Kenya’s proposed Finance Bill 2026 has sparked concerns among manufacturers after introducing tax measures that could make locally assembled smartphones more expensive while lowering the cost of imported devices. Industry stakeholders warn that the changes may undermine investments made by companies such as M-KOPA and Sun King in local smartphone production.
The Bill seeks to remove the zero rated Value Added Tax previously granted to locally assembled phones, impose a 25 per cent excise duty on domestically manufactured devices and exempt imported finished handsets from certain import related levies. Manufacturers argue that these measures would eliminate the tax advantages that encouraged investment in local assembly under reforms introduced in 2022.
According to the Kenya Association of Manufacturers, the proposed changes could increase production costs, force companies to absorb additional taxes on components and manufacturing inputs, and ultimately raise smartphone prices for consumers. Industry estimates suggest the new excise duty alone could increase the retail price of locally assembled devices by about KES 2,500, placing them at a disadvantage against imported alternatives.
The concerns come as Kenya has made significant progress in developing a local electronics manufacturing sector. Companies such as M-KOPA have produced millions of smartphones locally and created hundreds of jobs, while Sun King recently expanded into smartphone assembly. Stakeholders warn that if the proposals are adopted without adjustments, they could slow investment, threaten jobs and weaken Kenya’s ambition to become a regional hub for electronics manufacturing and digital innovation.