KEPSA leadership led by the CEO Ms. Carole Kariuki met with Prof. Njuguna Ndung’u, the Cabinet Secretary, National Treasury and Economic Planning on 22^nd February 2023 at the Treasury Building to discuss Kenya’s economic outlook and pathways toward a globally competitive economy.  

The Cabinet Secretary appreciated KEPSA’s courtesy meeting and apprised the meeting of government’s desire and plans to address the cost of living by adopting a myriad of short-term measures on the challenges in the supply side of consumer goods and welcomed KEPSA’s inputs on long-term measures. He further noted that the long-term goals and policies would be geared towards the accumulation of capital in order to boost production and re-invigorate industries to ensure economic recovery and prosperity. 

The Cabinet Secretary highlighted three core areas constituting government’s approach towards dynamic economic transformation. These included;

1. Protecting private investments in the education sector linked to building quality human capital; protecting private investments in healthcare sectors through the infrastructure, technology, and medical personnel; protecting private investments in the labor market and nutrition outcomes to ensure the nation had a healthy and nutritionally-securepopulation given the direct impact these had on building a productive workforce. 

2. Ensuring the country has a well-governed market system, which creates incentives to increase production and productivity while ensuring the owners of capital capture their rent without creating market inefficiencies.

3. Increasing domestic resource mobilization and capital accumulation. On this agenda, the Cabinet Secretary noted that the taxation regime needed not distort the structure of the demand and market and the decisions to invest. He further noted that it was important to incorporate digital tools to enhance efficiency and prudent use of resources and to tame institutional failures.

Having spoken, the meeting proceeded to plenary where the following issues affecting the private sector were raised. 

• First, that there was need to build an institutional culturewithin government and private sector that would entrench competitiveness and enhance a sustainable economic model that would cushion against unforeseen shocks.

• Second, that the regulators implementing the different laws and regulations needed to be enablers of business, avoiding duplication of roles and streamlining the regulatory institutions to be cohesive and lower regulatory costs. 

• Third, that the private sector supported government’s approach to subsidizing production rather than consumption in order to incentivize local production and reduce cost to consumers, with the goal of increasing the manufacturing sector's contribution to the GDP to from 7% to 20% by 2030.

• The need to streamline taxation was also highlighted to ensure that tax expenditures did not impede investment.  

• The Cabinet Secretary then went ahead and responded to the proposals floated. He committed and welcomed KEPSA’s inputs in relooking at the regulatory institutions to harmonize and diversify the regulatory environment to facilitate business.  He also proposed that the National Treasury would challenge the regulators to come up with an incentive framework to promote business and enhance compliance with their levies.  

• He further challenged the private sector to push for the revival and formulation of cooperatives to build value chains that would promote production and manufacturing. He emphasized that strengthening the value chains from the bottom up would ensure that industries were developed and sustained in various parts of the country hence increasing manufacturing and economic activities, and, thus, positive growth and development would emerge. 

• He noted that the move to exempt duty to some players in the basic consumer goods sector was a short-term and temporary move towards lowering the cost of living.

• He committed that the National Tax Policy that was being drafted would ensure that there was an environment that stimulated revenue, stimulated infrastructure development, and taxes that would reduce capital expenditures while not promoting exemptions. Going forward, he noted that the discussion on the removal and lowering of tax rates would require serious simulations to ascertain the effects on the economy in terms of revenue generation and revenue loss and the multiplier effects of the same. 

• He further committed to a continued engagement on the specific actions that need to be tackled to ensure the prosperity of business and government towards a better country. The engagements would articulate what structures worked and which ones need to be done away with. 

In conclusion, Mr. Mucai Kunyiha, KEPSA director, offered his vote of thanks and appreciated the National Treasury for the opportunity to engage with the Private Sector. Additionally, challenged the meeting toward working to ensure a prosperous economy noting that Kenya is only one economy with different players working toward the same goal.