Global recovery renews interest in Kenya’s EPZs

Investor interest in Kenya’s Export Processing Zones has nearly doubled in the past six months, brightening growth prospects for the country’s nascent exports sector and promising new jobs for the ever rising number of unemployed youth.

Latest data from Export Processing Zones Authority (EPZA) indicates that the number of foreign firms applying to set up operations in the special industrial zones rose to 12 since August last year double the annual average of six in the preceding period.

Investor interest in EPZs is in tandem with recent trends in the capital markets where the return of foreigners has been driving recovery since the last quarter of 2009.

Though the applications are at different stages of approval, EPZA estimates that they could generate at least 1,500 jobs in the first year of operation and add Sh2 billion to the value of Kenya’s EPZ exports which stood at Sh31.3 billion in 2008.

Joseph Kosure, the acting EPZA chief executive links the increased investor interest to the ongoing global recovery and the marketing blitz that Kenya enjoyed when it hosted the African Growth and Opportunities Act (AGOA) conference last year.

“We have received hundreds of enquiries from local and foreign investors since the Agoa conference,” said Mr Kosure, adding that the 12 new applicants have the potential to roll-out operations valued at more than Sh3.7 billion in the special production zones.

Delegates from dozens of African countries and their peers from Asia and other less developed countries that also qualify for preferential access to US market also attended the talks.

Kenya’s EPZs were established through an Act of Parliament in 1990 to promote export oriented investment through provision of ready infrastructure and tax holidays to entrepreneurs who set up operations in the regulated production zones.

Investors in the EPZs have been the biggest beneficiaries of the Agoa pact, the brainchild of former US president Bill Clinton that congress gave the seal of approval in the 1990s and offers preferential, duty free access to the US market to more than 6,000 goods and services from Africa.

The programme has since been expanded to other less developed countries as a way of fast tracking their growth through trade.

Kenya’s EPZs operators have benefited immensely from the free access to US markets with nearly all apparel and clothing products from the zones going into American shops.

EPZ firms employ more than 30,000 low to mid-level skilled Kenyans directly, and offers one of the most comprehensive downstream linkages by taking in a wide range of locally-produced goods and raw materials, boosting overall demand in the economy.

There are 99 EPZ enterprises operating from 35 gazetted zones in Nairobi, Mavoko, Mombasa, Kerio Valley, Kajiado and Voi. Total investments in the zones are valued at Sh21.7 billion.

Majority of the EPZ investors (61 per cent) are foreigners from China, UK, USA, Netherlands, Qatar, Taiwan and India while a quarter of the firms are joint ventures between Kenyans and foreigners. Only 14 per cent of the enterprises are fully owned by Kenyans.