[STATUS REPORT: KAM’S ADVOCACY ON VARIOUS LEGISLATION ]A report on KAM’s work to ensure that legislation in Kenya takes in the views of manufacturers as stakeholders.

2014Kenya Association of Manufacturers

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Introduction

The Kenya Association of Manufacturers (KAM) continues to provide an essential link for co-

operation, dialogue and understanding with the Government both at the National level and at

the County level by representing the views and concerns of its members

to the relevant government authorities. The inception of devolution with its actual

implementation coming after the March 2013 general elections has seen a lot of legislative

work rolling out at Parliament (both National Assembly and Senate) and at the County

Assemblies. KAM has worked closely with its members in addressing various issues that impact

on business in the country that has and continues to stem from the various bills and laws. We

value and take up our citizen participation role keenly in an effort to ensure that manufacturers

enjoy a conducive environment for doing business in the country.

We have and shall continue to share our views on various laws with the relevant stakeholders.

In a nutshell, below are the various pieces of legislation that KAM has or continues to engage

Government on this year.

Bills Affecting Businesses

1. Labour Relations Bill: - This bill seeks to align the Labour Relations Act with the 2010

Constitution. It also consolidate the law relating to trade unions and trade disputes, to

provide for the registration, regulation, and management of trade unions and employers

organizations or federations, to promote sound labour relations through the protection and

promotion of freedom of association, the encouragement of effective collective bargaining

and promotion of orderly and expeditious dispute settlement, conducive to social justice

and economic development. The amendments introduced through the bill introduce

alternative dispute settlement methods to avoid overburdening the court and to give room

for labour experts to resolve certain disputes. KAM was part of the technical team reviewing

the legislation and the introduction of ADR mechanisms that shall save on time and money

is a welcome idea.

2. Labour Institutions Bill: - The bill also seeks to align the Labour Institutions Act with the

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2010 Constitution and to also introduce alternative dispute settlement methods through

the various labour institutions. The Labour Institutions Act established various labour

institutions, provided their functions, powers and duties which were also the subject of

review in the bill. KAM was part of the technical team reviewing the legislation and the

introduction of ADR mechanisms that shall save on time and money is a welcome idea.

3. Public Procurement and Assets Disposal Bill: - the bill seeks to implement Article 227 of the

Constitution by having in place a procurement law by August 2014. KAM submitted

memorandum to National Treasury proposing that preference and reservations be based on

the products and services and not the contractor (promote buy Kenyan build Kenyan).

Concerns of KAM were on the implementation of exclusive preference and margins of

preference that have led to certain category of persons being awarded Government

Tenders without an audit of the source of the goods and services hence an influx of imports

into the country with industries closing down due to unfair competition by the foreign

products and services.

4. Scrap Metal Bill: - the bill seeks to provide for the regulation of dealings in scrap metal and

to establish and provide for the functions of the Scrap Metal Council. We submitted our

memorandum to the National Assembly and the metal sector got an opportunity to meet

the Finance, Planning and Trade committee of the National Assembly to discuss the KAM

submissions.

5. Mining Bill: - the bill seeks to implement articles 60, 62(1) (f), 69 and 71 of the constitution.

The Constitution vests all minerals in the national government and provides for the

sustainable exploitation, utilization, management and conservation of the environment and

natural resources and the equitable sharing of the accruing benefits. KAM has participated

in the development of this bill through engagements with the Ministry of Mining and the

Parliament as well as other stakeholders. We have submitted our memorandum to

Government mainly recommending inclusion of key provisions on local content together

with clear guidelines on the monitoring of the same.

6. Special Economic Zones Bill: - this bill seeks to establish special economic zones in order to

promote and facilitate global and local investors. The bill also provides mechanisms for the

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development and management of an enabling environment for such investments. KAM has

engaged Government for the last four years on both the policy and the bill in order to

ensure that there is a level playing field between the firms to be located in SEZ zones and

those in none SEZ zones. This is in light of the market access to be given to SEZ products as

provided in the policy and the fiscal incentives as provided for in the bill.

7. Community Land Bill: - this bill was pulled out of Senate hence no longer in the house. The

bill sought to give effect to Article 63(5) of the Constitution by providing for recognition,

protection, management and administration of community land as well as to establish

certain structures for the proper implementation of the law. We circulated the highlights as

well as the bill to members but the bill was pulled out before we could file our submissions.

We are following closely on what the Ministry of Lands is doing around the same subject so

that we can make our submissions to them in good time.

8. Climate Change Bill: - has gone for a second reading in the national assembly. KAM is part

of the technical team working on the policy and inputs to the bill. KAM has adequately

sensitized the members in all the chapters on the risks, opportunities and impacts of climate

change to their businesses.

