Kenya Manufacturers Join Court Fight Over Tenfold Factory Levy Rise
Kenya · BUSINESS
Key Facts
- —The country Kenya, East Africa’s business hub, has about 57.5 million people. Its economy, about US$136 billion in 2025, is under a twentieth of Britain’s (World Bank).
- —Why it matters Factories produce only about 7 percent of Kenya’s output. Industry groups say high energy costs and taxes already squeeze Kenyan factories.
- —Why now On 30 September 2026 the High Court admitted the Kenya Association of Manufacturers (KAM), the main industry lobby, into the levy case.
- —What happened A 2025 order kept the Standards Levy at 0.2 percent of monthly turnover. It raised the yearly cap tenfold, to about US$30,840.
- —The numbers The cap rose from KES 400,000 (about US$3,084) to KES 4 million for five years. It is then set to rise to KES 6 million (about US$46,260).
- —What it means for you Foreign firms making goods in Kenya pay more in standards fees. Part of the cost may reach shop prices, the petitioners argue.
- —Still open The court plans its judgment for Friday, 30 October 2026. Until then, factories must keep paying the higher levy.
Kenya’s main manufacturers’ lobby has joined a court fight against a tenfold rise in a compulsory factory charge. A judgment is due on 30 October 2026.
The Kenya factory levy dispute has a new player. On Wednesday, 30 September 2026, the High Court admitted the Kenya Association of Manufacturers (KAM) into a case against the Standards Levy.
KAM is the country’s main industry lobby. The levy funds the Kenya Bureau of Standards (KEBS), the state body that sets and polices product standards.
Kenya is East Africa’s main business hub, so the outcome matters to foreign firms that make goods there.
What the new Kenya factory levy means
Legal Notice No. 136 of 2025, gazetted in August 2025, kept the levy at 0.2 percent of monthly manufacturing turnover. That turnover excludes value-added tax (VAT), excise duty and discounts.
The change is in the ceiling. The yearly cap, unchanged since 1990, rose from KES 400,000 (about US$3,084) to KES 4 million (about US$30,840) for five years.
After that, the cap is set to rise to KES 6 million (about US$46,260), according to local reports. KEBS says firms with turnover of up to KES 5 million (about US$38,550) are exempt.
Manufacturers pay through the Kenya Revenue Authority’s iTax online system by the 20th of the following month. Conversions in this article use 129.7 shillings per US dollar (open.er-api.com, 1 October 2026).
Who is in the court fight
The case was brought by the Green Thinking Action Party (GTAP), a Kenyan political party. It argues the higher cap breaches the constitution and is discriminatory, unreasonable and unfair.
Its central complaint is weak public participation, which Kenya’s constitution requires before such rules are made. GTAP also says the levy will push up the prices consumers pay.
The High Court first suspended collection after GTAP applied. On 27 February 2026, however, the court sitting in Kerugoya, north-east of Nairobi, declined to keep the levy on hold.
The judge said the harm claimed was mainly financial. GTAP had not shown specific factories facing collapse because of the levy, the court found.
Why the court brought manufacturers in
In Wednesday’s ruling, the court called KAM “a necessary party” whose members are directly affected. GTAP’s case relies on an affidavit by a KAM official describing harm to manufacturers.
The government also cites its consultations with manufacturers to rebut the public participation complaint. The court gave KAM seven days to file a replying affidavit and its submissions.
The court listed public participation as a key issue. It will test the order against Article 10 of the constitution and the public finance principles in Article 201.
The government’s defence
The trade ministry says the Cabinet Secretary, Kenya’s trade minister, had the legal power to change the levy order. The Attorney General, the government’s chief lawyer, argued the order is valid.
The government says the money strengthens standards work, quality control, research and training. It also defends bringing new sectors under the levy, including energy generation, software development and dry cleaning.
Officials told the court that public consultation forums were held in seven towns, including Nairobi, Mombasa and Kisumu, plus online sessions. GTAP disputes that these were adequate.
Why manufacturers fear the cost
Manufacturing makes up about 7 percent of Kenya’s economy, according to the World Bank. That share has shrunk since the early 2010s, and industry groups blame high energy costs and taxes.
KAM and other business groups have said firms cannot absorb the extra cost, local reports say. They expect it to pass down the supply chain to buyers.
GTAP’s lawyer, James Oketch, told the court that nothing in law stops firms passing the levy on to consumers. He argued that public bodies must keep increases in fees predictable.
What it means for foreign investors
For a foreign company with a plant in Kenya, the levy is a fixed cost of doing business. At the new cap, the largest firms pay about US$30,840 a year, against about US$3,084 before.
That sum is small for a multinational, but the dispute is about predictability. Investors watch whether Kenya can raise state fees sharply without broad agreement from the businesses that pay them.
The case also shows Kenya’s courts are an active check on new charges. In late September 2026 the Court of Appeal upheld a separate housing levy on workers’ pay.
What to watch next
The court plans to deliver its judgment on Friday, 30 October 2026. Until then, the higher cap stays in force and manufacturers must keep paying.
If the order is upheld, the cap is set to rise again after five years. The wider contest over who pays for development is a theme in Africa: The New Scramble.
Frequently Asked Questions
What is the Kenya factory levy?
It is the Standards Levy, a charge of 0.2 percent of monthly manufacturing turnover that funds the Kenya Bureau of Standards. A 2025 order raised its yearly cap tenfold.
How much is the new cap?
The cap rose from KES 400,000 (about US$3,084) to KES 4 million (about US$30,840) for five years. It is then set to rise to KES 6 million (about US$46,260).
Who is challenging the levy?
The Green Thinking Action Party brought the case. On 30 September 2026 the High Court admitted the Kenya Association of Manufacturers as a party.
When will the court decide?
The court plans to deliver its judgment on 30 October 2026. The higher levy stays in force until then.
Connected Coverage
Sources
- businessdailyafrica.com – KAM joins battle (30 Sep 2026)
- businessdailyafrica.com – why the court allowed the levy (Mar 2026)
- Kenya Law – High Court ruling, 27 Feb 2026
- streamlinefeed.co.ke
- World Bank – Kenya data
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