During Uhuru Kenyatta’s presidency from 2013 to 2022, the government introduced laws, tax measures, and economic programmes that affected several key industries in Kenya.
The decisions affected banking, manufacturing, agriculture, energy, transport, and housing.
Some sought to lower the cost of borrowing and promote local production, while others changed how businesses operated, how goods moved across the country and how certain products were taxed.
The administration also invested heavily in major infrastructure projects and introduced reforms to address challenges in the agricultural sector.
Some of the policies achieved their immediate objectives, while others attracted criticism or were later changed.
Here are seven major government decisions and initiatives that affected Kenya’s key industries during the period.
1. Interest Rate Caps
In August 2016, Kenyatta signed the Banking (Amendment) Act, introducing limits on the interest rates banks could charge borrowers and the minimum interest rates payable on qualifying deposits.
The law capped lending rates at four percentage points above the Central Bank Rate (CBR). It also set the minimum interest rate on qualifying interest-earning deposits at 70 per cent of the CBR.
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The decision followed public complaints about the high cost of borrowing and was intended to make loans more affordable while improving returns for savers.
However, the controls created challenges for sections of the banking industry. Banks became more reluctant to lend to some borrowers considered risky, including small businesses that could not easily meet lending requirements.
An International Monetary Fund (IMF) working paper published in May 2019 found that the interest rate controls contributed to a sharp decline in credit to micro, small and medium-sized enterprises. The study also found a shrinking loan book among smaller banks and reduced financial intermediation.
In November 2019, Parliament repealed the interest rate caps through amendments to the law, allowing banks to set lending rates without the statutory ceiling.
2. The Big Four Agenda
In 2017, Kenyatta introduced the Big Four Agenda as a central part of his administration’s second-term economic programme.
The agenda focused on four areas: manufacturing, affordable housing, universal healthcare and food and nutrition security.
Under manufacturing, the government aimed to increase the sector’s contribution to gross domestic product from 8.4 per cent to 15 per cent by 2022.
The housing pillar targeted the construction of 500,000 affordable homes, while the health and food security pillars sought to expand access to healthcare and improve the availability of food.
The programme influenced government spending and policy priorities, directing funding toward projects intended to support the four sectors.
For manufacturers, the agenda aimed to encourage local production, expand industrial activity and create jobs.
The affordable housing programme was expected to generate business for construction companies, cement manufacturers, steel producers, transporters and other suppliers.
The healthcare pillar also created a policy focus on expanding access to medical services and strengthening the capacity of the health system.
Government’s implementation report for the 2020/21 financial year documented progress and challenges across the pillars, so the programme should be assessed against actual outcomes rather than the original promises alone.
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3. The Plastic Bag Ban
On August 28, 2017, Kenya implemented a ban on the use, manufacture and importation of plastic carrier bags and certain flat bags used for commercial and household packaging.
The Ministry of Environment and Natural Resources introduced the measure through a gazette notice, and the National Environment Management Authority (NEMA) enforced it.
The ban targeted commonly used plastic shopping bags, including those distributed by supermarkets, shops and market traders. NEMA said the decision was intended to address environmental pollution caused by plastic waste.
The policy affected plastic bag manufacturers, importers, retailers and businesses that depended on plastic carrier bags to package or transport goods.
Businesses had to seek alternatives, including paper, cloth, sisal and other permitted packaging materials. This pressured companies to change their packaging arrangements and increased demand for alternative products.
The ban did not absolutely prohibit all types of plastic packaging. NEMA exempted specified primary industrial packaging and certain waste liners, subject to applicable conditions.
The decision also faced legal challenges from manufacturers, importers, exporters, wholesalers and retailers. In June 2018, the Environment and Lands Court declined to overturn the ban.
4. Fuel VAT
In September 2018, the government implemented value-added tax on petroleum products, bringing a major change to the taxation of fuel.
The Kenya Revenue Authority announced that VAT at 16 per cent would apply to petroleum products from September 1, 2018, under the Value Added Tax Act. The requirement affected oil importers, depot operators, distributors, oil marketers and petrol stations.
The introduction of the tax attracted public concern because fuel is a key input for transport, manufacturing, agriculture and electricity generation. Higher fuel costs can also affect the cost of moving food, construction materials and other goods.
In response to the public reaction, Parliament amended the relevant provisions, and the government set an eight per cent VAT rate on petroleum products in September 2018.
The episode showed how tax changes can affect more than the petroleum industry. Fuel prices influence operating costs for businesses that depend on transport, machinery and logistics, while also affecting household expenditure.
5. Tea Sector Reforms
Tea is one of Kenya’s major agricultural exports, supporting small-scale farmers, factories, brokers, exporters and workers across several tea-growing counties.
During Kenyatta’s presidency, the government pursued changes to address concerns about the management and marketing and the returns farmers receive.
In 2020, Parliament passed the Tea Act, 2020, providing a legislative framework the regulate the sector and the law was among the measures introduced during a period of government-led efforts to reform tea production, marketing and oversight.
The reforms were intended to improve governance and accountability in the industry and address concerns about how tea was marketed and how farmers benefited from the sale of their produce.
The sector’s structure meant that regulatory changes could affect small-scale growers, tea factories, marketing agents, exporters, and other participants in the supply chain.
For farmers, the issue was the price they received for their tea and the deductions and costs that affected their earnings; for traders and exporters, the regulatory framework influenced how tea was marketed and sold.
6. The Standard Gauge Railway (SGR)
The construction and commissioning of the Standard Gauge Railway (SGR) between Mombasa and Nairobi was one of the largest infrastructure projects undertaken during Kenyatta’s presidency.
Construction of the line began in January 2015. Kenya Railways records show that passenger services under the Madaraka Express brand began on May 31, 2017, while freight services were commissioned the previous day. Commercial freight operations subsequently began in January 2018.
The railway created a new transport option for passengers and cargo moving between the Port of Mombasa and Nairobi. It also formed part of the government’s wider strategy to improve transport infrastructure and strengthen connections between the port, inland logistics facilities and other parts of the country.
The project affected several industries, including transport, logistics, shipping, warehousing, tourism and trade.
For businesses moving imported goods, the railway offered an alternative to road transport. Its freight services also linked with inland container facilities intended to support cargo handling and ease pressure on the Port of Mombasa. Kenya Railways says the Embakasi Inland Container Depot was expanded to increase its capacity and improve cargo handling.
The project also had significant public-finance implications because of the scale of the investment and the borrowing used to finance its construction.
7. Affordable Housing
Affordable housing was one of the four pillars of the Big Four Agenda, making construction and housing development a major policy priority during Kenyatta’s second term.
The government set a target of delivering 500,000 affordable homes by 2022, with the programme intended to expand access to housing for lower-income households.
Building projects require cement, steel, roofing materials, plumbing equipment, electrical fittings, transport and labour.The policy affected the construction industry and its supply chains.
The government’s focus on affordable housing therefore sought to support activity across multiple businesses while addressing the shortage of homes that ordinary Kenyans could afford.
The programme also formed part of the administration’s effort to increase the contribution of manufacturing to the economy, since local producers could supply some of the materials required for construction.
However, the housing target was a government objective, not proof that the government had completed and made 500,000 homes available by the end of 2022.
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