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How Kenya will lure investors to manufacturing, exports sector

With manufacturing one of the pillars of the Big Four Agenda, EPZA chairman Paul Gicheru spoke to the Star about the authority's achievements, focus areas, challenges and vision

In Summary

• Last year President Uhuru Kenyatta appointed Paul Gicheru chairman of the EPZA.

• More than 140 EPZA firms employ 60,000 workers, but new investments will create an additional 100,000 jobs

Cabinet Secretary for the Ministry of Labour and Social Protection Ukur Yatanni tours the Export Processing Zone at Ruaraka on May 14, 2018.
Cabinet Secretary for the Ministry of Labour and Social Protection Ukur Yatanni tours the Export Processing Zone at Ruaraka on May 14, 2018.
Image: EZEKIEL AMING'A

The Exports Processing Zones Authority (EPZA) was established in 1990 to perform the investment promotion, facilitation and development of public zones in addition to its regulatory functions.

The authority has the mandate to maintain the overall favourable investment climate, address constraints faced by investors and advise the government on policy matters relating to EPZ.

Last year President Uhuru Kenyatta appointed Paul Gicheru chairman of the authority. Within a short period, Gicheru has implemented positive changes in operations of the EPZA, putting it in focus and targeting to achieve its mandate faster.

 
 
 

In this interview, he talks about EPZA's achievements, new focus areas, challenges and vision that will help the country achieve growth in manufacturing, a key pillar in Uhuru’s Big Four Agenda.

Can you elaborate on the mandate or functions of EPZA?

Our main function as the EPZA is to help promote and diversify exports by ensuring the country moves from traditional exports to value-added products in various areas. We have to put in place policies and structures that stimulate domestic and foreign investment in export-oriented manufacturing, commercial and service activities.

We also have the mandate to develop public industrial zones, along with the required infrastructure. EPZA is also mandated to help create employment opportunities through the EPZs and related functions. We also play the role of developing necessary linkages and chains in our domestic economy for better resource utilisation. The authority also has the mandate to help in the transfer of skills and technology in management, marketing and production technology to Kenyans.

How relevant is the authority in Kenya’s economy that has been expanding at a slow pace?

The idea of establishing the EPZA was very noble because looking at our mandate and functions, it’s obvious the vision in having the EPZs brings out the focus on improving our exports and manufacturing as key stimulators of the country’s economic growth. An expanded manufacturing sector means we are to have a vibrant economy, more jobs for our people and a socially and economically stable country. That’s why President Kenyatta has a good vision for this country by targeting manufacturing as a key sector, if we want our economy to grow faster like Malaysia did along with other Asian tigers. EZPA is, hence, extremely relevant in our economic situation.

EPZA chairman Paul Gicheru during an interview with the Star
EPZA chairman Paul Gicheru during an interview with the Star
Image: MATHEWS NDANYI

So far, what is the infrastructure in place to help the EPZA achieve its mandate?

 

The authority has its headquarters at Athi River, along with the main Export Processing Zones located there. However, countrywide, we have more than 72 gazzetted zones in 19 counties. We have about 140 operating EPZ firms. Although the focus has mainly been at Athi River, we are now shifting our focus to partner with counties in developing all the zones we have countrywide.

 
Many people do not know that some of the best brands we have globally are manufactured here in the country through the EPZ. They include Tommy Hilfiger,  Calvin Klein, and Walmart and Macy’s
EPZA chair Paul Gicheru

What does the overall performance look like in general since the establishment of the EPZA?

So far, the firms we have employed about 80,000 people, mostly youth, our cumulate investments run to over Sh52 billion as per last year’s statistics, our annual sales turnover is more than Sh76 billion, annual exports are valued at more than Sh72 billion, while imports amount to over Sh33 billion. Our domestic expenditure annually stands at about Sh29 billion.

What are the advantages of investing through the EPZs?

We have a wide set of advantages for investors through the EPZs, and these are the key drivers we are focusing on to attract more investors both at Athi River and in other parts of the country. The main advantages we have include a 10-year tax holiday and, thereafter, tax at the rate of 25 per cent, exemption from import duty, exemption of VAT, exemption from Withholding Tax and single EPZ licences.

