Kenya Industrial Parks
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They publish weekly sector briefs. These are one-page break downs of what is going on in sub-sectors of their five core markets (Nigeria, Ghana, Ethiopia, Kenya and Cote d'Ivoire) and we feel these could be very interesting reads to JobnetAfrica followers as well. We will publish some of these sector briefs in our blog on a regular basis, starting with Kenya's Industrial Parks.
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Investor interest in Kenya’s industrial parks continues with early indications that interest will intensify as the country progresses from an EPZ to SEZ model.
The year’s first major endorsement of Kenya’s industrialisation strategy has been January’s groundbreaking on the $200 million Sino-African Incubation Park. Chinese investors CIFAL International and China International Investment will setup the park, which will host a broad range of industries, in the Athi River Export Processing Zone (EPZ) with China’s Qingjian International Group as contractor. Upon its completion in 2020, the park will cover an area of 500sqm.
Industrial Investment in Kenya
The firm’s situation at Athi River EPZ is no surprise. Since 1990 the government has promoted industrial investment through establishing a network of public and private EPZs, playing host to exporting manufacturers. Each park offers incentives in the form of tax breaks (e.g. a ten-year corporate tax holiday). At present the EPZ Authority, which allocates EPZ licenses, reports 66 EPZs across the country in which more than 130 companies have set up shop. Nonetheless, inward investments to the parks total around just $800 million since 1990, making Sino-African a significant investment.
In a bid to drive additional capital the government passed the 2015 Act for the establishment of Special Economic Zones, offering additional tax incentives (including exemptions from Kenya’s 16% VAT) and an allocation of work permits for expatriate workers (one fifth of workers can be expats). Participating firms are also exempt from the export requirement of EPZs, servicing primarily domestic demand.
Development in Nairobi
Thus far only two private SEZs have broken ground; one of which is the landmark Tatu City development in Kiambu County, north of the capital, Nairobi. The $3.4 billion mixed-use development will include recreational residential and, crucially, manufacturing infrastructure all of which has been classified under the SEZ program as of April. Currently being developed by Lagos-headquartered Rendeavour (majority shareholder), the City has attracted more than $500 million in investment thus far. International investors include Unilever, South Africa’s ADvTECH, and China’s Tianlong Cylinder.
In May Tatu shareholders were joined by China’s Guangdong New South Group which signed a $1.94 billion MOU for the construction of the Africa Economic Zone (AEZ). Currently under development in joint venture with Africa Economic Zones Ltd. (a special purpose vehicle owned by Kenya’s DL Group of Companies), the first phase will see 700 acres of industrial space constructed in Eldoret, western Kenya. The first phase is expected to reach completion by May 2018 with the remaining three phases finalising over the course of ten years.
Alongside the development of private SEZs the government’s Vision 2030 development manifesto details plans for public SEZs in Athi River, Naivasha, Nairobi,Mombasa, Kisumu and Lamu. Work is yet to begin on these projects.
The government hope that these zones will allow for value addition to Kenya’s products; at present EAC statistics indicate just over 16% of the country’s agricultural outputs are processed against 27% in Tanzania and 34% in Uganda. In line with Vision 2030, the government is targeting annual growth of 10% in the manufacturing sector which is today valued at $7.8 billion.
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