The World Bank has urged Kenya to consider several reforms to unlock Sh194.6 billion in investment and create approximately 80,000 jobs. These reforms include a value-added tax (VAT) deferment scheme on fruit processing equipment and the suspension of the certificate of conformity for medical devices. According to the World Bank, delayed VAT refunds by the National Treasury have hindered investment in Kenya's horticulture sector due to cash flow challenges.
The World Bank suggests that a VAT deferment regime for fruit processing equipment could be established through an amendment to the Finance Act. This would enable processed fruit exporting businesses to postpone paying import VAT on eligible capital goods, rather than paying it upfront at customs. The mechanism would provide cash flow relief primarily for long-term operational assets like plants, machinery, or heavy equipment.
The implementation of a VAT deferment regime in the fruit processing value chain could unlock Sh21.7 billion worth of investment and 36,000 jobs. Additionally, the World Bank points out that local manufacturing of medical consumables, such as surgical scalpel handles, hospital beds, surgical masks, disposable gloves, and cotton swabs, has the potential to attract investment worth Sh103.8 billion and generate an estimated 33,000 jobs.
The World Bank also recommends that Kenya clear overlapping regulatory requirements on locally manufactured medical consumables from the Pharmacy and Poisons Board and the Kenya Bureau of Standards. This would help to attract investment in the local manufacturing of medical consumables.
Targeted reforms in the Coastal Tourism sector could unlock Sh46.7 billion worth of investment and generate 14,000 jobs, according to the World Bank. The lender emphasizes that these reforms would have a significant impact on the country's economy.
The World Bank's suggestions aim to address the challenges faced by investors in Kenya, including delayed VAT refunds and overlapping regulatory requirements. By implementing these reforms, the country can create a more favorable business environment and attract more investment.
The proposed reforms are expected to have a positive impact on Kenya's economy, creating jobs and unlocking significant investment. The World Bank's recommendations will be closely watched by investors and policymakers in the country.
Key points
- The World Bank urges Kenya to implement a VAT deferment scheme on fruit processing equipment to unlock Sh21.7 billion worth of investment and 36,000 jobs.
- The lender recommends clearing overlapping regulatory requirements on locally manufactured medical consumables to attract investment worth Sh103.8 billion and generate 33,000 jobs.
- Targeted reforms in the Coastal Tourism sector could unlock Sh46.7 billion worth of investment and generate 14,000 jobs.
