The State is fast-tracking the establishment of three special economic zones (SEZs) in Kisumu, Mombasa and Lamu. The manufacturing facilities to be set up within these zones, including textile factories, are expected to create a million jobs yearly.
Parliament is also expected to pass a law establishing SEZs by the end of this month. In addition to providing land, tax holidays, duty-free imports and waivers on value-added tax to potential clients, the Government is hoping the zones will directly create 10 million jobs over the next 30 years.
About 2,000 sq km of land has already been set aside in Mombasa, Lamu and the Kisumu for the project. SEZs will have low levels of taxation and fewer regulatory hurdles and will focus primarily on industrial activity, in particular textile production.
Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed said early this year that the new economic zones will mainly target foreign textile firms from textile industries in Myanmar, China, Vietnam and South Africa. Government estimates the zones to be ready for investors in two to three years.
Kenya has a single free trade zone in Mombasa, aimed at boosting the manufacturing sector. This is in addition to established Export Processing Zones (EPZs), which contributed $543 million (Sh46.1 billion) to the economy last year. EPZ Authority Chief Executive Cyrille Nabutola said the zones account for 10 per cent of Kenya’s exports – the bulk of which are textiles and apparel sent to the US.
As of 2012, garment manufacturers accounted for 29 per cent of EPZ companies, 56 per cent of EPZ exports and 30 per cent of EPZ private investments. The SEZs are expected to boost the country’s industrial output that has been experiencing steady growth in recent years.
According to the Economic Survey 2013, the sector grew by 4.6 per cent in the third quarter of last year, compared to 2.6 per cent in the same quarter of 2012. Growth in the first and second quarters in 2013 was 4.2 per cent and 4.3 per cent, compared to 2.1 per cent and 1.4 per cent, respectively, in the previous year.
World Bank estimates that value-added manufacturing, focussing on food, textiles, machinery and chemical processing grew by five per cent in 2013 compared to 3.3 per cent in 2012. Vision 2030 plans to transform Kenya into a middle-income State with manufacturing accounting for 20 per cent of the GDP by 2030.
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