@BusinessDaily

NDEMO: Why new furniture tax will kill the sector

1 weeks ago, 19:00

By: Bitange Ndemo

Does the Cabinet sit together to review major policy changes contained in the Budget? If they do, they should by now have realised that Treasury secretary Henry Rotich’s budget last month contained a proposal that will likely kill the furniture making industry.

As the budget was being presented, Environment secretary Keriako Tobiko was extending the logging freeze in community and public forests for the next six months until December 2018.

Implementation of the ban, however, has become a nightmare. Police cannot differentiate the source of timber and as such the ban affects even those harvesting their own trees.

Effectively, you cannot transport timber without being arrested. As if this was not enough disruption in the sector, Mr Rotich imposed a 35 per cent tax on medium-density fibreboard (MDF), the most used product in the furniture industry.

With the stroke of a pen, we have given foreign companies an instant competitive advantage over local productions. Imported furniture will have a 30 per cent cost advantage over similar goods produced locally. It beats logic at a time we are hoping to deal with the problem of unemployment.

It is also against our effort to build a vibrant manufacturing sector and construct affordable housing. The changes have pushed the price of essential wood products by four times. The retail price of 4x2 cypress timber jumped from Sh25 to Sh96 per a foot within this short period.

Clearly, this is seriously undermining the manufacturing agenda. Someone should have foreseen that the logging ban being in place and hiking the taxes of other imported wood would lead to an instant shortage of raw materials in an industry that supports thousands of Micro, Small and Medium Enterprises.

These are the enterprises that require to be tweaked in order to scale and develop a formidable manufacturing sector.

Any intentional disruption is what should be least expected when the elephant in the room is unemployment. When the President gave his vision in the Big Four Agenda, especially in manufacturing, it was not a temporary intervention but an effort to build a competitive advantage for the country and in turn hand him a legacy.

Implementers of the agenda have no choice but to look into value innovation, where cost is contained while increasing value to the entrepreneurs and the customer. While such a strategy is implemented, the implementers must be cognisant of the external competitors and seek to equip local enterprises with the abilities to build a sustainable competitive advantage.

That is not happening. We cannot succeed if we do not convert political pronouncement into actionable and sustainable strategies. This is a onetime chance in a lifetime for bureaucrats to plan for manufacturing in the country for the next 50 years because legacies outlive their political creators.

In the absence of a clear strategy we miss the whole point. My concern about the furniture industry is by no means advocacy for wanton destruction of the forests in the country.

What we need is a strategic direction on the implementation of the agenda. By budget time, the ministries responsible should ...
Read More


Category: business opinion news lifestyle corporate

Suggested

3 hours ago, 12:13
@AfricaNews - By: Africanews
Nigeria Air seeks strategic partner to invest $300m | Africanews

Decades of neglect and lack of investment have left Nigeria with low-quality infrastructure seen as a hurdle to prosperity. The government has said that upgrading it will require private investment. ...

Category: africa topnews news africa_business business
7 hours ago, 07:57
@DailyNation - By: Brian Ngugi
BAT half-year profit rises 3.39pc to Sh2bn

Sales rose due to incremental pricing and distribution expansion initiatives. ...

Category: topnews news business
3 hours ago, 12:40
@StandardMedia - By: Bbc
Fashion firm burns items worth billions to prevent them being sold cheaply

Burberry, the upmarket British fashion label, destroyed unsold clothes, accessories and perfume worth Sh 3 billion (£28.6m) last year to protect brand ...

Category: business news
1 hour ago
@CapitalFMNews - By: Ken Macharia
78-year-old works alongside her great-grandsons at a Nairobi audio shop

NAIROBI, Kenya, Jul 20 - Like most senior citizens in Kenya, Cecelia Wangari, guesstimates her exact age. Her national identity card reads 1940 as the Kenya breaking news | Kenya news today | ...

Category: business
Now
@CapitalFMNews - By: Njoki Kihiu
Contaminated or not? Kenyans divided about domestic sugar consumption

NAIROBI, Kenya, Jul, 20 - As the final report by the Joint Committee probing the proliferation of contraband sugar in the country is due on Tuesday, Kenya breaking news | Kenya news today | ...

Category: business
7 hours ago, 08:28
@BusinessDaily - By: Dr Mukuhi Ng’ang’ ...
DR NG'ANG'A: Why am I Losing Weight?

Cancer can cause generalised symptoms. ...