9. Energy Bill – the bill seeks to consolidate the laws relating to energy, to provide for national

and county government functions in relation to energy, to provide for the establishment,

powers and functions of the energy sector entities; promotion of renewable energy;

exploration, recovery and commercial utilization of coal and geothermal energy; regulation

of midstream and downstream petroleum activities; and the production, supply and use of

all energy forms. KAM’s main agenda is to ensure manufacturers’ energy concerns on

adequacy, reliable and quality power supply as well as competitive energy prices is

addressed in the bill.

10. The Business Registration Service Bill: - this bill seeks to establish the business registration

service to ensure effective administration of the laws relating to the incorporation,

registration, operation and management of companies, partnerships and firms, the laws

relating to individuals carrying on business under a business name, bankruptcy, societies,

hire purchase, chattels transfers, adoption, coat of arms, books and newspapers and the

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national flag, emblems and names. We submitted a memorandum to the national assembly

that mainly sought an understanding of the functions of the service and how different they

will be from the current registrar general’s office. The memorandum also proposed

decentralization of the service together with all other business registries to the counties to

facilitate faster delivery of services.

11. Division of Revenue bill and County Allocation of Revenue bill: - these two bills are

prepared before every annual national budget to provide guidance in the preparation of the

national and county budgets based on what revenue has been allocated to the various

levels of government. This is a good guide for KAM while engaging the national government

and the counties by encouraging accountability in the utilization of public funds as well as

seeking justification for the funds collected from the business community vis a vis the funds

allocated and service delivery.

Legislation Affecting Business

1. Pharmacy and Poisons (Amendment) Bill: - this is an amendment bill to the Pharmacy and

Poisons Act intending to transform the Pharmacy and Poisons Board into a more effective

semi-autonomous authority to be known as the Pharmacy and Poisons Authority. We

prepared highlights on the bill to members as well as circulated the bill. We are still awaiting

to receive comments.

2. Alcoholic Drinks (Amendment) Bill: - this is an amendment bill to the Alcoholic Drinks

Control Act. The amendment bill seeks to make the Act conform to the practical challenges

in its implementation arising out of its enactment and implementation. We submitted our

memorandum on the amendment bill to Senate proposing the ideal procedures relating to

labeling of alcoholic beverages; a process that should not increase the cost of production.

We also made proposals on liquor licensing we recommended that the bill provides a

guiding national framework that creates uniformity in the licensing of the trade across the

counties; among other proposals.

3. Value Added Tax (Amendment) Bill: - this amendment bill was passed to law and was

enacted on 8th May 2014 with the effective date being 29th May 2014. KAM made its

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submissions to parliament and the following was passed on 23rd April 2014:

a. Items added to list of exempt supplies (goods);

i. Inputs or raw materials (either procured locally or imported)supplied to

pharmaceutical manufacturers in Kenya for manufacturing of medicament

ii. Specialized solar equipment and accessories

iii. Unprocessed green tea

iv. Sugarcane of tariff no. 1212.93.00.

v. Unprocessed produce of plant species camellia sinensis

vi. Materials, waste, residue and byproducts, whether or not in the form of pellets, and

preparations of a kind used in animal feeding of tariff numbers 2308.00.00,

2309.10.00,2309.90.10 and 2309.90.90.

vii. Milk and cream of tariff 0401.10.00 and 0401.20.00

viii.Made-up fishing nets of man-made

ix. Textile material of tariff no. 5608.11.00

x. Mosquito nets of tariff no. 6304.91.10.

b. Items added to list of exempt supplies (services)

i. Air ticketing services supplied by travel agents

c. There was no change made in the initial list of zero rated items.

4. NSSF Act: - full implementation of the Act commenced from 31st May 2014 however

there is a case in court filed by the Kenya Plantation Workers Union that led to an

injunction being placed on the implementation of certain provisions of the Act and

reverting the contributions to NSSF to the former 200-200 until the matter is

determined. The regulations to the Act are now in place and private schemes can now

apply to RBA to opt out of Tier II contributions. KAM has conducted 2 sensitization

seminars (Nairobi and Nakuru) where we invited NSSF to clarify on the 2 tier system,

handling of expatriates, commencement of deductions, opting out procedures among

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others.

Legislation at EAC

1. EAC NTB Bill: - This is an EAC bill providing for the establishment of a legally binding

mechanism for reporting, monitoring and eliminating of Non-Tariff Barriers (NTBs) to trade.

The bill prohibits partner states from enacting, making or adopting laws, regulations,

policies, agreements, trade practices, customs procedures or any other measures that may

constitute new NTBs. KAM reviewed the bill and advised members on its content as well as

prepared and submitted a memorandum with proposed amendments to the Regional

Technical Committee on Elimination of NTBs. Two thirds of the KAM proposals were

adopted. The bill is now with the Sectoral Committee on Legal Affairs.

