Foreign investors plan avocado factory in Central Kenya
Mr Simon Njoroge sells avocados at a Nyeri market: The new processing factory in Maragwa is expected to boost farmers’ earnings. File
Kenya has licensed investors from New Zealand to set up an avocado processing plant in Murang’a, opening new markets to farmers and employment opportunities to hundreds of jobless youths.
Trade minister Chirau Ali Mwakwere said he had gazetted about 2.05 hectares of land in Maragwa as a new private export processing zone (EPZ) to be used by the investors to set up the factory.
“This business is still at its formative stage, having just met the first legal requirement of being officially gazetted,” the Export Processing Zone Authority told the Business Daily through spokesperson Jonathan Chifalu.
“The investors are not ready to go public about their identity or business structure, but their choice of Murang’a was influenced by the proximity to source of raw materials,” said Mr Chifalu.
The processing plant will open a new market for avocado farmers who are currently locked out of key export markets in US, Europe and South Africa by stringent quality standards.
Estimate puts the number of farmers and youths who are likely to derive incomes directly from the new Murang’a plant at 1,000, with EPZ officials saying this number is likely to grow as export trade picks up.
It will also bolster the country’s long running campaign to diversify exports by shifting from raw materials to value added products.
The US which opened its market for duty-and-quota free import of a range of goods, including fresh produce, under African Growth and Opportunity Act (Agoa) 11 years ago is yet to clear Kenya’s raw avocados to sell in its territory.
Fruit flies
South Africa was, up to five years ago, the largest export destination for Kenya’s raw avocado until it banned mangoes and avocados from the region two years ago, citing prevalence of fruit flies.
The ban has sparked debate with Stephen Mbithi , CEO of the Fresh Produce Exporters Association of Kenya saying, “fruit flies are common in all tropical countries and should not be introduced as a quality measure to lock out goods from getting into an African market.” Avocado is one of the horticultural crops that fetches Kenya up to Sh2.2 billion annually, according to government statistics.
On industrial scale, it has been important revenue earner for listed agricultural firm, Kakuzi Limited whose exports of Hass avocado variety accounts for up to 75 per cent of Kenya’s total avocado exports to Europe. The entry of the foreign investors comes just days after the EPZA’s newly appointed CEO Richard Mutule announced that many new private EPZs are eyeing Kenya. The new factories will use locally available raw materials with EPZA encouraging larger foreign firms to partner with small and medium enterprises.
The Maragwa plant is expected to start building its infrastructure and factory immediately, becoming the 43rd export processing zone for the country, in a race that began with only two public zones in Athi River and Mombasa.
It is being set up just months after another firm— Saw Africa EPZ Ltd started operations in Thika last year to process macadamia nuts for exports.
The firm’s CEO, Patrick Wainaina, said about 800 local women now derive their incomes directly from the factory which intends to expand its operations once market conditions improve.
“We are in this business that allows us to create more jobs by turning locally available materials into export products,” Mr Wainaina told the Business Daily on phone yesterday.
The move to woo local investors into EPZs comes at a time that the Government’s figures indicate growth of business in sectors that have traditionally been criticised for failing to use locally available resources to create quality employment.
The Economic Survey 2011 indicates sharp rise in the value of exports from the zones boosting investor confidence even as players blamed drastic drop in number of jobs created on tougher export market conditions.
Special economic zones
The EPZ exports increased by 22.5 per cent in 2010 to stand at a six year high of Sh28.6 billion, giving fresh impetus to government’s plan to expand them into special economic zones.
On Monday, EPZA officials announced plans by Government to team up with Korea in expanding the second phase of the Kipevu EPZ.
The announcement followed last week’s visit to Korea by Dr Mutule and EPZA chairman Mathenge Wanderi. The Korean Government also built the first phase of the institution.
Korean investors currently run the Athi River-based Technology Development Centre, an institution that provides industrial and technical training to EPZ firms.
Mr Wanderi said Mahindra Group of India has also expressed interest in helping the country to develop and implement its special economic zones.
