Business organisations have called for the immediate suspension of the Standards Levy Order, 2025, which increases the maximum annual levy payable by manufacturers, warning that the move could negatively affect investment, jobs, and the overall cost of doing business.
More than ten industry groups, including the Kenya Association of Manufacturers, Kenya Tea Growers Association (KTGA), Kenya Private Sector Alliance, Association of Kenya Suppliers, and Kenya Flower Council Quality Assured, argue that the revised levy imposes an unprecedented financial burden on manufacturers and threatens Kenya’s industrial competitiveness.
The stakeholders noted that the government gazetted the Standards (Standards Levy) Order, 2025, through the Kenya Bureau of Standards (KEBS) under Legal Notice No. 136 on August 8, 2025.
Under the new order, all manufacturers are required to remit 0.2 per cent of their monthly turnover, excluding VAT and discounts, subject to a capped amount. While the levy rate remains unchanged, the 2025 Order significantly revises the maximum payable limits and exemptions.
“The maximum levy payable is now set at KES 4 million per year for the first five years, rising to KES 6 million per year thereafter,” the groups said, noting that this represents a tenfold increase from the previous cap of Sh400,000 per year under the 1990 Order.
“At the maximum rate, businesses will effectively pay up to approximately Sh11,000 per day during the first five years, increasing to about Sh16,000 per day thereafter, inclusive of weekends and public holidays. The revised Standards Levy Order, 2025, is therefore expected to have a significant financial impact on manufacturers, leading to a negative social-economic impact on the country,” the statement added.
The groups warned that the sharp increase places an unprecedented burden on Kenya’s productive sector.
“While government revenue is vital for national development, such abrupt and disproportionate fiscal measures threaten business continuity, employment, and future investment. Such disruptions weaken the private sector’s capacity to create jobs, generate wealth for citizens, and expand the government’s own revenue base. These additional costs will ultimately be passed on to consumers, placing local enterprises at a competitive disadvantage, further exacerbating the already challenging business environment,” the statement said.
The stakeholders also cautioned that introducing new levies, fees, and charges by regulatory agencies undermines Kenya’s competitiveness both locally and globally.
“At a time when businesses are struggling to absorb existing operational costs, these measures undermine the country’s ability to attract, grow and retain much-needed investment,” the statement read.
They further highlighted the inequity of the levy, which does not apply to imports and is unique to Kenya, potentially diverting investment to neighbouring East African Community (EAC) member states.
“Imports are not subjected to the Standards Levy Order. The charge is unique to Kenya and is not applied in other East African Community (EAC) member states. This disparity undermines the regional competitiveness of Kenyan manufacturers and risks diverting investment to neighbouring economies,” the groups said.
The statement also criticised KEBS for favouring imported products over local manufacturers, noting that the agency’s infrastructure and institutional capacity were largely developed with support from Kenya’s manufacturing sector.
“In effect, KEBS is tilting the playing field against local manufacturers, further limiting their ability to compete in global markets,” the stakeholders said.
The groups also challenged the classification of naturally grown commodities, such as flowers, as manufactured goods.
“The classification of naturally grown commodities such as flowers as ‘manufactured goods’ is a fundamental misclassification and a legal overreach. In the flower sector, growers are subject to mandatory and separately paid-for inspections, certifications, and licenses from other government agencies. Extending the Standards Levy to them constitutes double taxation and regulatory overreach,” they noted.
Similar concerns were raised regarding extractive industries such as mining and quarrying, which already operate under multiple regulatory regimes and pay numerous statutory levies.
“Introducing an additional turnover-based levy risks creating overlapping regulatory charges that further increase the cost of production and undermine the competitiveness of Kenya’s extractive sector,” the stakeholders said.
The groups questioned whether the increased levy would improve KEBS services, noting that companies already pay significant amounts for standard marks, inspections, diamond marks, and testing services.
“All KEBS services are offered at a cost, which has been increasing over the last 3 years. Companies are already paying significant amounts to KEBS in the form of standard marks, inspections, diamond marks and testing services in the rates of millions, and the 4 million cap subjects the companies to excesses of 8 million paid to a single regulator (KEBS) per year. In principle, a levy should be attached to a service and not used as a resource mobilisation tool,” the statement reads.
Manufacturers also warned that relying on credit to sustain operations may force them to borrow further to meet levy obligations, sometimes on revenue that has not yet materialised.
“Manufacturing operations are largely sustained through credit facilities. As a result, businesses are likely to rely on additional borrowing to finance compliance with the Standards Levy at a time when many are already holding significant levels of unsold inventory. This means manufacturers will, in effect, be required to remit the levy on turnover that has not yet translated into actual sales or revenue,” the statement reads.
The groups further highlighted the risk of a cascading cost effect across production chains, compounding expenses and driving inflation.
“Moreover, manufacturers rely on raw materials that may have already been subjected to levy-related obligations within the value chain. The imposition of the new Standards Levy Order therefore risks creating a cascading cost effect, with compounded charges passed through production stages. This is likely to generate a significant multiplier inflationary impact across the broader economy,” they said.
The levy order is currently under judicial review, with the High Court of Kenya scheduled to hear the case on April 13, 2026.
“While respecting the ongoing judicial process, we remain firmly committed to constructive dialogue and policy engagement to safeguard industry competitiveness, protect jobs, and sustain Kenya’s economic recovery and consumer welfare,” reads the statement.
The groups outlined specific calls, including immediate suspension of the order, an independent review of KEBS’s financing framework, and the establishment of a joint public-private working group.
“Immediate suspension of the Standards Levy Order, 2025 and revert the Order back to stakeholder engagements to address the emerging issues, including the increasing cost of doing business, manufacturing competitiveness, and the tariff approach used to determine the Levy,” the statement said.
“Independent review of KEBS’s financing framework to ensure alignment with constitutional, fiscal, and service-based principles. Additionally, strengthen enforcement accountability and transparency in KEBS’ use of funds through annual reporting and audits. The establishment of a joint public-private working group comprising KEBS, the Ministry of Investments, Trade and Industry (MITI), other regulators, and the business community (through BMOs) to design sustainable, service-driven financing mechanisms.”
They also called for exemptions for sectors not under KEBS obligations, such as horticulture, pharmaceuticals, and companies in Export Processing Zones.
“Exempt industries that are not technically under KEBS obligations, for instance, players in horticulture, pharmaceutical and companies operating under special schemes, for instance, Exports Processing Zones (EPZs). Harmonise the Levy’s rates with the objective of improving service delivery and the World Trade Organisation trade facilitation principles, which require that any fees or charges imposed by border or trade-related agencies correspond to the actual cost of the services rendered and are not used as instruments for revenue generation or taxation,” they said.
