KAM Statement on Concerted Efforts Against COVID-19

We find ourselves at a remarkably tenuous point in our history. The unexpected turn of events as a result of the global pandemic (COVID-19) has thrown an unwonted curve ball on our plans for the year, at the start of a new decade no less.

As we navigate this precarious period, I would like to celebrate you for your responsiveness, kindness, generosity and solidarity with the Citizens and the Government, to ease the pressure that is certainly going to be felt in the coming weeks. Your in-kind contributions, donations, and financial support to on-going efforts to flatten the curve are truly laudable.

You have also dedicated a lot of time, long days and late nights to support technical committees working with the Government to find practical immediate solutions to keep our country afloat. Thank you.

Government’s Directives

H.E. the President’s pronouncements on Wednesday, 25th March 2020, on providing support to both Mwananchi and Businesses are commendable. We are supportive of the measures put in place by the government to support the country during this season, including those targeting the vulnerable in society and Micro, Small and Medium Enterprises (SMEs).

Government’s response since the pandemic hit our borders has been encouraging, all Ministries, Departments and Agencies (MDAs) have worked together to deliver quick, responsive measures to protect citizens.

Government has done a tremendous job to thwart speculation by accurate daily accounts of progress on the situation.

The Business Emergency Response Team led by the Ministry of Industrialization, Trade and Enterprise Development has spearheaded the formulation of measures and emergency policies to steer businesses in this time.

The Central Bank of Kenya and the Monetary Policy Committee have also developed measures to support the country during this time

Our Engagements

We are a strong Nation because you have been pivotal in setting a strong foundation, and it is with your support that we shall have a swift recovery and a promising future.

For this reason, we are working very closely with the Government to develop rebound strategies on which we can embark post-COVID-19. Once again, I look to you to be an active part of this process to help our Nation come out strong on the other side of the pandemic.

As we develop these measures, with the dynamic nature of the disease, we must also look at the gaps that have been uncovered during this time with a futuristic view to addressing them in the long-term. 

Thanks to your dedicated effort and contribution, Kenya Association of Manufacturers has successfully engaged the Government on measures specific to industry. Some of the outcomes of our engagements with government include:

• VAT refunds: KRA to expedite payment of all verified VAT refund claims amounting to Ksh. 10 Billion within 3 weeks; or allow for offsetting of Withholding VAT.
• Free treatment for anybody affected by the virus: Ksh. 1 billion has been allocated for the recruitment of more health workers.
• Pending bills: The Government announced that all verified pending bills shall be paid within 3 weeks. The private sector is also encouraged to clear all outstanding payments among themselves within three weeks
• Cut the cash reserve ratio (CRR) from 5.25% to 2%: The MPC reduced CRR from 5.25% to 4.25% to release an additional Ksh. 35.2 billion into the market.
• 6 months’ moratorium for non-performing loans: CBK announced mitigation measures to borrowers that were up-to-date with their loan repayment on 6th March 2020. KAM is also planning to meet Kenya Bankers Association (KBA) on complementary mitigation measures banks can offer to manufacturers. 
• Reduce the Repo Rate/Central Bank Rate (CBR) from the current 8.25% (Kenya) to 5%: The Central Bank of Kenya (CBK) Monetary Policy Committee (MPC) reduced CBR from 8.25% to 7.25% on 23rd March 2020.
• Fast-track further purchase of medical supplies by releasing a stimulus package or funds for local manufacturing of pharmaceuticals. CBK has released Ksh. 7.4 billion to the Government. These are proceeds from the demonetization process and are meant to support containment of the pandemic.
• Government to reduce/cancel relevant taxes for SMEs including VAT from 16% to 8%, Corporate Tax from 30% to 15% for the next 6 months. The government reduced VAT from 16% to 14%, effective 1st April 2020, Resident Income Tax (Corporation Tax) from 30% to 25% and turnover tax rate from the current 3% to 1% for all MSMEs.
• Expansion of salary bands where minimum taxable salary income to be increased from Ksh. 11,587 to 25,000 and review of the salary bands and personal relief after every two years. The government announced 100 % Tax Relief for persons earning a gross monthly income of up to Ksh. 24,000, reduction of PAYE from 30% to 25% and appropriation of an additional Ksh. 10 Billion to the elderly, orphans and other vulnerable members of our society.

Our manifesto

The onus will also be on us to stand strong as a development partner for our beloved country. Even as we do all of this in a fast-changing, daunting and very unpredictable situation, I implore us to remember our historic central role in building and upholding the society since before independence. 

In this regard:

• We must do our utmost to ensure that there are at best no, and at worst, minimal job losses.
• We must also mobilize our resources to support various on-going initiatives to mitigate the spread of the virus throughout the country.
• It is our obligation to remain ethical and fair in our pricing to enable, especially those whose daily wage will be greatly impacted by the pandemic, to cater to their basic needs.
• For those in industry whose services are deemed essential and therefore allowed to operate, we prioritize the health and safety of those in our companies and in our communities, by strictly adhering to guidelines and protocols provided by the Government under the Operational Safety and Health Act.
• By doing this that we will stand by our country to ensure the continuity and availability of critical supplies and essential products.

We have also launched an online directory to help the public and other businesses access local products and services to support their operations during this time. I urge you to log on to the Online Directory and update your information.

KAM has proposed measures that can be applied as Border Point protocols to facilitate the safe movement of supplies, and these have now been adopted by the EAC Council of Ministers.

Conclusion

As we develop these measures, with the dynamic nature of the disease, we must also look at the gaps that have been uncovered during this time with a futuristic view to address them in the long-term. 

For this reason, we are working very closely with the Government to develop rebound strategies on which we can embark post-COVID-19. Once again, I look to you to be an active part of this process to help our Nation come out strong on the other side of the pandemic.

We are a strong Nation because you have been pivotal in setting a strong foundation, and it is with your support that we shall have a swift recovery and a promising future.

Find attached a detailed statement of my statement and KAM’s manifesto for more information.

Yours Sincerely,

Sachen Gudka,

CHAIRMAN