By Eddah Waithaka
The alcoholic beverage industry is calling on Parliament to repeal proposed regulations that could significantly raise production costs by as much as 70 percent. In a statement released on Friday 13th, the Alcoholic Beverages Association of Kenya (Abak) warned that the Sustainable Waste Management (Extended Producers Responsibility) Regulations 2024 could undermine progress in sustainable waste management, potentially causing more harm than good to the sector and the environment.
These proposed charges have sparked significant debate within the industry, as stakeholders express concerns about the potential financial burden on manufacturers, particularly small and medium-sized enterprises. ABAK contends that the high licensing fee could stifle business growth and investment, ultimately affecting job creation in the sector. Additionally, the association argues that the packaging fees could lead to increased costs for consumers.
Speaking during the Press briefing in Nairobi, Abak chairperson Eric Githua said,”While we support all efforts to promote sustainable waste management, we are afraid that the EPR regulations are more likely to impose an unnecessary and heavy financial burden on the manufacturing sector.”
Githua emphasized that the regulations pose a significant risk to business viability, as they would inflate production costs to a level that might render goods unaffordable for both manufacturers and consumers.
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The regulations aim to implement various fees, including a charge of Sh150 per item for all imported packaging materials and finished products. Additionally, a five percent fee will be deducted by Nema from registered Producer Responsibility Organisations (PROs). Other financial obligations include an annual operating license fee of Sh100,000, as well as registration fees for both producers and PROs.
“With the Sh150 per item fees on imported packaging material in addition to the fees paid to PROs for post-consumer waste collection and management, that would amount to double taxation,” Githua noted.
“This is because manufacturers would in effect pay PROs a fee to manage post-consumer waste on the same item for which they paid Sh150 at the point of importation,” he added.
He noted that the fee charged per item is unclear, as it fails to clearly define what constitutes an “item.” “At a fee of Sh150 per item, and with the broad categories of goods used in manufacturing that are targeted, the cost of production in the alcoholic beverages industry is going to increase by 70 per cent.”
Abak Secretary Eric Kiniti expressed that manufacturers and distributors of alcohol are worried about the process behind the development of the new regulations, citing a lack of sufficient public engagement. “The lack of public participation in the formulation of regulations whose implementation could lead to a 70 per cent increase in the costs of production for the alcoholic beverages sector is a fatal sin of omission,” he said.
Additionally, Abak has requested that the parliamentary committee revoke the existing regulations and instruct the Ministry of Environment to carry out an impact assessment of the new charges. He also emphasized the importance of involving all stakeholders in the creation of regulations that would foster manufacturing growth.
“A great deal of investment in infrastructure and consumer sensitisation is required to achieve 100 per cent sustainable waste management. This can only be achieved over time and through strong collaboration between government and all stakeholders within the manufacturing ecosystem,” said ABAK’s Chairperson.
