The move to introduce the Eco Levy could stifle investments in the country, Kenya Extended Producer Responsibility Organisation (KEPRO) now says, as producers will be compelled to pay more to operate.
This Levy, KEPRO says, is almost a duplication of the already existing fees under the Extended Producer Responsibility (EPR) module, where the producer is held accountable for organising and financing the waste management associated with their products.
While the government retracted its decision on Eco Levy touching on local products, it has retained the levy on imported finished products, which it says contribute to e-waste and thus harm the environment when they are no longer in use.
Locally manufactured products, including sanitary towels, diapers, phones, computers, tyres and motorcycles will not attract the Eco Levy, according to the changes in the Finance Bill.
However with Kenya being a net importer, a huge section of imports will be subjected to the levy, industry players say, with commodity prices likely to increase by up to 70 per cent.
The levy had been proposed at Sh150 per kilogramme which translates to Sh150,000 per tonne.
“The same person has to comply with the EPR requirements, that means a majority of our products are going to be out of the reach of the common mwananchi,” KEPRO chief executive, James Odongo, said during an interview with the Star yesterday.
“By large, the government should allow for EPR to go through the paces of implementation before adding another burden to the producers in the country.”
An additional cost to producers has the potential of discouraging investments amid potential exits, meaning job losses.
Treasury has also proposed the removal of VAT exemption on the importation of equipment for recycling of plastic material, which sector players have termed “counterproductive.”
“On one hand you are charging producers eco-levy to take care of unintended consequences of a product but on this other hand, you are trying to reverse the gains made as far as establishment of an industry in respect of recycling is concerned,” Odongo queried.
KEPRO is part of the team spearheading the country’s EPR, which was mooted after the 2017 ban on single-use plastics.
The private sector and government agreed on the Kenya Plastic Action Plan, which paved the way for the introduction of a policy approach that will see producers take responsibility for their products, hence the EPR.
“KEPRO brings together producers who believe in the concept of planet and profit being able to co-exist. We manage compliance solutions for our members, in the context of EPR implementation and this case managing packaging for non-hazardous products,” Odongo explained.
The country has been keen to move from a linear economy (predominantly make, use, and dispose) to a circular economy, where there is minimal waste disposal to the environment.
EPR is anchored within the Sustainable Waste Management Act 2022, which came into force in July 2022, with section 13 of the Act stipulating that EPR is a mandatory requirement for everyone introducing a product into the Kenya market.
KEPRO has since called on the Environment Ministry to gazette regulations that will guide the implementation of the Waste Management Act.
“There is lack of clarity as far as the policy landscape is concerned. While the Act is in place, there is no regulations to guide implementation. That makes it difficult and there is a blood-line between what is required of the producer responsibility organisation and NEMA,” Odongo said.
There is also low awareness among producers and consumers on their responsibilities as far as issues of product stewardship and environmental stewardship is concerned, KEPRO notes.
The organisation has to date collected and recycled over 16,000 metric tonnes and done capacity building, supporting about 13 key recyclers in the market whom have expanded.
It has pumped more than Sh100 million into the ecosystem since its launch.
The Kenya Association of Manufacturers (KAM) remains concerned that to date, the government has yet to adopt the National Taxation Policy, which aims to assure both local and foreign investors have certainty and consistency in tax policies.
This includes a framework for granting tax incentives and a favourable regulatory tax regime.
“For instance, exporters continue to be faced with export barriers such as delays in VAT refunds, and high costs of intermediate products, and inputs including packaging costs which deter exports in the manufacturing sector,” KAM chief executive Anthony Mwangi said.