Category: business opinion news markets lifestyle economy corporate

@BusinessDaily

NDEMO: Why new furniture tax will kill the sector

1 weeks ago, 19:00

By: Bitange Ndemo

Does the Cabinet sit together to review major policy changes contained in the Budget? If they do, they should by now have realised that Treasury secretary Henry Rotich’s budget last month contained a proposal that will likely kill the furniture making industry.

As the budget was being presented, Environment secretary Keriako Tobiko was extending the logging freeze in community and public forests for the next six months until December 2018.

Implementation of the ban, however, has become a nightmare. Police cannot differentiate the source of timber and as such the ban affects even those harvesting their own trees.

Effectively, you cannot transport timber without being arrested. As if this was not enough disruption in the sector, Mr Rotich imposed a 35 per cent tax on medium-density fibreboard (MDF), the most used product in the furniture industry.

With the stroke of a pen, we have given foreign companies an instant competitive advantage over local productions. Imported furniture will have a 30 per cent cost advantage over similar goods produced locally. It beats logic at a time we are hoping to deal with the problem of unemployment.

It is also against our effort to build a vibrant manufacturing sector and construct affordable housing. The changes have pushed the price of essential wood products by four times. The retail price of 4x2 cypress timber jumped from Sh25 to Sh96 per a foot within this short period.

Clearly, this is seriously undermining the manufacturing agenda. Someone should have foreseen that the logging ban being in place and hiking the taxes of other imported wood would lead to an instant shortage of raw materials in an industry that supports thousands of Micro, Small and Medium Enterprises.

These are the enterprises that require to be tweaked in order to scale and develop a formidable manufacturing sector.

Any intentional disruption is what should be least expected when the elephant in the room is unemployment. When the President gave his vision in the Big Four Agenda, especially in manufacturing, it was not a temporary intervention but an effort to build a competitive advantage for the country and in turn hand him a legacy.

Implementers of the agenda have no choice but to look into value innovation, where cost is contained while increasing value to the entrepreneurs and the customer. While such a strategy is implemented, the implementers must be cognisant of the external competitors and seek to equip local enterprises with the abilities to build a sustainable competitive advantage.

That is not happening. We cannot succeed if we do not convert political pronouncement into actionable and sustainable strategies. This is a onetime chance in a lifetime for bureaucrats to plan for manufacturing in the country for the next 50 years because legacies outlive their political creators.

In the absence of a clear strategy we miss the whole point. My concern about the furniture industry is by no means advocacy for wanton destruction of the forests in the country.

What we need is a strategic direction on the implementation of the agenda. By budget time, the ministries responsible should ...
Read More

Category: business opinion news lifestyle corporate

Suggested

3 hours ago, 12:13
@AfricaNews - By: Africanews
Nigeria Air seeks strategic partner to invest $300m | Africanews

Decades of neglect and lack of investment have left Nigeria with low-quality infrastructure seen as a hurdle to prosperity. The government has said that upgrading it will require private investment. ...

Category: africa topnews news africa_business business
7 hours ago, 07:57
@DailyNation - By: Brian Ngugi
BAT half-year profit rises 3.39pc to Sh2bn

Sales rose due to incremental pricing and distribution expansion initiatives. ...

Category: topnews news business
3 hours ago, 12:40
@StandardMedia - By: Bbc
Fashion firm burns items worth billions to prevent them being sold cheaply

Burberry, the upmarket British fashion label, destroyed unsold clothes, accessories and perfume worth Sh 3 billion (£28.6m) last year to protect brand ...

Category: business news
1 hour ago
@CapitalFMNews - By: Ken Macharia
78-year-old works alongside her great-grandsons at a Nairobi audio shop

NAIROBI, Kenya, Jul 20 - Like most senior citizens in Kenya, Cecelia Wangari, guesstimates her exact age. Her national identity card reads 1940 as the Kenya breaking news | Kenya news today | ...

Category: business
Now
@CapitalFMNews - By: Njoki Kihiu
Contaminated or not? Kenyans divided about domestic sugar consumption

NAIROBI, Kenya, Jul, 20 - As the final report by the Joint Committee probing the proliferation of contraband sugar in the country is due on Tuesday, Kenya breaking news | Kenya news today | ...

Category: business
7 hours ago, 08:28
@BusinessDaily - By: Dr Mukuhi Ng’ang’ ...
DR NG'ANG'A: Why am I Losing Weight?

Cancer can cause generalised symptoms. ...

Category: business opinion news markets lifestyle economy corporate
Our App