Textile companies say the decision by Finance minister Uhuru Kenyatta to reduce import duty on yarn and second hand clothes puts at risk some 6,200 jobs. The Kenya Association of Manufacturers (KAM) say the tax directives by the minister would have a negative impact on the textile industry. The letter, by KAM chief executive Betty Maina says that the new tariff scenario does not encourage the local spinning industry and is not conducive in development of the textile value chain “which is so crucial for the survival of this industry.”

Betty Maina says that the industry took a compromise position in the East African Community common external tariff negotiation by accepting a three-band tariff structure. The structure agreed is zero for fibre (raw materials), 10% for yarn (intermediate), 25% for fabric (finished product) as well as apparel (finished product). This structure allowed the degree of processing to be adequately sheltered against imports and dumping, she said.

During his 2009-2010 Budget, the Minister said that the tax measures would help make local industries continue in business. Minister has reduced import duty on all synthetic yarns, acrylic yarn, polyester yarn and high velocity yarn from the current rate of 10% to 0%. On second hand clothes the minister said that the current global economic recession had made it difficult for ordinary Kenyan to make ends meet, and thus this measure is important in the context of local economy.