FKE warns of job losses as high taxes force business closures, urges relief in budget
FKE Executive Director Jacqueline Mugo said many firms in the region have shut down because of high operating costs, causing about 5,000 people to lose their jobs.
The Federation of Kenya Employers (FKE) has raised the alarm over the heavy tax burden that is hurting businesses and forcing companies to cut thousands of jobs.
Speaking at the FKE Coast branch annual meeting in Mombasa, Executive Director Jacqueline Mugo said many firms in the region have shut down because of high operating costs, causing about 5,000 people to lose their jobs.
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Mugo called on the government to reduce the housing levy and the Social Health Authority (SHA) levy in the upcoming national budget. She explained that these cuts would help ease the financial pressure on employers and ordinary 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.
The FKE also urged the government to work with Sudanese officials to reopen the market for Kenyan tea, which was banned by Sudan since March 11, 2025.
This ban has led to losses estimated at Sh2.4 billion, with tea shipments stuck at Port Sudan, on ships, or in Mombasa warehouses.
Mugo criticised the Sh7,000 cess per truck imposed by Mombasa County, saying it adds unnecessary costs to the tea trade despite similar charges being declared unconstitutional.
“This fee acts as a non-tariff barrier, in direct violation of the East African Community trade protocols,” she said.
She also expressed concern over the transit bond requirements for tea from neighbouring countries sold through the Mombasa tea auction, which threaten Mombasa’s role as a regional trade hub.
Tourism recovery
On a positive note, FKE praised the recovery seen in the tourism and hospitality sectors after the Covid-19 pandemic.
Mugo encouraged the government to make travel easier by allowing visa-free entry for transit passengers and visitors staying less than 96 hours, and by improving air access to Kenya.
However, FKE criticised the government for excluding university-based technical and vocational education and training (TVET) students from funding, unlike stand-alone TVET institutions.
“This undermines the development of a skilled workforce and contradicts Kenya’s industrialisation agenda,” she said.
Mugo emphasised FKE’s support for tax reforms aimed at reducing the burden on citizens and businesses.
“It is in the public domain that most Kenyans and the business community look to the government to alleviate their suffering,” she said.
Members of the tea and manufacturing sectors asked FKE to push for special economic zones to help them compete globally. Others expressed frustration with the government’s tax policies, with some suggesting political change as the only solution.
FKE also urged the government to strengthen trade agreements in agriculture, manufacturing, and exports.
This is vital in light of recent tariffs by the US and growing trade restrictions from other 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.
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