Eco Levy – A Deep Dive for Kenyan Manufacturers and Mwananchi

The recently proposed Eco-Levy in Kenya’s Finance Bill 2024 has sparked a lively debate within the manufacturing sector. While environmental responsibility is a shared goal, manufacturers are concerned about the potential impact on production costs and competitiveness. This article delves deeper into the Eco-Levy, exploring its implications for Kenyan manufacturers and offering insights on navigating this new policy landscape.

Understanding the Eco-Levy

This is a new environmental tax targeting manufacturers and importers of select products with the aim of setting up waste management infrastructure, financing Kenya’s sustainable waste management programme, and setting up material recovery facilities and electronics waste collection centres across 47 counties. Notwithstanding KAM’s support on environmental conservation, the Eco Levy will not only duplicate the existing levy mandated under Extended Producer Responsibility (EPRs) schemes, but it will also further reverse Kenya’s initiatives to create a circular economy to manage its waste and become a regional recycling hub through the proposed removal of the incentive to increase investments in recycling of waste products.

The levy will  increase prices for all plastic packaging materials, batteries, and hygiene products. For instance, the Ksh. 150 levy per kilogram of plastic packaging will increase the cost of a 400 grams loaf of bread by Ksh. 9 from Ksh. 65 to Ksh. 74; increase 1 litre of cooking oil by Ksh. 16.81 from Ksh. 300 to Ksh. 316.81; increase 1 kilogram of power detergent by Ksh 30 from Ksh. 200 to Ksh. 230 notwithstanding other duties proposed by the Finance Bill 2024 on the same products.

Environmental Challenges in Kenya

1.       Rapid Waste Generation: Kenya generates an estimated 22,000 tonnes of waste daily.

2.       Limited Waste Management Infrastructure: Only about 70% of Kenya’s waste is collected, with the rest often ending up in landfills or the environment.

3.       Plastic Pollution: Plastic waste is a major concern, with negative impacts on ecosystems, wildlife, and human health. Kenya generates an estimated 0.5 – 1.3 million tonnes of plastic waste annually.

Potential Implications of the Eco-Levy for Manufacturers

·         Increased Production Costs: Manufacturers will likely face higher costs due to the levy, potentially impacting product pricing and competitiveness.

·         Shifting Consumer Preferences: Consumers may become more conscious of environmentally friendly products, potentially influencing purchasing decisions.

·         Supply Chain Disruptions: The levy’s implementation might disrupt established supply chains, requiring manufacturers to adapt sourcing strategies.

Opportunities for Manufacturers

1.       Innovation in Sustainable Packaging: The Eco-Levy incentivizes manufacturers to explore eco-friendly packaging solutions, creating a potential competitive advantage.

2.       Investment in Recycling Infrastructure: Collaboration between manufacturers and waste management companies can lead to investments in recycling infrastructure, creating a circular economy.

3.       Enhanced Brand Reputation: Demonstrating environmental responsibility through sustainable practices can strengthen brand reputation and consumer loyalty.

Balancing Sustainability and Growth

The Eco-Levy presents both challenges and opportunities for Kenyan manufacturers. Here are some key considerations:

·         Transparency and Predictability: Clear communication from the government regarding the levy’s implementation and future adjustments is crucial for manufacturers to plan effectively.

·         Support for Green Technologies: Government initiatives that promote and subsidize the adoption of green technologies can ease the transition for manufacturers.

·         Collaboration and Knowledge Sharing: Collaboration between manufacturers, waste management companies, and policymakers can foster innovation and knowledge sharing to address waste management challenges collaboratively.

KAM’s Role in Supporting Manufacturers

The Kenya Association of Manufacturers (KAM) can play a vital role in supporting its members navigate the Eco-Levy:

·         Advocacy: KAM can advocate for a transparent and predictable implementation of the Eco-Levy, ensuring a fair and balanced approach.

·         Capacity Building: KAM can offer workshops and training programs to educate manufacturers on sustainable practices and compliance with the Eco-Levy.

·         Collaboration: KAM can facilitate collaboration between manufacturers, waste management companies, and policymakers to develop effective waste management solutions.

Conclusion

The Eco-Levy in Kenya’s Finance Bill 2024 presents a significant shift towards a more sustainable future for the manufacturing sector.  While challenges exist, there are also substantial opportunities for manufacturers to innovate, adapt, and thrive in this new landscape. By embracing sustainable practices and collaborating with key stakeholders, Kenyan manufacturers can ensure their competitiveness and contribute to a cleaner, healthier environment for all.