Industrialists eye cheaper loans to boost recovery

Kenya Association of Manufacturers CEO Phyllis Wakiaga. FILE PHOTO | NMG 

By EDWIN OKOTH
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Summary

• The makers of goods are pushing for faster processing of Value Added Tax refunds to pump liquidity drained by slow demand as the pandemic sweeps through various sectors of the economy.
• The lobby also wants the Treasury to push for increased moratorium for bank loan repayments including interest to six to 12 months.
• They want interest rates further pushed down to eight percent and the entire loan and overdraft books granted a full waiver for the three months.

Manufacturers have asked the State to ease importation of raw materials, relax operational restrictions and compel banks to lower lending rates as the country plans to reopen after three months of lockdown.

The industrialists also want the government to consider an emergency rescue package for businesses hard hit by effects of covid-19 control restrictions with suggestions to have direct monetary support to their employees kicked out of employment.

Through their umbrella body the Kenya Association of Manufacturers (KAM), the makers of goods are pushing for faster processing of Value Added Tax refunds to pump liquidity drained by slow demand as the pandemic sweeps through various sectors of the economy.

“Government should ease regulations on importation of raw materials, intermediate goods, industrial spares and machineries especially where ports of origin have been closed down and inspecting agencies are not operating optimally,” the manufacturers wrote to Treasury Principal Secretary Julius Muia.

In the detailed memo outlining measures that will enable the sector return to normalcy, KAM wants the emergency rescue fund to be set up, supported by development partners, to identify and support the most vulnerable businesses and entrepreneurs affected by Covid-19.

The lobby also wants the Treasury to push for increased moratorium for bank loan repayments including interest to six to 12 months.

They want interest rates further pushed down to eight percent and the entire loan and overdraft books granted a full waiver for the three months.

“In addition to direct cash transfers (helicopter money) to targeted individuals, indirect transfers to individuals through the manufacturers could be considered,” the manufacturers wrote.

The sector, which employs about 300,000 directly and three million indirectly has been hard hit by the pandemic driven fall in demand for goods forcing them to cut operations and shed employees.

President Uhuru Kenyatta has already indicated a possibility of relaxing the movement restrictions between counties from July after months of lockdown.

The manufacturers estimate earlier measures put in place to stimulate the economy like reduced corporate income taxes, Value Added Tax and the other measures, as well as others aimed at increasing consumers’ disposable incomes will begin bearing fruit after the pandemic.