State pushes new SEZ reforms, China trade deal to boost exports and jobs

Kufaru Enterprises GM Deepak Sachania, Kifaru Enterprises Founder & CEO Kalpesh Shah, Investment Promotion PS Abubakar Hassan Abubakar, SME Support Centre CEO Linda Onyango and KAM CEO Tobia Alando during the launch of Kifaru Exim SEZ at Tatu City, Kiambu county, on August 21, 2025. [Wilberforce Okwiri, Standard]

The Ministry of Investment, Trade and Industry has begun amending laws governing Special Economic Zones (SEZs) as it seals a new trade deal with China in a twin strategy aimed at expanding Kenya's outsourcing industry and boosting agricultural exports.

Principal Secretary for Investment Abubakar Hassan said the upcoming Business Amendment Bill of 2025 proposes five reforms to make it easier for Business Process Outsourcing (BPO) firms to set up operations in SEZs.

"We are amending the law to facilitate BPOs to set up because this is one of the sectors we are targeting. It employs many young people and has great growth potential," Hassan said.

The first amendment will allow BPO firms to operate from individual office buildings, instead of requiring large parcels of land to be gazetted as SEZs.

The second will allow specialised educational institutions to set up in SEZs, creating centres of excellence to train skilled workers.

Another reform that the Ministry is pushing seeks to clarify which buildings qualify for SEZ incentives, limiting them to facilities built for employee accommodation rather than leasing or trading. The fourth amendment proposed by the ministry seeks to provide clarity on the stability of incentives. This follows concerns from investors on whether incentives can be guaranteed for a specific period.

The PS explained that while a lock-in was introduced last year, some investors interpreted it as restrictive, hence the need to clarify the provision.

"The Fifth Amendment focuses on capital gains tax. Last year, the government removed capital gains tax on the transfer of property under the SEZ programme. However, stakeholders have since requested that this exemption be expanded to also cover the transfer of company shares, not just property," noted Hassa.

Kenya's BPO industry is projected to grow its revenue from $570 million (Sh72.8 billion) in 2022 to $1.3 billion (Sh169 billion) by 2027, driven by lower costs, a skilled youth workforce, and government incentives.

Hassan revealed that tea, coffee, and avocado farmers are set to reap higher earnings under a new trade deal with China that will grant Kenya duty-free and quota-free access to the vast Asian market.

He said the government has assembled a negotiation team to fast-track the agreement, which also covers other agricultural exports.

Speaking on Wednesday during the launch of Kifaru Exim SEZ Ltd at Tatu City in Ruiru, Kiambu County, the PS said the deal is part of a broader China-Africa Economic Partnership aimed at promoting shared development.

Hassan added that the ministry is also developing a policy and legal framework to strengthen chambers of commerce and enhance private sector growth. He urged local investors, particularly SMEs, to take advantage of SEZ incentives.

Kifaru Exim SEZ Director Kalpesh Shah announced that the new facility is expected to create 600 direct jobs and at least 1,800 indirect jobs once fully operational.

"Right now, I have nine warehouses. We want to target SMEs so that each can take up one godown, or in some cases, one SME can take more than one. This way, we will have several SMEs occupying them. We are already in discussions with some who have shown interest," Kalpesh said.

Kenya Association of Manufacturers chief executive Tobias Alando welcomed the reforms, saying increased private investment would strengthen Kenya's position as a regional hub.