facilitate public participation and involvement in the legislative and other of Parliament and its committees business.

An independent Judiciary was another of the key wins under the 2010 Constitution. The Constitution at Article 160 emphasizes that the Judiciary, in exercising its mandate, shall be subject only to the Constitution and the law and shall not be subject to the control or direction of any person or authority. This independence has ensured that the Judiciary has protected the rule of law and the provisions of the Constitution from the excesses of the Executive and the Legislature.

To manufactures’ delight, the court has over time revoked several taxes, fees and levies that were enacted without proper public participation or stakeholder engagement. A good example is minimum tax, which was declared unconstitutional and its guidelines voided.

Despite the Constitution’s progressive provisions, gaps still remain. For manufacturers, the prevalence of high taxes that are unpredictable, inconsistent and punitive impedes growth. This uneven nature of taxes decreases Kenya’s competitiveness and discourages investment. This is compounded by government regulators imposing fees and charges for their services in a haphazard manner. Manufacturers are therefore not able to plan even one year ahead for the growth of their business.

For the manufacturing sector, the legal and regulatory environment is still characterized by uncertainty, unpredictability and instability at the national and county levels of government. County governments have enacted fees, levies and charges that, while necessary for raising revenue, have hampered the movement of goods across county borders. This increases the cost of doing business and lowers Kenya’s competitiveness. Consequently, this has led to some manufacturers shifting their production to the other east Africa community (EAC) neighboring countries.

How can the constitution catalyze Kenya’s shift to an industrial-led economy?

First, we need to ensure policy stability and predictability, which are critical factors for any investor’s choice of investment destination. Kenya needs a predictable and efficient tax regime that promotes innovation and the growth of businesses, including entrenchment of the National Tax Policy as a guiding document for all tax related activities.

Second, we must harmonize fees and levies across both levels of government with due regard to predictability, sustainability and reduction of roles duplication and multiplicity of fees and levies.

Third, it is paramount for all public entities across the two levels of government to prioritize local manufacturing of goods and services during procurement, in the spirit of ‘Buy Kenya Build Kenya’.

The fourth consideration is the institutionalization of businesses or the private sector advisory committee for the development of policies for the economic growth of the country.

Finally, Kenya needs to mandate Parliament to pass legislation that supports the growth and development of the manufacturing sector, through incentives and coordination of the various government agencies to promote the sector.

Essentially and as we press forward on our path to national prosperity and development, we must ensure that every stakeholder remains true to the guiding principles of our Constitution. This way, we can ensure nobody is left behind in our quest for a prosperous Kenya.

The writer is the CEO at the Kenya Association of Manufacturers (KAM) and can be reached at ceo@kam.co.ke.