President William Ruto has ruled out repeal of a levy on importation of clinker, a key input for cement production, contradicting an earlier position by the Trade ministry, which had promised to roll back the controversial tax.The President said the government would not allow the importation of clinker, a raw material used for cement production, noting that the country has enough limestone of its own. Clinker is mined from limestone, a creamy white or soft gray rock.”We have limestone, we have all the other raw materials that are necessary for the production of cement here in Kenya,” Dr Ruto said on Tuesday.”Somebody needs to explain to me why we want to go and import stones, just stones. How can we spend our money to buy stones from other countries when we have our own stones?” he wondered.President Ruto was speaking as Bamburi Cement signed a Sh32 billion ($250 million) deal with Sinoma CBMI Construction for the construction of a clinker plant in Matuga, Kwale County.In October, Trade Cabinet Secretary Lee Kinyanjui said the Executive would petition Parliament to repeal the 17.5 percent export and investment promotion levy on clinker and steel, noting that it had unintended effects on companies in these critical sectors.Read: Trade ministry now calls for repeal of 17.5pc cement levy”We are currently charging 17.5 percent for anybody who imports clinker, yet we don’t have enough local clinker,” said Kinyanjui.”So, many of our cement factories are operating sub-optimally because they don’t have enough clinker, and the people who have clinker sometimes refuse to sell to them because they’re also competitors,” he added.However, the President said he is not “persuaded” that the country lacks the capacity to produce its own clinker, noting that the government will continue to restrict imports of the raw material, currently managed through the imposition of the levy.The controversial levy was introduced by the Kenya Kwanza administration in July 2023, rattling the cement sector as clinker imports plummeted from 148,000 tonnes in 2023 to 10,300 tonnes last year. The reduced imports are also said to have impacted the construction sector as cement consumption tanked.At the time, the levy was opposed by the Kenya Association of Manufacturers (KAM), which argued that it would not achieve its intended goal of boosting local production and exports.However, KAM, the lobby for manufacturers, has made a U-turn, noting that the levy had enabled the establishment of clinker and manufacturing plants in Kenya, and turning the country from being a net importer into the next exporter of these products.“Repealing the 17.5 percent levy would reverse the progress achieved in attracting substantial investment in the sector, “said KAM in a statement on Tuesday.One of the strongest backers of the levy has been businessman Narendra Raval, a close ally of President Ruto, whose steel and cement operations were among the biggest beneficiaries of the policy changes.Raval began building ties with President Ruto soon after he became Kenya’s fourth head of state. This drove five cement makers into a frenzy.Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement, and Riftcot Limited mounted a spirited fight against what they feared was a fresh plot by Raval to control the lucrative clinker market.There were concerns that the tycoon, whose Devki Group also dominates the steel sector, had Dr Ruto’s ear as the new administration prepared its first budget for the fiscal year starting in July 2023.For a while, Athi River-based National Cement, which has the largest limestone deposits — the main material for clinker production — pushed for the import duty on clinker to be raised to 25 percent, noting it had sufficient capacity.However, the five other companies argued they had already been given a four-year grace period, lapsing in 2026, to build their own grinders. The agreement, hatched during President Uhuru Kenyatta’s tenure, expected the players to invest individually in clinker facilities worth $1 billion (Sh125 billion).Bamburi Cement on Tuesday announced that construction of its clinker factory would start in the first quarter of 2026 and is expected to be completed in the first quarter of 2028.Bamburi Cement, recently acquired by Tanzania’s Amsons Group, is expected to double its clinker capacity, enabling it to compete more effectively with players such as National Cement that have to dominate the cement sub-sector.→ dakure@ke.nationmedia.com Provided by SyndiGate Media Inc. (Syndigate.info).
