On Thursday, June 19th, 2025, the Kenyan Parliament approved the Finance Bill 2025, signaling relief for the construction industry in Kenya. One of the most anticipated amendments is the proposal to reduce the Export Promotion and Investment Levy from 10%% to 5% for semi-finished iron and non-alloy steel products, as well as cement clinker — a key raw material in cement production.
Understanding the Export Promotion and Investment Levy
The Export Promotion and Investment Levy (EPIL) was introduced in 2023 through the Finance Act, as part of the government’s push to promote local manufacturing and reduce reliance on imports. The levy was set at a flat 17.5% of the Customs value and applied to several construction-related imports including steel bars, iron rods, and cement clinker.
While the goal was noble — to support local producers — the levy ended up pushing up the cost of critical construction inputs, including cement and steel products. This had a ripple effect on the overall cost of construction, particularly in infrastructure and housing development.
What the Economic Survey 2025 Revealed
The 2025 Economic Survey published by the Kenya National Bureau of Statistics (KNBS) confirms the adverse impacts of this levy on the construction industry. Key data from the report includes:
- The value of imported clinker dropped drastically from KSh 1.1 billion in 2023 to just KSh 74 million in 2024, compared to KSh 8.6 billion in 2020.
- The quantity of imported clinker fell sharply from 2.0 billion tonnes (2020) to negligible levels in 2024.
- As a result, cement production declined from 9.6 million tonnes to 8.9 million tonnes, indicating a slowdown in manufacturing.
- Iron and steel exports in 2024 dropped by 12.6%, down to 171,300 tonnes, following the introduction of the EPIL.
These numbers paint a clear picture: the high levy discouraged imports of raw materials and disrupted the supply chain for construction manufacturers.
17.5%
The Export and Investment Promotion Levy was first introduced in 2023 through the Finance Act, 2023. It was initially set at 17.5% of customs value. In 2024, the levy was lowered to 10% for certain construction related goods.
Industry Pushback and Legal Opposition
From the outset, the Kenya Association of Manufacturers (KAM) opposed the levy. In a public statement in 2023, KAM described the EPIL as punitive and misaligned with the government’s affordable housing and infrastructure goals. The association moved to challenge the levy in court in September 2023, citing concerns over reduced competitiveness and rising costs for local industries.
Related:
Economic Survey 2025: A Slow Year for Construction Sector
Finance Bill 2024: Incentives for construction, SEZ pinch for Proptech
What the Finance Bill 2024 Proposed
Although the levy is not entirely scrapped, this year’s Finance bill offers hope. Through the finance Bill 2024, lawmakers proposed reducing the Export Promotion and Investment Levy on imported clinker ,steel and iron products from 17.5% to 10%.
This year’s Finance Bill, 2025 which is ready for assent by the president proposes reducing the levy on semi-finished iron and non-alloy steel to 5%.
These adjustments are expected to ease pressure on construction costs, especially for manufacturers and ultimately, developers and contractors.
Why This Matters for Construction in Kenya
Lowering the levy is a welcome development for Kenya’s construction industry, which has been grappling with high material costs and project slowdowns. With iron and steel being essential for structural works, cheaper import costs will likely lower the cost of construction.
Final Thoughts
While more reforms may be needed to fully stabilize construction input prices, reducing levies on clinker and steel is likely to offer short-term cost relief and long-term construction industry confidence.
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