The Executive is petitioning Parliament to repeal a tax on clinker importation, revealing huge disruptions it has caused in the steel and cement industries since its introduction two years ago.
Trade Cabinet Secretary Lee Kinyanjui says the Executive is taking action after observing the impacts the levy has had on the operations of companies in the steel and cement sectors.
“We are currently charging 17.5 percent for anybody who imports clinker, yet we don’t have enough local clinker.
“So, many of our cement factories are operating sub-optimally because they don’t have enough clinker, and the people who have clinker sometimes are refusing to sell to them because they’re also competitors,” he said.
The Ministry of Investments, Trade and Industry has said it is writing to the National Assembly to repeal the Export and Investment Promotion Levy.
The ministry blames the levy for the decline in the operations of steel and cement companies, which have been left without the key raw material.
The government introduced a 17.5 percent levy in July 2023 to promote local clinker production. However, many companies are operating below capacity because a major industry player has been accused of refusing to sell clinker to competitors.
Clinker is the primary raw material used in the production of cement, a key input for the construction sector.
The ministry has expressed concerns amid negative trends in domestic and export markets for cement, with production declining by 763,500 tonnes (7.9 percent) last year.
The drop in production saw a similar (7.2 percent) drop in cement consumption in the country, though exports were most affected.
“Exports to Uganda and Tanzania dropped significantly by 49.6 percent to 96,100 tonnes in 2024. Likewise, cement exports to other countries declined from 263,600 tonnes in 2023 to 259,100 tonnes in 2024,” said the Kenya National Bureau of Statistics in the 2025 Economic Survey.
The KNBS data, however, observed that cement imports increased by 16.1 percent to 39,700 tonnes last year.
MITI says the Export and Investment Promotion Levy has created an unhealthy competition within the cement industry, favouring few players with access to clinker locally, while majority of companies that relied on imports lack access.
Since introduction of the levy, companies importing clinker into the country are charged at the rate of 17.5 percent, which makes their products expensive and uncompetitive against companies with access to local clinker.
“We don't consider that a very healthy situation. So, you have companies that are operating at 60 percent (capacity),” CS Kinyanjui says.
The CS reckons that cement and steel are among Kenya’s key exports to the East African Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa), thus the levy has curtailed the sectors’ competitiveness in the region.
Cement exports to Uganda and Tanzania alone, for instance, dropped from 190,800 tonnes in 2023 to 96,100 tonnes last year. Total cement exports dropped by 21.8 percent to 355,300 tonnes.
CS Kinyanjui said the government hopes to repeal the levy before end of the current fiscal year in June 2026.
He said players within the sector had complained that the government introduced rules favouring some of the players, creating an unfair playing ground.
The aim, the Ministry argues, is to create a level playing field since the levy has eroded Kenya’s competitiveness “and as the government, we don't think that's a very good position to be.”
“We'll call the stakeholders and write to parliament and we've largely agreed with parliament that we think that's a direction things should go,” CS Kinyanjui said.