2. EAC Industrialization Bill: - the bill seeks to provide a legal and institutional framework to

enable the EAC promote industrialization in a harmonious and coordinated manner so as to

achieve the community. The specific objectives of the Act shall be to strengthen

collaboration and coordination of investment in the industrial sector, and provide

regulatory guidelines for the undertaking of joint industrial projects; provide a regulatory

framework which promotes regional integration while eliminating any unfair competition

and business practices; create a coherent and harmonized fiscal and incentive regime for

industrial development; provide a mechanism for preferential treatment of goods and

services produced and supplied by industries in terms of government procurement; to

create a system for coordinating collection and dissemination of industrial data; promote

production and trade on essential raw materials and industrial inputs; promote industrial

innovation, research and development and protection of intellectual property rights; create

a fund to support investment in strategic regional industries; and establish a industrial

development board to promote industrial development. KAM has commenced the review

and engagements on the bill

3. EAC SQMT (Product Certification in the Partner States) Regulations: - The EAC SQMT

(Product Certification in Partner States) Regulation of 2013 was passed by the EAC Council

of Ministers and Clause 23 of the regulations impose strict liability on a manufacturer on

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any injury or damage caused during the normal usage of their product. KAM is commencing

engagements on this issue with the relevant stakeholders and we will keep you abreast on

any developments.

Legislation at the Chapter Counties

Nakuru Chapter

1. Nakuru County Finance Act: - the chapter engaged the county government on the Act

mainly on CESS, Single Business Permit (SBP), parking fees among other issues. This is still

work in progress as the County government is receptive and agreeable to make

amendments.

2. Nakuru County Rating Bill: - the bill introduces new rates to property, an increment from

the former. KAM comments submitted through the Nakuru business coalition’s

memorandum.

3. Nakuru County Agricultural Development Fund Bill: - the bill proposes introduction of an

agricultural fund for farmers to access loans at subsidized rates. KAM Nakuru chapter

engaging the county government through the Nakuru county business coalition.

4. Nakuru County Revenue Administration Bill: - the bill seeks to provide a framework for

revenue administration in the county. KAM Nakuru chapter engaging the county

government through the Nakuru county business coalition.

5. Nakuru County Nuisance Bill: - this bill may indirectly affect business through its

administration. We are closely tracking its progress in the county assembly.

Mombasa Chapter

1. Mombasa County Finance Act: - this is now a county law. We are still tracking its

implementation with the chapter having engaged the county government of key provisions

on entry fees, licenses, new port fees challenging regional trade, single business permit

(SBP) among others.

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Kiambu Chapter

1. Kiambu County Finance Act: - this Act was nullified by court on the grounds of lack of public

participation and new bill in process of being published. KAM central Kenya chapter

submitted a memorandum on the new bill through the Kiambu business coalition to the

county government. Key concerns: CESS, conservancy fees, parking fees, SBP among others.

2. Kiambu County Roads Bill

3. Kiambu County Transport Bill

4. Kiambu County Public Works Bill

5. Kiambu County Energy Bill

6. Kiambu County Disaster Management Bill

The bills listed from number 2 to 6 above a yet to be introduced. KAM has submitted a

memorandum on the five bills yet to be drafted.

Nairobi – Industrial Area Chapter

1. The Nairobi City County Plastic Carry Bags Control Bill, 2014: - the bill seeks to ban the

manufacture of plastic carry bags but extends to other plastics i.e. polyethylene

terephthalate (PET), High density polyethylene (HDPE), Poly Vinyl Chlorine (PVC), Low

density polyethylene (LDPE). Polypropylene (PP), Polystyrene (PS), Polybutadiene

Terephthalate (PBT), Acrilonitrile Butadiene Styrene (ABS) and Acrylic. KAM met the County

Assembly Environment Committee and submitted our final memorandum on 25th July 2014

together with a proposal from the plastic sector to recycle waste carry bags. KAM also

recommended adherence to the Kenyan Standards of manufacturing of plastic carry bags as

provided by the Kenya National Bureau of Standards.

2. Finance Bill: - the county 2014-2015 budget was read to the public. We are awaiting

publication of the bill.

Kisumu Chapter

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1. The County Government of Kisumu (Solid Waste Management) Bill: - the bill seeks to

establish a waste management system in the county. We have circulated the highlights as

well as the bill to members and we are awaiting comments.

Eldoret Chapter

1. County Disaster Preparedness and Response Bill: - KAM was incorporated in the Interim

Committee to draft the Bill. We shall circulate the first draft of the bill once it is ready.