The Export Processing Zone Authority (EPZA) has made great strides since it was launched in 1990 as a response to a decline in industrial investment and output, poor export performance and inadequate job and wealth creation.
Since then, the number of investors has grown, the latest being square pharmaceuticals and Be Brawn, a company of great repute in healthcare worldwide. All companies operating at EPZA currently employ over 54,000 people.
There are currently 71 gazetted EPZA zones across the country, most of them moribund but it is encouraging that 131 enterprises are operational at the headquarters while another 42 have been approved. It was therefore shocking to hear of an alleged Sh1.3 billion scandal at the EPZA, which is a threat not only to the export market but thousands of jobs and multi-billion shillings investments. Three senior managers have so far been sent on compulsory leave pending investigations in the loss of funds from tendering scandals.
A report by the new EPZA board to Cabinet Secretary Peter Munya reveals that the Public Procurement Regulatory Authority raised questions regarding 13 procurements which had either been amended or had huge variations in contravention of the law. Should those graft allegations be proven, then EPZA will join the ranks of the National Youth Service, Kenya Pipeline Company and the Ministry of Health and others in the list of mega corruption scandals. It is even more worrying that the alleged scandal also involves land grabbing and wanton sale of public land at EPZA to private entities.
The report says title deeds were processed for individuals without any gazette notice from the Minister of Trade. Export Processing Zones are used by governments to create a conducive foreign direct investment by providing investors benefits and incentives like tax exemptions for a specified period of time and relaxed business regulations.
The EPZA should be protected because it has done a great job in the promotion and diversification of Kenya’s traditional exports from the agricultural sector to apparel, pharmaceuticals, leather products and horticulture. One local company has for instance contracted many farmers from Mt Kenya who now export their crop through the EPZA. The operations of this company have provided direct and indirect benefits to approximately 153,000 people. The proceeds of value addition also reach the farmers and other local traders selling services and goods to EPZA, thereby earning the country additional foreign exchange.
Many investors have developed interest because of the incentive package, which includes exemption from custom duties and value added taxes on all imports of raw materials, capital equipment or machinery and other inputs that go into export business.
The one stop office service by EPZA in matters such as issuance of permits, labour and industrial relations, utility connection and provision of other utility services are also aimed at making investors contend.
Traders have access to export markets under preferential trade agreements signed like Agoa and Generalised System of preferences, Comesa, European Union under the African Caribbean Pacific agreement. While the Economic Partnership Agreement is being negotiated, the recently signed Africa Free Trade Area already offers market for setting up businesses at the EPZA.
There are many challenges facing EPZA which must be dealt with to ensure all available opportunities are exploited for the benefit of the country and investors.
In addressing the challenges, investors have requested the Ministry of East African Community and Northern Corridor Development to expand the range of activities eligible in the EPZ program. These include primary activities, export quarantine services for livestock and fisheries so as to widen opportunity for logistics and live exports. They also want a railway siding adjacent the SGR Athi River station for EPZ and the environs for logistic oriented projects.
- The writer is a Director at Fiona Mika Productions and a journalist based in Nairobi
The Standard Group Plc is a
multi-media organization with investments in media platforms spanning newspaper
print operations, television, radio broadcasting, digital and online services. The
Standard Group is recognized as a leading multi-media house in Kenya with a key
influence in matters of national and international interest.
join