FKE urges state to reduce SHA, housing levy deductions to save businesses

The Federation of Kenya Employers (FKE) has decried the high tax burden that has affected businesses and forced companies to lay off thousands of workers.

FKE Executive Director Jacqueline Mugo said that in the Coast region several firms closed down due to high operational costs, leading to the loss of about 5,000 jobs.

Speaking during the FKE Coast branch annual general meeting at a Mombasa hotel on Thursday, Mugo proposed a reduction of the housing levy and the Social Health Authority (SHA) levy in the next national budget to ease the financial burden on employers and Kenyans.

“About 5,000 jobs were recently lost and many businesses closed down in the Coast region due to the tax burden because of high taxes,” she said.

At the same time, FKE urged the government to engage Sudanese authorities to restore market access for tea from the Mombasa tea auction.

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Mugo noted that since the ban on Kenyan tea on March 11, 2025 a loss of about Sh2.4 billion has been recorded.

“We are deeply concerned about the ban by the government of Sudan on Kenyan tea imports since March 11, 2025. This unilateral action has caused losses estimated at Sh2.4 billion, with tea stuck at Port Sudan, on vessels en route or in warehouses in Mombasa,” she noted.

The FKE boss also took issue with the Sh7,000 cess per truck imposed by Mombasa County, saying it has burdened the tea value chain despite similar charges being declared unconstitutional.

“This fee acts as a non-tariff barrier, in direct violation of the East African Community (EAC) trade protocols,” she said.

 “We also raise concern over the transit bond requirements imposed on teas from neighbouring countries sold via the Mombasa tea auction. These conditions create unfair trade barriers and risk undermining Mombasa’s competitiveness as a regional trade hub,” Mugo added.

However, FKE commended progress in the tourism and hospitality sectors driven by the post-Covid-19 recovery activation plan.

“To sustain these gains, FKE urges the government to further liberalise travel, including visa-free entry for transit passengers and visitors staying less than 96 hours, and to enhance air access into Kenya,” Mugo said.  

FKE also criticised the government for excluding university-based Technical and Vocational Education and Training (TVET) students from capitation despite similar programmes in stand-alone institutions receiving funding.

“This undermines the development of a skilled workforce and contradicts Kenya’s industrialisation agenda,” Mugo said, urging the government to rectify the situation.

She was flanked by FKE Coast regional president David Kisa, FKE Coast regional coordinator Florence Odwako and Kenya Ships Agents Association (KSAA) chairman Roger Dainty, among others.

“FKE supports reforms aimed at reducing the tax burden on citizens and businesses. We agree with the public discourse indicating that the current situation is not sustainable, as it has made life very difficult for ordinary citizens. It is in the public domain that most Kenyans and the business community look to the government to alleviate their suffering,” she said.

FKE hopes that the policies that will be proposed by the National Treasury, especially in the 2025/2026 budget, will change the perception.

Some members in the tea and manufacturing sectors urged FKE to engage the government to allow them to operate as special economic zones to make them competitive in the international markets.

Others indicated they had lost hope in the possibility of the government reducing taxes and said the solution may be only the removal of the government in the next general election.

Meanwhile, FKE urged the government to pursue and strengthen preferential trade agreements with other countries in the areas of agriculture, manufacturing and trade exports.

“This is particularly urgent considering the tariffs recently imposed by the US government and growing restrictions from other trading partners. Strategic trade engagement is essential to safeguard market access, enhance competitiveness and protect the livelihoods tied to export-driven industries in the region,” Mugo said.