The view of this article is to spur more discussion into the suggestion raised by the Thika Member of National Assembly Hon. Patrick Wainaina. The MNA, who was overwhelmingly voted in on an Independent Candidate ticket, has brought forward a very remarkable debate.
Once it goes through and becomes law in Kenya, it will see to it that imports become more expensive while locally produced goods become cheaper to the consumers. The move is meant to promote local trade and boost local agriculture, manufacturing and production.
The MNA has proposed that an advalorem tax of approximately 1,000% be imposed on all imported goods that can be produced locally. Speaking during a graduation ceremony in one of the universities in Thika, Hon. Patrick expressed that it is not just for Kenyans to be subjected to cheap imports while indigenous entrepreneurs have no market to sell similar goods that they have produced.
By introducing this increase on custom duty, imported goods shall be pricier and thus their demand will contract. Domestically produced goods will then have a competitive advantage over imported goods. This is a move that Kenyan producers have been waiting for for ages.
One of the main concerns however is the cost of homegrown goods and services. Kenyans habitually resort to imported goods because of their low prices. Giving a similar example of the wheelbarrow that Hon. Patrick mentioned, a wheelbarrow made in Kenya with comparable standards with that made in China is likely to cost more.
The government thus needs to lower the cost of production in favour of suppliers who will consequently produce and supply more goods and in cheaper market prices. This will also be an employment-creation opportunity because firms will need to expand on their scales of production.
Raising the cost of imports without either lowering the local cost of production or increasing the purchasing power of Kenyan consumers will hurt the end-users who will have to dig deeper into their pockets. The move may also shrink the assortment of goods that are available for the consumers and will then lead to the emergence of monopolies. There is also the likelihood of inefficiencies among domestic producers due to lack of competition; end-users will be subjected to low quality goods.
In the spirit of reciprocity, introducing high tariffs and intricate customs procedures could lead to Kenya receiving the same treatment from the countries where it exports its goods to. As an alternative, Kenya could negotiate with the importing countries on the amount of goods that they send in.
There are a few other possibilities that could be explored besides the 1,000% advalorem tax. The government could come up with incentives to producers to encourage the affordable production of exports like through the setting up of more Export Processing Zones (EPZs).
It may also need to regulate the amount of imports coming into the country as well as the volume of imports that traders are allowed to hold at a given period of time. This will lead to the contraction of imports in the local market making their prices to rise. Eventually, end-users will resort to the indigenous goods. The government could also start campaigning for the consumption of local goods.
In light of the foregoing, the motion by Hon. Patrick ought to be strongly supported. The few pointers raised also need to be looked into so that once it becomes law it is all-inclusive.
It should be noted that other than protecting Kenyan industries from unfair competition and encouraging the country to be more self-reliant and self-sufficient, the law will reduce dumping of substandard products in Kenya and restrict the importation of harmful goods. This is the best move towards promoting innovation and investment in Kenya. It will also lead to increased employment and above all, rapid economic growth.
A redacted version of this article has been published on The Standard by the same author
