There is a moment every manufacturer in Kenya knows well. It comes late at night, when the factory premises is still, and you are alone with your numbers: forget the sales figures, but the full, honest picture: payroll, licences, levies, compliance fees.
Kenya targets manufacturing at 20 percent of GDP by 2030, yet it stands at 7.3 percent today, down from over 11 percent a decade ago. Behind this decline are scaled-down factories, paused investments and unrealised expansion. Despite various initiatives to streamline the regulatory environment in Kenya, the issues persist and constrain industry growth.
To run a manufacturing business in Kenya today is to be perpetually compliant – not in a simple, once-a-year sense, but in a multi-agency, multi-fee, multi-inspection cycle. In some sectors, this means managing upwards of 50 licences. In pharmaceuticals, this number rises to 57.
The National Environment Management Authority (Nema) requires approvals on effluent discharge, while the Directorate of Occupational Safety and Health Services (DOSHS) mandates audits on fire safety, occupational health, risk assessments, first aid training and fire marshal certification: often conducted separately, sometimes by the same officers, and billed as different engagements.
Counties layer on their own requirements: business permits, vehicle branding fees at entry points, and separate parking fees for delivery vehicles.
Policy pressure
Beyond the structural weight, two measures currently facing manufacturers capture the deeper problem in how policy is landing on the ground.
First is the Extended Producer Responsibility (EPR) framework. Manufacturers are not resisting environmental accountability and have invested heavily in circular economy systems: funding recovery schemes, participating in producer responsibility organisations (PROs), and working with government to reduce waste.
The Sh150 per item levy reads clearly on paper, but industrial inputs do not move in neat units. They arrive in bulk, in standard packaging used globally for safety and efficiency.
When that reality meets a per-item charge, costs compound in ways that are not obvious at first glance, particularly when stacked on top of existing PRO obligations manufacturers are already meeting.
In some sectors, the effect is already showing up as a five to six percent increase in production costs. In beverages, projections point to cost increases of up to 70 percent under the current structure.
At that scale, it stops feeling like environmental reform and starts feeling like a fundamental disruption of production economics.
The second is the Standards Levy Order, which has raised the levy ceiling to between Sh4 million and Sh6 million, up from Sh400,000 annually.
Take Sh4 million and spread it across the year: it comes to roughly Sh11,000 every single day.
Daily cost
Every day the factory is running, whether production is high or low, whether sales are strong or weak, during public holidays, when power is out, when raw materials are held at the port, when a VAT refund is still pending, that cost is accumulating.
Put differently, that is the daily wage equivalent of 11 casual workers, hired not for production, not for growth, but purely for compliance.
For manufacturers, this erodes competitiveness in markets already flooded with cheaper imports. For smaller firms, the question is more immediate: where does that money come from?
These sit alongside rising statutory deductions, volatile input prices and a domestic market where purchasing power is already stretched. Across counties, fees continue to vary, often without clear pricing frameworks or justification.
For the manufacturer on the ground, it is not one cost that defines the environment, but the accumulation.
Beyond Kenya’s borders, the environment offers little relief. Supply chains are shifting, trade tensions are rising, and protectionism is increasing. Shipping routes remain disrupted and energy prices are unpredictable.
Competitive gap
These are pressures no single manufacturer can control, which is why the domestic environment matters. While external shocks are expected, the internal framework should offer stability to plan around. Right now, that assurance is not there. Costs are being layered faster than businesses can adjust.
Other countries are moving differently. Rwanda has streamlined licensing frameworks and reduced regulatory duplication. Egypt has taken deliberate steps to cap compliance costs and provide long-term policy clarity to investors.
As Kenya constrains the ability of local industries to compete, other countries are strengthening theirs, resulting in lost markets and capital flight.
Kenya has the fundamentals to compete: a strategic location, a skilled workforce and a strong industrial base. But competitiveness is not built on potential alone.
Manufacturing is a multiplier: when it grows, it drives jobs, exports and value chains; when it stalls, the effects ripple across sectors and into the wider economy.
Some of this is within our control. Review how EPR is being applied and align it with how supply chains function. Draw a clear boundary between EPR charges and existing PRO obligations to eliminate duplication.
Reconsider the scale and structure of the standards levy and anchor it in a phased, predictable framework.
More broadly, reduce duplication across regulatory agencies, harmonise national and county requirements and restore predictability to how policy is introduced.
Hard question
It is time we confront how these levies and regulatory layers are playing out in real businesses. Are these levies and charges truly aligned with the services they support?
Our commitments under the WTO Trade Facilitation Agreement require that agency fees are commensurate with services provided and not serve as revenue streams.
These costs do not disappear. They move into the price of goods. They lead to fewer jobs and reduced investment.
Ultimately, the ripple effect lands on mwananchi, the very person these systems are meant to protect.
If the cost of local production keeps rising, businesses hesitate to expand, and competitiveness declines, what exactly are we protecting?