The Kenya Association of Manufacturers (KAM) has issued a statement on local companies’ capacity to supply the aggregate demand for clinker in the country.
In the 2020/21 budget cycle, a proposal to increase the import duty for clinker from 10% to 25% was tabled by some stakeholders in the cement industry. The stakeholders cited the sufficient capacity to supply the aggregate local demand for clinker in the country. However, the proposal was opposed by a cross-section of players in the same industry, with concerns that it would distort the market and set the stage for unfair competition.
To resolve the arising stalemate, a National Independent Verification Committee was established by KAM, with other stakeholders co-opted, to assess clinker production and consumption capacities in Kenya.
The committee constituted representatives from the Ministry of Industrialization, Trade and Enterprises Development, Ministry of Petroleum and Mining, The National Treasury, Kenya Bureau of Standards (KEBS), a representative from the grinders, clinker manufacturers and KAM.
The Committee later begun its work on 22nd April, 2021 and completed the verification task on 15th September, 2021. Among the findings in the report is that the demand for cement has been growing, driven by growth in the housing segment and Government infrastructure projects.
Similarly, industry’s capacity has grown exponentially from 6.9 million tonnes in 2016 to 14 million tonnes in 2020 while the demand decreasing, from 6.7 million tonnes in 2016 to 5.97 million tonnes in 2019.
The National Independent Verification Committee has made the following key recommendations on the sector.
1. That, a grace period of 4 years is considered before any increase of import duty. The 4-year grace period will enable the non-integrated companies and those with ongoing expansions to set up and operationalize their clinker facilities to achieve self-sufficiency for clinker production in terms of quantity and quality.
2. That, a national clinker standard be developed under the auspices of KEBS to harmonize quality specifications in line with industry requirements and enable enforcement of the same to trade in clinker within the country. This should take cognizance of the requirements of special cement(s) and white cement.
3. That, the pricing model for locally produced clinker should not be pegged on the prices of imported clinker. Locally produced clinker is currently 15-30% cheaper than imported clinker.
4. That, to support the Local Content Policy and the Big Four Agenda, stakeholders in industry, the Ministry of Transport, Infrastructure, Housing, Urban Development & Public Works, and other related government agencies should develop a framework to boost cement production and consumption in the country.
KAM has reiterated its commitment to exercise its Policy Advocacy mandate to ensure that local capacity is increased and that the local content policy is adhered to.