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Special economic zone to create jobs and boost trade

SHIPPING & LOGISTICS
By Benard Sanga | September 16th 2021

Ongoing construction of the Dongo Kundu bypass bridge. [Robert Menza,Standard]

Kenya is preparing to launch the Dongo Kundu Special Economic Zone (SEZ) that is expected to be a logistics and industrial hub in Mombasa.

For the last three years, Mombasa has been bleeding jobs due to a slump in tourism and a shift in logistics business.

The SEZ will be developed on 3,000 acres of land. It will have common user facilities, a free port, free trade zone, industrial park, logistics zone and public utility area with a supporting road network.

Players in the logistics business interviewed by Shipping and Logistics said that the Sh39.1 billion project has the ability to create at least 30,000 jobs.

Already, documents from the Vision 2030 Secretariat show that tenders for the construction of a one-stop-shop and customs offices at the SEZ have been awarded.

Other works to start soon are construction of the perimeter wall and access roads. The SEZ is a government attempt at creating an economic engine in the region and a regional production hub.

It is estimated that all the projects being undertaken at the Coast will cost over Sh3.6 trillion. Most of these projects are near the SEZ.

For instance, the Changamwe interchange and Phase II of the Dongo Kundu bypass currently underway will boost the efficiency of the SEZ. 

The Changamwe interchange involves the dualling of the Mombasa-Kwa Jomvu section spanning 11.3 kilometres at a cost of Sh8.5 billion. The single two-way road will be a dual carriageway with six lanes from Mombasa to Kwa Jomvu.

The Japanese consortium, Fujita-Mitsubishi Corporation, is also working to complete a road bridge over the Indian Ocean which is part of the Dongo Kundu road bypass phase II.

Both the 8.9 kilometer-long dual carriageway and an interchange at the Likoni-Lunga Lunga highway will cost Sh25 billion.

This section is 85 per cent complete, according to the Presidential Delivery Unit that toured the coast a fortnight ago. Two bridges at Mwache and Mteza creeks will also be built. 

Phase III of the Dongo Kundu bypass road project, according to the unit, will connect the bridges to the South Coast at Kibundani area.

According to Shippers Council of East Africa CEO Gilbert Langat, construction of the SEZ in Mombasa “should have happened as soon as yesterday”.

“An SEZ in Mombasa will spur a big change to the manufacturing sector. The country will import raw materials and export finished goods. This will address the situation where most of the containers return empty,” Mr Langat said.

Daniel Nzeki, CEO of Container Freight Stations Association of Kenya, said Mombasa was the most ideal location for an SEZ. 

“Mombasa may have lost a lot following the disruption brought by the Standard Gauge Railway (SGR), but it has the potential of becoming a new Dubai,” said Mr Nzeki.

Once complete, the SEZ is expected to increase Foreign Direct Investments in the country by at least Sh100 billion  according to government estimates.

The project is being implemented through a committee drawn from the Special Economic Zones Authority (SEZA), State Department of Infrastructure, State Department of Public Works, State Department of Transport, Kenya Ports Authority, and the State Department for Industrialisation.

“The SEZ is also expected to increase the manufacturing sector’s contribution to the GDP by two percent which is approximately Sh200 billion,” said George Masiemo, an investment analyst in Mombasa.

Currently, the country, according to Langat, exports only two per cent of its fresh produce through Mombasa Port. The rest goes by air, which is about five times costlier compared to sea.

This puts the country into an uncompetitive position with peers such as Brazil and Columbia, who transport over 40 per cent of their fresh produce by sea.

Maritime analysts opined that there was need to position Mombasa as a maritime hub rather than a transport one. This, they say, will open other opportunities such as ship and ferry building.

Maersk shipping line is enhancing the service it offers from Mombasa to North Europe, specifically Felixstowe and Rotterdam ports, by providing a single transshipment product through Salalah Port in Oman.

 “We welcome the redesign of our ocean network from Salalah, which will connect our Kenyan customers’ cargo to Europe through a single transshipment,” said Carl Lorenz, Maersk Eastern Africa Managing Director.

Kenya Transporters Association CEO Dennis Ombok said SGR has affected business but exuded confidence  that the SEZ could create other jobs for transporters

He added that the rehabilitation of the Medium Gauge Railway line between Naivasha-Malaba and Nakuru-Kisumu will poorly affect the cargo volumes truckers transport.  

“The government should allow importers to choose their mode of transport instead of forcing them to go the SGR way,” Mr Ombok said.

Data released by the Kenya National Bureau of Statistics (KNBS) on Thursday last week indicate that more shippers are transporting their cargo through SGR.

Although the trend is seen as a positive one, it has affected other players in the logistics sector such as haulers, Container Freight Stations and customs agents.

 “The volume of freight transported through the SGR increased by 4.8 per cent from 4.2 million tonnes in 2019 to 4.4 million tonnes in 2020,” asserted the KNBS data.

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