Cabinet gives the nod for Special Economic Zone construction in Mombasa
The land neighbouring the port of Mombasa that is expected to used for the construction of the Dongo Kundu bypass to decongest the Likoni ferry channel. PHOTO | FILE
What you need to know:
The free-trade zone (FTZ) project will be established on a site of between 300-500 acres of land that is available to investors.
It will host wholesale and retail trading, breaking bulk, re-packaging logistics, warehousing and handling and storage of goods.
The facility is expected to gain immensely from the ongoing expansion and modernisation of the port of Mombasa.
The Cabinet has approved the development of a Special Economic Zone (SEZ) in Dongo Kundu, Mombasa, targeting to boost job creation and regional trade.
The facility will be developed as an industrial and commercial hub with potential for the creation of jobs for the youth, a dispatch from State House said.
A blue print by the Industrialisation ministry showed that the plan included the establishment a free-trade zone (FTZ) within the 1,326 hectares SEZ facility.
“2018 is the target year for the launch of Mombasa SEZ at Dongo Kundu,” the ministry said in the document adding that it forecasts a population of 27,000 workers within the SEZ.
The FTZ project will be established on a site of between 300-500 acres of land that is available to investors.
It will host wholesale and retail trading, breaking bulk, re-packaging logistics, warehousing and handling and storage of goods among others.
Unlike the current practice at Mombasa port, where all goods are subjected to slow customs procedure, a FTZ creates a haven where goods on transit face less strict customs regulations.
The area will be reserved for re-exports to the 400 million-people Common Market for Eastern and Southern African (Comesa), allowing for transshipment of cargo without inspection or paying customs duty.
Worldwide, FTZs are organised around major seaports, international airports and generally underdeveloped areas.
Marginalised areas are often targeted for the FTZs because they attract investments which help address poverty. As a sweetener, corporations setting up in the zone may be given tax breaks.
The zones are normally popular with multinational corporations that set up factories to produce goods such as textiles.
In building an FTZ, Kenya will join others such as Dubai whose economy rides on goods distributed to other parts of the world.
The planned FTZ is expected to gain immensely from the ongoing expansion and modernisation of the port of Mombasa.
The government is currently building a second container terminal valued at Sh28 billion in Mombasa to handle increased trade within the region driven by a boom in the construction industry, vast infrastructure development and an emerging middle class.
The new terminal is projected to have a capacity of 450,000 twenty-foot equivalent units (TEUs) this year and this is expected to rise to 1.2 million by 2019.
The Mombasa port handled a record one million TEUs of cargo last year, signifying rising trade volumes in the region.
The extra capacity is expected to boost operations at the port that has been witnessing increased traffic, driven by improved economic activity in neighbouring countries that depend on it for exports and imports.
Besides the expansion of the port of Mombasa, the planned construction of the standard gauge railway could also boost the coming FTZ by providing efficient flow of cargo to and from the port of Mombasa where the government has also effected major regulatory reforms.
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