The government plans to review the framework set in the establishment of Special Economic Zones (SEZ) and Export Processing Zones to accommodate more participants in the space.
The review comes as the Kenya Kwanza administration prioritises facilities including industrial parks in positioning Kenya as a global production hub.
“In order to make our SEZ and EPZ programmes vibrant and to provide a globally competitive framework, we have committed to overhaul both regimes by the end of this year," Investment, Trade and Industry Cabinet Secretary Rebecca Miano told the Business Daily in an interview.
She added: "This will provide a conducive environment which will create a virtuous cycle of attraction of investments, generation of employment opportunities, investment in infrastructure, utilisation of local resources and improvements in planned urban development; all resulting in improved standards of living.”
Currently, the ministry says there are over 25 gazetted SEZs with over Sh451.6 billion ($3 billion) in investments and over 90 EPZs with investments sitting at over Sh144.5 billion ($960 million).
SEZs refer to areas considered to be outside the customs territory and are regulated by the SEZ Authority.
Entities inside SEZs carry an operator, developer or enterprise license and earn incentives including tax and duty exemptions, work permit facilitation and protection and repatriation of profits.
The zones can either be public or private where some of the gazetted SEZs’ include the Centum owned Two Rivers International Finance and Innovation Centre, Tatu City and Dongo Kundu.
All licensed SEZ enterprises, developers and operators are granted exemption from all taxes and duties payable under the Excise Duty Act, the Income Tax Act, East African Community Customs Management Act and the Value Added Tax Act on all SEZ transactions.
Meanwhile, EPZs are designated parts of the country that are aimed at promoting and facilitating export-oriented investments and to develop and enable an environment for such investments.
The zones which are managed and promoted by the Export Processing Zones Authority are located in areas including Nairobi, Voi, Athi River, Kerio Valley, Mombasa and Kilifi.
Among the benefits accruing to EPZ enterprises include exemption from all existing and future taxes and duties payable under the Customs and Excise Act and Value Added Tax Act on all processing zone imports for use in the eligible business activities.
The Ministry of Investments, Trade and Industry notes the needs for entities covered under the SEZs and EPZs have been changing, requiring a shift in policy.
In addition to the planned overhaul, the ministry is working to establish County Aggregation and Industrial Parks (CAIPs) in all 47 counties with aggregation centres and value-addition sections.
“CAIPs are aimed at preventing post-harvest losses at the grassroots by receiving and storing all harvests; enable producers get higher and predictable earnings by selling their produce domestically in other counties and export markets in warehouses outside the country; and value addition in the light manufacturing sections to boost earnings,” CS Miano added.
The first phase of the project is expected to utilise 10 acres in each county with the construction of 4,000 square metres of sheds, half of which will feature cold storage.
About 4,000 square metres of sheds will have 40 value addition investors from the local area.
So far, 12 CAIPs have been launched and are at various stages of development.
In its 2023 Budget Policy Statement, the National Treasury stated that the government planned to use the Public-Private-Partnership model to deliver industrial parks and SEZs around the country.
“In this arrangement, the government will provide the private sector will provide the private sector with appropriate land and create necessary incentives, through fiscal tax measures and special power tariffs to stimulate private sector investment into SEZs,” the exchequer stated.
