Kenya's President Mwai Kibaki on Monday ordered the energy and finance ministries to lower electricity tariffs in response to high costs that have been passed on to consumers.
Speaking during the inauguration of the second National Economic and Social Council (NESC) in Nairobi, Kibaki observed that the prices were getting out of hand and needed to be lowered to ease the financial strain on Kenyans.
"I have directed the ministries of energy and finance to review taxes and levies on electricity in order to bring down power costs," he said.
The president also directed the Kenya Revenue Authority to also issue Value Added Tax (VAT) refunds within two months. Once implemented, there will be no VAT on fuel cost adjustment or the foreign exchange component.
The directive is expected to provide an incentive for manufacturers, many of whom had threatened to relocate to neighboring countries with lower energy costs.
Industrialists criticized the escalating energy costs which have increased by between 66-75 percent since January, in step with a rise in the global prices of oil.
Speaking earlier, manufacturers said high energy costs, dilapidated road network, shortage of skilled labor, crime and insecurity, corruption and a stifling regulation regime are to blame for the high cost of doing business in Kenya.
The Kenya Private Alliance (KEPSA) chairman, Steve Smith noted that the recently enacted labor laws were major stumbling blocks to the successful operation of businesses in the country. Smith said the business community was not against the laws.
"We are opposed to the manner in which they were implemented. These laws will stifle the labor market, in the result denying many people job opportunities. This is very unfortunate given that we need to get thousands of people to work," he said.
He further indicated that although labor laws have been enacted in many countries worldwide, these regulations are normally implemented in tit-bits as opposed to whole some. "The employers are also given incentives by the government to embrace them."
Kengen CEO Eddy Njoroge emphasized on the importance of power to the achievement of the envisioned Vision 2030. "Power is critical to Vision 2030," he said, adding "It is the main engine behind economic growth, the main river that we need to pull in order to prosper."
Deputy Prime Minister Musalia Mudavadi said the business community had raised fundamental issues that are critical if the country is to attain Vision 2030.
"We shall digest them and work towards improving the cost of doing business in Kenya," he said.
KAM CEO Betty Maina said the only way to reduce unemployment among the youth is through the deepening of enterprises.
Source: Xinhua
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