Export zones feel brunt of economic slowdown

By Robert Ndwiga

The Government started the Export Processing Zones (EPZ) in 1990, as part of its export development programme. Key among the objectives of EPZ was job creation, diversification and expansion of exports.

During their peak, the zones employed more than 40,000 workers, and contributed more than 10 per cent of national exports. Then, the EPZ were billed as favourable due to the African Growth and Opportunity Act ( Agoa) preferential scheme that started in 2000, and allowed sub-Saharan African countries duty free access to the US market.

Another factor that led to their growth was the relatively large and dynamic private sector, and a low cost, but well trained local labour force. However, times have changed dramatically in recent years, with the Agoa agreement coming up for review.

This has been further compounded by the increasing cost of doing business in Kenya, due to expensive energy, lack of storage facilities, insecurity, competition, high freight costs and poor infrastructure. The global economic crisis forced the US to cut its spending, and review Agoa. This has led to thousands of job cuts within the EPZ, and some of the factories have closed shop or migrated to other countries.

Faced with few options, most of the workers from the EPZ are forced to retreat to rural areas, while others make do with menial jobs, causing a strain, and lowering standards of living across board.