The Competition Authority of Kenya (CAK) has warned the government against implementing a proposal by steel tycoon Narendra Raval to raise the import duty on clinker from 10 to 25 percent, Business Daily reported.
Raval is a Kenyan industrialist, entrepreneur, philanthropist and founder of Devki Group of Companies, one of East Africa’s largest conglomerates. He is the group’s executive chairman.
The privately held conglomerate’s interests span steel, aluminium and aviation. It is also a leading producer of cement in East Africa, owning multiple cement plants.
Clinker is a raw material used in cement production. With four cement plants, Raval’s group already has a near monopoly on the country’s cement market.
The regulator therefore classifies the proposal as a self-serving move on the part of the industrialist, as it risks shutting down rival plants and raising national cement prices.
“Further, increasing duty will make it more costly [sic] for firms to import clinker yet sourcing from local manufacturers is even more expensive.The proposal seems not to be attending to an existing market/consumer problem but a private/shareholder investment strategy,” the CAK was reported as saying.
In recommendation to the government, the CAK noted that imported clinker is cheaper and the window to import or produce it locally should be maintained to ensure healthy competition.
“Increasing the current import duties will therefore distort the market, entrench National Cement’s position as a cement manufacturer and a clinker supplier and placing it at a position to foreclosing competitors and barring entry into the market,” the CAK added.
Raval has been lobbying the government to raise taxes on the grounds that Kenya already has sufficient capacity to meet its clinker needs, according to reports.
