Naema Celestine 
By Derrick Wanjala.
The Kenya Revenue Authority (KRA) has launched investigations into two steel companies following complaints from other manufacturers about preferential treatment.
The move comes after several steel manufacturers wrote to the Kenya Association of Manufacturers (KAM), citing concerns that two companies were allowed to import raw materials worth billions of shillings without paying the requisite taxes. Following the trail of correspondence between the manufacturers and KAM, revealing an ongoing wrangle within the steel sector.
Letters seen by me expose a thread of mistrust and fierce competition among steel manufacturers, particularly concerning the Special Operating Framework Agreement (SOFA). SOFA allows approved entities to import specific quantities of raw materials duty-free. Complaints from various manufacturers indicate discontent with only two operators receiving SOFA approval, giving them an undue advantage in the market. A letter from Zira Nails and Steel Products, dated July 10, 2024, and addressed to KAM, expressed concerns about unfair competition and potential layoffs. Similar sentiments were echoed by other players, including Jumbo Steel Mills, Tonoka Rolling Mills, Devki Steel Mills, Accurate Steel Mills, and Tamal Wire Products.
Jumbo Steel Mills highlighted in a letter dated July 5, 2024, addressed to KAM CEO Antony Mangi, that Blue Nile Rolling Mills had benefited from SOFA. This prompted inquiries to the Kenya Revenue Authority (KRA), which referred to a Gazette notice by the East Africa Community dated October 20, 2023. The notice confirmed that Blue Nile and Roofing Kenya Limited were approved to import significant quantities of wire rod duty-free. Blue Nile was allowed to import 32,000 metric tons, while Roofing Kenya Limited was permitted 40,000 metric tons. This approval has raised questions among other steel manufacturers about the legality and fairness of the exemptions.
Sources indicated potential clandestine involvement of two former cabinet secretaries and two principal secretaries in the approvals. Blue Nile Rolling Mills, in response to the allegations, dismissed them as baseless and fictitious, aimed solely at tarnishing their business reputation. The company affirmed that their operations were above board, with written confirmation from the Attorney General’s office, and that they complied with SOFA requirements. A spokesperson for Blue Nile stated, “To the best of our knowledge, the people who complained are not manufacturers of G.I. Wire and are only trying to damage our brand image by peddling rumors.”
The Kenya Association of Manufacturers has acknowledged the concerns raised by its members and stated that it will follow due procedure to resolve the dispute. The association is expected to conduct a thorough investigation to determine whether the exemptions granted to Blue Nile and Roofing Kenya Limited were based on merit or involved dubious dealings. The outcome of this investigation could have significant implications for the steel industry in Kenya, as it may set a precedent for how similar cases are handled in the future.
The steel sector is critical to Kenya’s economy, and any perceived unfairness in the application of policies like SOFA could undermine trust and cooperation among industry players. Many manufacturers have invested heavily in their operations and rely on a level playing field to compete effectively. The allegations of preferential treatment have created a rift in the industry, with some companies feeling disadvantaged and struggling to maintain their competitiveness both locally and in export markets.
The KRA’s investigation will likely scrutinize the processes and criteria used to grant SOFA approvals. This may involve examining the roles of various government officials and the transparency of their decision-making. The findings could lead to policy changes aimed at ensuring a fairer and more transparent system for all manufacturers. For now, the steel sector waits with bated breath as the investigation unfolds, hoping for a resolution that restores trust and promotes healthy competition.
In conclusion, the KRA’s investigation into the preferential treatment allegations within the steel industry underscores the importance of transparency and fairness in policy implementation. The outcome will not only affect the companies involved but also set a tone for the future of industrial regulation in Kenya. As the investigation progresses, stakeholders across the sector are watching closely, anticipating a resolution that will uphold the principles of equity and integrity in the marketplace.
