How levies and taxes are killing start-ups in manufacturing

Piquant Spices started in 2021, however its first products (Tea Masala and Pilau Masala), got into the market in 2022. We spent six months in 2021 doing market research, understanding the manufacturing processes, the science behind spices and general product development. The business was lucky to start through a grant. The initial capital injection was approximately Sh1.5 million which went into product development, market research, KEBs certification and design and printing. Currently, we have Tea Masala, Pilau Masala and Mixed Spices as our signature products. Our products are uniquely formulated for whole-family use. 

It took almost a year to break even. However, we are still using incubation facilities such as the Kenya Industrial Research and Development Institute to do our production. The story would be different if we were in our own spaces where the cost of electricity, licences and compliances would shoot our expenses.

Some of the challenges I have faced include having to pay VAT and other government levies even before the business got the right footing. There should be tax waivers, especially for startups in manufacturing which is capital and labour-intensive. Access to markets and branding has also been a challenge, primarily, because sales and marketing activities are costly and they will continue rising with the increased cost of fuel and advertising taxes. Some of our raw materials are imported and they are affected by the exchange rates. In the past six months, we have experienced the highest fluctuations in raw materials prices with some having up to 150 percent increase.

The spice business is a totally new sector for me. I used to be in the development sector for some years. I was employed in consulting, project management, public policy, and digital advisory. Interestingly, all these past experiences have come in handy in growing the business.

Being a risk taker, I am constantly making money mistakes, many times for not taking calculated risks. My first shot in agri-business saw me lose over Sh250,000 in tomato farming. I was a phone farmer who relied on the “sound advice” of the farm manager. I never did my research or question. Later, I discovered the money I spent was enough to till a bigger piece of land with better returns than the Sh9,000 I got.

Getting Piquant Spices products on Twiga Foods Distribution system has been my greatest business moment so far. It has helped us cut down the costs of distribution. It’s now easy to get out spices in a shop within estates. I managed to get into Twiga Foods through an email and they have been supportive.

If I could start afresh, in any business or professional engagement, I would be keen to put my paperwork right from the word go. I have lost money by not having legal agreements in place, and relying on a gentle-man’s handshakes. On Piquant Spices, we learn and improve on the go.

Saccos and banks have come in handy in building a good credit history in anticipation of my future money needs. It’s been effective so far because I can access unsecured loans to boost my business. I used money market funds but they were not as effective for business. Business is always demanding money and you need to be in a space where you can easily access money.

The universe conspires to provide a support system to those who have the courage to start. Shake off your fears and work on your dreams like tomorrow never existed. When it comes to business versus employment, go where your heart is. Remember, entrepreneurship is very demanding. More often than not, you will find yourself working five times more than the people you have employed.