Kippra wants setting up of special economic zones fast-tracked

Economic policy experts are rooting for faster creation of special enclaves for enterprises in an effort to rev up manufacturing which accounts for 10 per cent of Kenya’s annual production.

Analysts at the Kenya Institute for Public Policy Research and Analysis (Kippra), a state-owned think tank, say that special economic zones will attract industrialists and help cut the import bill.

The enclaves, which offer a raft of incentives, are normally used as bait for foreign investors.

“The successful establishment of special zones will boost Kenya’s industrialisation efforts hence enabling the country to produce several goods locally,” said Prof Joseph Kieyah, a principal analyst at Kippra.

“This will lead to a decline of China’s exports to Kenya.”

Analysts see the special economic zones as the missing link as investment in mega infrastructure projects like seaports, the standard gauge railway and roads change the country’s business profile.

The zones are meant to encourage the export of value-added commodities, helping to shore up Kenya’s hard currency reserves and creating jobs.

Kenya’s single largest import bill comes from Beijing at Sh275 billion in the first 10 months of last year, accounting for a quarter of total imports.

READ: Cabinet gives the nod for Special Economic Zone construction in Mombasa

This has seen analysts suggest that Kenya should adopt a protectionist stance and lock out goods that can be manufactured locally.

This is based on the fact that Kenya’s manufacturing sector has stagnated at an average of 11 per cent to the gross domestic product (GDP) for the past decade.

In September 2015, the Industrialisation ministry launched an industrialisation roadmap, charting the way for the country’s quest to industrialise.

This came after President Uhuru Kenyatta signed into law the Special Economic Zones Bill, clearing the way for the formation of industrial hubs.

But the projects are yet to kick off. Industrialisation secretary Adan Mohamed said that the board he recently constituted is scouting for a management team to spearhead formation of the special zones.

Kenya is pursuing a combination of public and private special zones.