Billionaire Narendra Raval ‘Guru’ has won the second round of a vicious battle against five cement manufacturers to control the multi-billion shilling industry even as he tightens his grip on the steel sector.
This is after the Finance and National Planning Committee supported his position and refused to delete a clause that introduced a 10 percent export and investment promotion levy on imported clinker, steel and paper products.
Mr Raval, whose Devki Group also has an iron grip on the steel sector, benefited from the decision by the committee to increase excise duty from 10 percent to 17.5 percent on imported steel products.
Cement manufacturers such as Rai Cement, together with the Kenya Association of Manufacturers (KAM), unsuccessfully petitioned the committee chaired by the MP for Molo Kuria Kimani to delete the clause introducing the 10 percent export and investment levy.
“Delete Clause (68) because the proposed imposition of the export and investment levy to 10 percent and import duty at 10 percent will have trade redirection in favour of Egypt which exports 67 percent duty-free clinker to Kenya,” said Rai Cement, whose founder is another billionaire Jaswant Rai.
“Cement manufacturers will be forced to close down, leading to loss of revenue for the government and individuals will lose jobs. The levy will have a negative impact on the government’s Affordable Housing Plan.”
But the MPs rejected this proposal, which was also submitted by the America Chamber of Commerce and Westminster Consulting.
“The committee rejected this proposal observing that the introduction of the export and investment promotion levy is aimed at boosting local manufacturing, promoting exports, promoting value chain and creating more jobs in the country by providing aggregation centres at the counties,” said the committee.
With the highest production capacity of clinker locally, Mr Raval is one of the biggest beneficiaries of this policy.
Clinker is the main ingredient in the manufacture of cement.
Raval started getting close with President William Ruto soon after the latter became Kenya’s fourth head of state. This drove five cement makers into a frenzy.
Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot Limited put up a spirited fight against what they feared was a fresh plot by Raval to control the lucrative clinker market.
Read: Narendra Raval on growing from a small trader to tycoon
Back then there were fears that the tycoon, whose Devki Group also has an iron grip on the steel sector, had Dr Ruto’s ear as the new administration prepared its first budget for the upcoming fiscal year starting July.
Their fears have come to pass with the Finance Bill 2023 introducing the export and investment levy, which together with other contentious clauses, has already passed the second reading stage.
The Bill is now awaiting the Third Reading.
Mr Raval’s National Cement Services also made its submission to the committee asking it to increase the proposed levy from 10 percent to 25 percent.
He also wanted the lawmakers to make it unalterable for at least 15 years, noting that this would eliminate imports and drastically reduce unemployment in the country.
“This is the only way that Kenya will develop its industries, save jobs for Kenyans by promoting local industries and save the precious foreign exchange,” said National Cement.
MPs’ response was ambiguous. Where they either rejected a proposal or accepted it, to National Cement’s proposal they said they “considered the proposal.”
The hike in excise duty on imported steel products adds to the higher import duty on these items, which Kenya, unlike the other East African Countries, has maintained since 2018.
It is a major win for Guru who was appointed by Dr Ruto to chair a 25-member Presidential Taskforce on the establishment of a National Lottery.
This places him at the centre of President Ruto’s affordable housing plan as cement and steel are some of the main building components.
For a while, the Athi River-based National Cement, which has the largest limestone deposits, the main material for clinker production, has been pushing for import duty on clinker to be raised to 25 percent.
During the forum between the State Department of Industry and the Kenya Association of Manufacturers (KAM) on the proposed increase of duty on clinker that was held on January 31, Narendra’s National Cement argued that the country had enough capacity to produce clinker.
“National Cement reported they have fully integrated plants in Athi River, Mombasa, Emali with a clinker production capacity of 4.5 million tonnes per annum and a new one in West Pokot, which has a capacity of 2.5 million tonnes per annum and a total combined was seven million tonnes per annum,” reads minutes in the meeting that was chaired the PS for State Department for Industry Juma Mukhwana.
The event was also attended by Abubakar Hassan, PS for the State Department of Investment Promotion.
In a sharp rejoinder, however, the other five cement makers argued that raising duty on clinker would result in unfair competition with the quality of clinker not being guaranteed.
They said they had already been given a grace period of four years lapsing in 2026 to build their grinders.
The other five players are expected to put up individual clinker investments worth $1 billion (Sh125 billion).
Westminster Consulting, which provides trade, tax and business advisory, told the committee that the export levy would be counterproductive.
