EPZ firms step up hiring as sales near Sh100bn

DnTradeMinistry2710ued
DnTradeMinistry2710ued

Companies operating in the Export Processing Zones (EPZs) stepped up hiring in the financial year that ended June as exports approached Sh100 billion on relaxed Covid-19 disruptions in export markets.

Data from the State Department of Trade shows that the number of workers in these economic zones rose by 12,891 in the review period compared with 7,477 in the previous period.

The additional hiring took the total staff count in EPZ firms to 65,900 as the value of exports jumped to Sh98.14 billion at the end of June from Sh85.41 billion.

“Increase in employment was due to new enterprises that started operation within the period and expansion of employment by existing enterprises,” said the State Department of Trade.

The growth in exports was mainly attributed to EPZ apparel and agro-processing during the review period.

A majority of EPZ firms are in textiles and apparel and largely export to the US under the quota- and duty-free Growth and Opportunity Act, which expires in September 2025.

Kenya closed June 2022 with 153 EPZ firms — up from the previous year’s 144 but below the targeted 153.

Export Processing Zones Authority (EPZA) linked the missed target to budgetary constraints and the shortage of industrial sheds, especially within the Athi River zone.

The authority had for instance targeted to complete the Athi River Textile Hub by June but only managed 65.14 percent.

EPZs attracted Sh45.23 billion as investments, against the targeted Sh80 billion and down from Sh68.57 billion a year earlier, partly impacted by elections period uncertainty.

“Target not met due to Covid-19 pandemic in the year 2020/21 and political uncertainty in the year 2021/22,” said the State Department.

EPZs enjoy a range of attractive fiscal, physical, and procedural incentives including a 10-year corporate and withholding tax holiday as well as a 100 percent investment deduction on new investments.

The firms are also granted perpetual exemption from payment of stamp duty on legal instruments as well as payment of value-added tax and customs import duty on inputs.

The authority also offers incentives to SME exporters with the majority of local Kenyan shareholding desiring to be set up under the EPZA programme.

Small and medium enterprises (SMEs) from sectors such as horticulture, food processing, textile and apparel, leather and commercial crafts are offered purpose-built infrastructure with smaller warehouses and excused from paying rent for four months.

A business is classified as a potential EPZ SME if it is an existing business whose total initial capital investment is less than Sh40 million, has below 100 workers and is at least 75 percent Kenyan-owned.

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