Sameer Seeks Government Subsidies

Kenya based Sameer Africa Ltd has asked the Kenyan government to provide subsidies to local manufacturers so they can counter rising energy costs and remain competitive. The manufacturer of Yana brand tyres has made this call following government requests to the Kenya Association of Manufacturers (KAM) to transfer some of their production to off peak times in which there is lower demand for electricity.

Sameer Africa’s chairman, Naushad Meralli, believes high energy costs are a large contributor to local manufacturers’ diminishing competitiveness. “This increased costs will diminish our ability to compete effectively domestically and in the export markets, which are also attractive to our competitors with lower power costs,” he said.

This rising cost has added to the strain felt when the East African Community Common External Tariff (CETS) was implemented in 2005 and tariffs on imported tyres were lowered from between 25 and 35 per cent to just 10 per cent, effectively making them cheaper than those made locally. Earlier this year the tyremaker announced it had accumulated losses amounting to 22 million Kenyan shillings (£164,000) after sales were hit by a sudden influx of low price imported tyres.

Meralli’s comments were made at the inauguration of a light truck bias tyre assembly machine at Sameer’s Nairobi factory on July 23. The new Sh12 million (£87,000) machine will enable Sameer to produce an additional 2,700 tyres monthly, lifting total light truck tyre production capacity to 15,000 per month. The new equipment is part of a capital growth program the tyremaker has embarked on in order to boost capacity, and during the previous 12 months Sameer has invested more than Sh 88 million (£639,000) to modernise vital plant machinery.