Apparel factories within the Economic Processing Zones (EPZs) are seeking exemption from wage increase and new levies, saying they have shed 11,000 jobs in a year after the 2022 minimum wage review.
In a letter to EPZ Authority chairman Richard Cheruiyot, the factories said they lose market share when multinational clients ditch them for neighbouring countries such as Tanzania and Ethiopia.
They are blaming it on “abrupt policy decisions concerning wage and utility increases without comprehensive stakeholder engagement. We highly recommend delinking EPZ from onshore policies as EPZs are technically free zones,” they said in the April 12 letter.
Among key policies they want to be shielded from is the annual minimum wage increase announced on Labour Day marked on May 1.
The last minimum wage raise was in 2022 when former President Uhuru Kenyatta declared a 12 percent increase to Sh15,201.
While in other markets free zones are not bound by policies affecting the general economy, the opposite has been the case in Kenya where EPZ companies are subject to onshore policies, they said.
“By establishing clear and consistent policies for free zones, Kenya can enhance its attractiveness to investors and stimulate economic growth in targeted industries.”
Government levies and policies that increase the cost of production make them uncompetitive on the global market, they said.
Due to the harsh conditions, they export less and have shed about 22 percent of their workforce since October 2022.
Most of the factories produce garments for export and blame a 13 percent drop in exports from Sh527.3 million in 2022 to Sh459.6 million last year on increased cost of doing business.
