Kenya’s clinker (a semi-finished product produced during cement manufacturing) capacity is growing. However, it could face a new cost burden if a 2 per cent mineral royalty and a 1 per cent Mineral Development Levy (MDL) are imposed on exported clinker. 

The additional charges risk undermining investment in domestic production, increasing export costs and weakening the competitiveness of Kenyan manufacturers in regional markets.  

The proposed levies come as Kenya’s cement industry transitions from heavy reliance on imported clinker to greater domestic production and exports. Manufacturers have invested billions of shillings in clinker production facilities to reduce dependence on imports, strengthen local value addition and position Kenya as a regional supplier.  

A key concern is how the mining regulatory framework classifies clinker. Clinker is manufactured by processing limestone and other naturally occurring raw materials at high temperatures. It is subsequently ground with gypsum and other additives to produce cement. Manufacturers have questioned applying mineral royalties to clinker, arguing that it has undergone significant processing and should be distinguished from naturally occurring minerals.  

Under the proposed arrangement, exported clinker is subject to a 2 per cent mineral royalty calculated on its market or reference value, together with a 1 per cent MDL on the gross sale value of exported minerals. When both charges apply to the same taxable value, the combined nominal burden is 3 per cent, thereby increasing the fiscal cost of exporting locally manufactured clinker.  

The additional costs could erode manufacturers’ export margins and make Kenyan clinker less competitive with alternative suppliers in the region. This is particularly concerning given the capital-intensive nature of clinker manufacturing, where investment decisions depend on predictable operating costs, economies of scale and access to regional markets.  

Kenya’s expanding production capacity reflects significant private-sector investment. Devki Group’s KSh70 billion clinker and cement project in Ngaaie, Kitui County, and Bamburi Cement’s KSh32 billion clinkerisation plant in Matuga, Kwale County, are major sector investments. The Bamburi project is expected to add 1.6 million tonnes of annual production capacity. Other investments include Rai Cement’s KSh30 billion factory project in Kisumu and Devki Group’s investment in West Pokot.  

These investments aim to strengthen domestic production, reduce reliance on imported clinker, and increase exports. However, introducing additional charges on exported clinker could affect the commercial returns on these investments and discourage further expansion of local manufacturing capacity.  

The potential impact is significant, as Kenya exported approximately 1.81 million metric tonnes of cement clinker in 2024, valued at approximately US$114.56 million (KSh14.89 billion). Maintaining the competitiveness of these exports is important for sustaining manufacturing growth, generating foreign exchange and strengthening Kenya’s position in regional supply chains.  

The issue also raises broader questions about the alignment of fiscal policy with the country’s industrialisation agenda. Through the proposed Minerals, Mining and Beneficiation Policy 2026, the government aims to increase mining’s contribution to GDP from approximately 1 per cent to 10 per cent by 2030. The policy recognises mineral processing and beneficiation as key drivers of industrialisation, job creation, and export earnings.  

However, promoting beneficiation requires an enabling environment for businesses investing in processing locally available raw materials. Fiscal measures that raise the cost of exporting processed products risk undermining the very value addition the country seeks to promote.  

There is therefore a need to consider the cumulative fiscal burden of the proposed charges, clarify their legal basis, and distinguish between royalties on extracted minerals and levies on processed industrial products.  

Kenya’s transition towards greater domestic clinker production marks an important step towards strengthening local manufacturing and reducing import dependence. Preserving these gains will require a predictable, competitive fiscal framework that encourages investment, supports value addition and sustains the country’s growing export capacity.