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EPZ firms triple new jobs as exports hit Sh126bn
Kenyan workers prepare clothes for export at the New Wide Garment Export Processing Zone (EPZ) factory operating under the US African Growth and Opportunity Act (Agoa) in Kitengela, Kajiado County, Kenya on September 19, 2025.
Firms operating in the Export Processing Zones (EPZs) tripled new hiring to 12,069 in the year ended June on the back of opening of new companies and growth in exports prior to the expiry of duty-free window for shipping goods to the US.
Data from the State Department of Trade shows the number of new workers in these economic zones rose from 4,142, surpassing the 8,000 that had been targeted for the review period.
“The achievement was mainly attributed to new firms, which continued to recruit as the production process advanced and also the expansion of the employment base by the existing enterprises,” said the department in disclosures to the National Treasury.
However, these zones, which cumulatively employ over 70,000 people, face sustainability test following the expiry of the window that allows duty-free access of African goods to the US market.
The African Growth and Opportunity Act (Agoa) has been supporting some of the EPZ firms. The expiry of the 25-year-old trade agreement, which provided duty-free access to the US market for many African products, expired on September 30, 2025.
The expiry of Agoa exposed exporters to a 10 percent tariff that took effect on August 2 under US President Donald Trump’s reciprocal tariffs measure.
There were 32 new EPZ enterprises that were licensed in the year to June compared with the targeted 20. This was a rise from 12 that joined in the prior financial year. The State department said the target was surpassed due to the rigorous promotion activities and more inquiries turning into actual projects.
EPZ firms are supervised by the Export Processing Zones Authority (EPZA) and 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 review period saw EPZ firms export goods valued Sh126 billion, an 8.9 percent rise from Sh115.71 billion in the previous period. The value of local purchases from these zones hit Sh20 billion from Sh16.58 billion a year earlier.
Increased exports were linked due to higher shipments in the garments and agro-processing sectors. However, local purchases missed the targeted Sh21.5 billion due to a shortage of raw materials such as avocado and cashew nuts in the local market.
Garments account for 50.3 percent of exports from EPZ, followed by agro-processing (21.2 percent) and food processing (9.2 percent).
EPZ 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. In the year ended June 2025, EPZs attracted Sh26 billion as new direct investments—above the targeted Sh12 billion and a growth from Sh15.82 billion.
The State department said the new investments surpassed the target due to the expansion of the existing companies and new entrants. EPZA also offers incentives to small and medium enterprises (SMEs) exporters with the majority of local Kenyan shareholding desiring to be set up under the EPZA programme.
Firms under these zones enjoy perpetual exemption from payment of stamp duty on legal instruments and from value added tax and customs import duty on inputs. Companies applying to operate under EPZ enjoy faster approval since they only require EPZA licensing with unrestricted investment by foreigners.
SMEs from sectors such as horticulture, food processing, textile and apparel, leather and commercial crafts are offered customized infrastructure with smaller warehouses and excused from paying rent for four months.
The United Nations Conference on Trade and Development (UNCTAD) cautioned in September that many African economies will lose export competitiveness in the US market without the renewal of Agoa.
“This sudden jump in tariffs could disrupt long-standing trade relations and severely disadvantage African exporters, particularly in highly protected sectors like textiles and apparel, where Agoa has so far provided critical market access,” said UNCTAD.
The UN agency said that Kenya would see its trade-weighted average US tariff nearly triple, jumping from 10 percent to 28 percent. It said Africa’s only hope would be to accelerate the implementation of the African Continental Free Trade Area.
However, it said, such a readjustment would be challenging and require considerable time.
