EDITORIAL: Duty on cement clinker long overdue

Cement production is one local industry that has existed for decades without much challenge from the region or abroad.

However, just like many industries the country is losing out to new investments in the East African Community (EAC) and even some imports from the Middle East and Pakistan.

The irony is that we have all the raw materials needed to meet growth in demand and indeed, the industry has for decades now invested capacity ahead of effective demand.

Nevertheless, we have not seen the need protect an industry with clear comparative advantage.

On Tuesday President Uhuru Kenyatta opened what is reported to be Sh6 billion grinding plant in Salgaa, Nakuru County, by Devki Group with a capacity of 750,000 tonnes yearly, that just raised the excess capacity.

While the significance of the investment largely lies in the investment destination of choice—and probably cutting of transport cost for cement from Athi River to the Rift Valley—it is not lost on anyone the impact such an investment would have on the local economy.

The promoters say it will provide 700 direct jobs. That is why we fully support the call by Devki chairman Narendra Raval for the government to slap a 25 percent duty on clinker—a key ingredient in cement making—import.

Mr Raval pointed out that Tanzania, a key destination of our cement, has already done that meaning it is possible Kenyan products will be locked out of that EAC market.

The tax will make sure clinker is only sourced locally, failure to which a manufacturer will be locked out of the local market.

Notably, Kenya is using over Sh10 billion to import clinker while a number of players including Devki, Bamburi, East African Portland Cement Company, Mombasa Cement and Savannah Cement are in the process of increasing capacity or investing in new plant.

Mr Raval says demand for clinker can be fully met locally with the current investment.

Hopefully, when Kenya is fully self-sufficient in clinker production and the duty is in place, the industry will be regulated enough to prevent big players from running smaller grinders out of the market.

We are calling on Mr Kenyatta to heed the call to help create jobs and wealth and save scarce forex.