Factories, malls, hotels give Kisumu County new buzz as investment zone


A cyclist rides on Kisumu-Busia highway next to the newly built Crown Paints factory. PHOTO | TOM OTIENO

For two decades, Kisumu County registered a massive economic downturn characterised by rising poverty and crime levels owing to the collapse of its mainstay industries.

From the fall of once vibrant fish and sugar processors to the closure of the giant Kisumu Cotton Mills (Kicomi) and the region’s economy suffered a devastating blow, leaving thousands of households highly disadvantaged.

Today, however, there is renewed hope of restoring Kisumu’s economic and social pride amid rising investment in key growth sectors as manufacturing, real estate and agriculture.

On the 41-kilometre highway stretch between Kisumu and Awasi on the border with Kericho County alone, about 10 new processing plants have been set up including a steel smelting mill, plastic and mattress factories, three road and house construction material processing plants and a timber treatment facility.

The Nairobi Securities Exchange (NSE) -listed Crown Paints also recently set up its Sh400 million plant in the outskirts of Kisumu town in Kisian area, west of the lakeside town towards Maseno, adding to a raft of new investments including hotels and shopping malls.

In the last five years 12 new hotels have come up in Kisumu, including the now popular Pinecone, Clarice, Acacia Premier, Scottish Tartan, Desert Rose and Sovereign.

New as well as established supermarket chains, including Uchumi, Naivas, Tumaini and Maisha Mart have also taken space in the shopping malls that have sprouted across Kisumu such as Tuff Foam and Lake Basin.

“We have been working hard to woo investors and some of whom have factories. The good business environment and our proximity to access other East African states through roads, air and water also gives us an upper hand,” Governor Jack Ranguma says.

Gogni Construction Company that acquired a 26-acre parcel of land around Awasi area for extraction of rocks for use in its projects, says the venture has since morphed into a massive quarry business with ever-growing order books.

“We initially started the business to produce our own construction materials, but other companies and individuals requested that we supply them.

We now produce up to 300 tonnes of ballast alone in a day,” the firm’s manager Micky Cheniati said. The company also makes and supplies blocks, culverts and construction poles.

Enhance efficiency

“This place is conducive and that is why companies are setting up here. In the next five to 10 years, this place would be exceptionally an industrial belt,” Mr Cheniati added.

Crown Paints CEO Rakesh Rao, while opening their Kisumu branch, said it was part of their strategic move to tap into the region’s robust construction industry excited by the high development growth in particularly the real estate sector.

The new plant, with a production capacity of 1.3 million litres of paint per month, will serve not only the larger Western Kenya but also the East African countries, Tanzania in particular.

“This region produces more than 40 per cent of the company’s sales and establishing a new plant in Kisumu, which is very central regionally, will enhance efficiency and also improve our sales and market share,” Mr Rakesh said.

There is also renewed activity towards the revival of the region’s cotton industry including the ongoing search for investors by the county government and the Industralisation ministry to reopen the infamous Kisumu Cotton Mills (Kicomi).

Before its closure in 1999, Kicomi was key to region’s economy, supporting thousands of farmers and traders in the cotton supply chain.

Its collapse alongside most ginneries in western Kenya affected nearly 10,000 farmers in Kisumu, Homabay, Migori, Siaya and Busia counties who are now forced to transport lint to processors in Makueni, hundreds of kilometres away.

“Cotton is now gaining momentum, but we are farming far from the market. It is illogical to travel across eight counties to have cotton separated from seeds. We have requested the county government to set up at least one for the region,” Mr Michael Onyura, a cotton farmer in Nyakach, said.

Beatrice Obara, a farmer who co-ordinates the collection of the produce, said supplying a company in Makueni was uneconomical.

“For every three kilos of raw product, only a kilo of lint is extracted and retained in Makueni while we bring back the other two as seeds for replanting. The to-and-fro journeys reduce our profitability by a large percentage,” Mrs Obara said.

The farmers transported about 500,000 kilos of cotton balls to Makueni in 2015 alone from 300,000 kilos in 2014.

Another giant cotton mill in the region, Rift Valley Textiles (Rivatex) had also collapsed and was only recently revived following a takeover by Moi University in 2007 for an estimated Sh205 million.

A raft of planned road and maritime infrastructure upgrades around the lakeside town are further expected to bolster the latest resurgence of economic activity.

Trade around the town has over the years been affected by a number of factors, including a derelict railway infrastructure and impenetrable and stubborn water hyacinth as well as boundary disputes that have turned Lake Victoria into a liability.

This situation could change with the planned construction of a new sea port in Kisumu and extend a branch of the standard gauge railway (SGR) line being built from Mombasa.

The piers in Homa Bay, Mbita and Luanda K’Otieno are projected to register enhanced activity when the planed port becomes operational.
Before the collapse of the lake transport, Homa Bay was the main shipping point for goods to Tanzania.

Vessels from Kisumu docked in Homa Bay and offloaded cargo which was then transported via trucks to the Tanzanian border two hours away.

Mbita and Lunda K’otieno today host regular ferry services by private firms and the construction of a new port facility is expected to boost trade in merchandise.

A regional body, the Lake Victoria Basin Commission (LVBC) — which implements projects on behalf of the riparian states — has already kicked-off initiatives to boost transport and trade through the lake.

The Kisumu-based agency is undertaking two mega projects to improve lake transport industry and safety of its users.

Among the plans is to have a weather forecast centre and to upgrade the piers to enable 24-hour operations in accordance with the International Maritime Organisation (IMO) regulations.

The commission in 2015 received a $450 million (Sh47.4 billion) allocation by the World Bank to desilt the piers to fit larger vessels and install electronic maps to inform ship stewards of route safety before planning their journeys.

Navigation routes

“We will also devise new navigation routes not only from Kisumu to Mwanza and Arusha, but also to landlocked countries which can be connected by railway systems,” said the outgoing LVBC executive secretary Dr Canisius Kanangire, adding that the survey and mapping of the lake are already under way.

“We also have another project to link the central corridors, including Dar-es-Salaam to Mwanza, the Northern Corridor from Mombasa via railway to Kisumu and Entebbe in Uganda, via the lake, and other states as well.”

The town is also looking up to improved air transport following upgrades on the Kisumu International Airport.

Only recently the Kenya Airports Authority (KAA) commenced a Sh600 million expansion of the airport runway to 60 metres from the current 40 metres, to handle bigger cargo planes that carry loads of up to 100 tonnes.

“In order for runway to carry bigger aircraft of 40 tonnes and above, it is being upgraded from code C to code D. This will also enable us to accommodate more international aircraft with wider shoulders and wings stands,” Joseph Okumu, the airport manager, said.

Sugar factories

“Other than being a transit point, Kisumu Airport is turning into a business entity meant to benefit local industries especially the agro-based,” said Mr Okumu.

The expansion has also created a gap for new aircraft operators and other businesses like hotels and restaurants, storage rooms, cargo warehouses, transit shades, retail outlets and business centres.

The region’s limping sugar factories, which at their peak employed thousands of workers, are also expected to boost the town’s economic fortunes when the ongoing privatisation plans are concluded.

The government plans to sell a 51 per cent stake in the five sugar companies to strategic investors and reserve another 24 per cent for farmers and employees.

The government will then sell a remaining 25 per cent stake in the Sony, Chemelil, Nzoia, Muhoroni and Miwani milling companies in an initial public offering once the factories are profitable.