By Benadeta Mwaura - Reporter
Kenya, June 09, 2026 - The Kenya Association of Manufacturers (KAM) has warned that proposed Value Added Tax (VAT) changes contained in the Finance Bill 2026 could increase the cost of electric motorcycles, mobile phones and other digital devices, potentially slowing Kenya's push toward digital inclusion and green mobility.
The manufacturers' lobby says the proposals, currently under consideration by Parliament, risk making critical technologies less affordable at a time when the government is promoting digital transformation, financial inclusion and the transition to cleaner transport solutions.
Speaking during submissions on the Finance Bill, KAM Chief Executive Officer Tobias Alando cautioned that removing existing tax incentives could have unintended consequences for consumers and businesses.
"The proposed VAT measures will increase the cost of essential technologies and products that are critical to Kenya's economic transformation agenda," Alando said.
According to KAM, the proposals could particularly affect mobile phones, which have become indispensable tools for communication, education, financial transactions and business operations across the country.
The association argues that smartphones are no longer luxury items but essential economic tools that enable millions of Kenyans to access mobile banking services, digital marketplaces, government services and employment opportunities.
The warning comes amid ongoing public debate over provisions contained in the Finance Bill 2026, with many stakeholders expressing concern that some tax measures could increase the cost of living and raise the cost of doing business.
KAM also raised concerns about the potential impact on Kenya's rapidly growing electric mobility sector, which has attracted significant investment in recent years as the country seeks to reduce dependence on fossil fuels and lower carbon emissions.
The association noted that electric motorcycles have emerged as an important alternative for thousands of boda boda operators seeking to reduce fuel costs. However, higher taxes could make the vehicles less affordable and slow adoption rates.
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"Kenya has made significant progress in promoting e-mobility, and it is important that tax policies continue supporting rather than discouraging investment in the sector," Alando added.
Industry players have consistently argued that maintaining incentives for electric vehicles and related technologies is necessary to help Kenya achieve its climate goals while reducing transport costs for operators.
The concerns come as the government continues implementing policies aimed at expanding digital connectivity and supporting innovation. Kenya recently secured billions of shillings in financing for digital infrastructure expansion, while authorities have repeatedly emphasized the importance of increasing access to technology and internet services across the country.
Analysts note that the debate highlights a broader challenge facing policymakers: balancing the need to raise government revenue against the risk of making critical goods and services more expensive for consumers.
The Finance Bill 2026 has already generated significant public interest, with stakeholders from various sectors submitting proposals and objections during public participation hearings. Among the most debated issues are taxes affecting digital transactions, telecommunications services, rental income and consumer goods.
KAM is now urging lawmakers to reconsider the VAT proposals before the bill is finalized, arguing that preserving affordability will ultimately support economic growth, innovation and job creation.
The association maintains that tax policy should encourage the adoption of technology and clean energy solutions rather than create additional barriers for consumers and businesses already grappling with rising operating costs.
As Parliament reviews submissions from stakeholders, the fate of the proposed VAT changes will be closely watched by manufacturers, technology firms, e-mobility companies and consumers concerned about the potential impact on prices in the months ahead.