The Kenya Association of Manufacturers (KAM) is conducting investigations into complaints from several steel investors over preferential treatment in tax waivers.
According to the steel manufacturers, two companies have been allowed to operate under the Special Operating Framework Agreement (SOFA), giving them an upper hand in the market.
SOFA is a framework that allows an entity- once approved, to import a specific quantity of raw material duty free.
Consequently, other manufacturing companies in the steel industry have lamented that the two companies have an undue advantage against other competitors.
The companies putting KAM to task include Jumbo Steel Mills limited, Tononoka rolling Mills limited, Devki Steel mills limited, Accurate Steel Mills limited, Tarmal Wire Products limited, Zingira Nails and Steel products.
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Steel Manufacturer Write Letters to KAM
Zingira Nails and Steel products in a letter dated July 10, informed KAM that if the scenario continues, it will be forced to lay off up to 250 workers in its company.
At the same time, the company indicated that it will be forced to shut down its manufacturing facility due to unfair competition.
“The benefits attained under this framework to the manufacturer has made us very uncompetitive in Kenya and export market. We have been supporting the local producer of wire rod from the time the plant was invented and since the duty and levies were imposed.
“If the scenario continues, we will be unable to compete in the market and we will have no option but to lay off approximately 250 workers in our wire division and shut down our manufacturing facility,” the letter read in part.
At the same time, Jumbo Steel in a letter on July 5, addressed to the Kenya Association of Manufacturers lamented that Blue Nile Rolling Mills limited had benefited from SOFA.
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Blue Nile Responds to Questions of Preferential Treatment
Blue Nile in a response to Citizen TV, distanced itself from the allegations and labeled them as foul play by other manufacturers in the industry.
“To the best of our knowledge, the people who complained are not manufacturers of wire and are only trying to damage our brand image by peddling rumours,” the company stated.
A gazette notice by the East Africa Community dated October 20, 2023, indicated that the two companies were approved to import wire rods of cross section measuring less than 8 millimetres.
However, other steel companies have questioned the legitimacy of the exemption and how the two companies were able to get it.
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