We also have applications for new investors cleared within 30 days, quick issuance of work permits where required, and availability of land and factory buildings for the zones, which are developed with the requisite infrastructure, enabling investors to easily move in and start operations.

What about the types of products which investors through the EPZs can manufacture?

We have a very wide range of products. Actually more than 40 types. Just to name a few, we have textiles and apparel, textile accessories, horticulture and floriculture processing, fortified blended foods, relief supplies, pharmaceuticals and pharmaceuticals extraction, manufacture of medical supplies and health supplies, blending and packaging of tea and coffee, meat processing, macadamia nut processing, extraction and packaging of avocado oils and fruit juices, among many others which remain largely unexploited.

Which are the other regions EPZA is focusing on for the creation of new industrial parks?

Our plan is to focus on all viable regions in our country through the counties we have. But to start with, we have earmarked four regions dedicated to the development of textiles and apparels. These include the Naivasha clusters, which are close to the geothermal power resource, with skilled labour from Naivasha town and a competitive cost base. We also have the Homa Bay/Nandi clusters, which also have many advantages, including already-signed MOUs for the zones, skilled labour and opportunities in agro-industries and Lake Victoria water resources.

We also have the Athi River clusters and also the Mombasa/Mtwapa/Samburu clusters that are close to the Mombasa port, among other labour-related advantages.

And what are some of the key investors you have at the EPZs?

They are quite many, including both local and foreign. We have several success case studies of investors, including the Nodor (Athi River), which is an investment from the UK, being a world leader in dartboard manufacture. It employees about 400 people and processes about 80 per cent of Kenya’s sisal. We also have Thomas De La Rue (Nairobi), which is also an investment from the UK, dealing in currency and security print. It employs about 300 people and also exports currency.

We also have Gold Crown Foods (Mombasa), also from the UK, dealing in value-added tea exports, and employs more than 300 people. We also have Olivado (Muranga), which is an investment from Australia with 200 employees and benefits more than 3,000 avocado farmers. Another major firm we have in the EPZ is the Jungle Macs (Thika), which is a Kenyan investment, processing macadamia nuts, and employs 1,500 people and serves more than 50,000 farmers.

In the apparels sector, many people do not know that some of the best brands we have globally are manufactured here in the country through the EPZ. They include Tommy Hilfiger, Tesco, Guess Calvin Klein (CK), Vanheusen, Target and Walmart and Macy’s.

These are just a few, but we have very many local firms operated by hardworking Kenyans doing great work through the EPZs

For new investors, in which sectors do we have opportunities through the EPZs?

The opportunities available are quite wide in sectors like horticulture, floriculture, fisheries, meat processing, agro-processing, and cotton and leather value chain. We would like to work with farmers through the counties in tapping some of the opportunities available, like dealing in macadamia and avocado.

Since you were appointed, what are the major changes you have put in place to transform the EPZA and attract more investments into the country?

President Kenyatta has a great vision for this country and he has a keen interest in the manufacturing sector to create jobs for our youth, and we wouldn’t want to let him down. First, we are now working as a team with the management at the EPZA and we started with streamlining operations at the EPZA headquarters. We have now eliminated graft chains that were entrenched in some areas through major management and staff changes.

The EPZA is now gearing to offer world-class services and operations required by investors to come to our country. We have fenced off the zones at Athi River and removed speculators who had grabbed part of our land, we have improved security and sanitation services for our investors. We have also done away with companies which were holding godowns and land meant for investors, and we are not allowing anyone to have EPZ land for more than 6 months without utilising it.

We have eased our licensing procedures and handle our investors with greater professionalism and importance.

Are you seeing any improvements from where you found the EPZA?

Oh, yes. After streamlining everything, we now have more than five new enquiries from investors weekly. The enquiries include very many from the foreign embassies we have and also from abroad, and our interest now is to tap them as we focus on major achievements in investments.

How is the EPZA planning to work with the counties in developing more zones?

Many of the counties have already stated their interest to establish industrial parks, and we will pursue linkages towards those lines. We already are in talks with some of the governors, including in Vihiga and Kakamega, who have a great vision to work with the EPZA in establishing the zones in their regions. With this, we will open up more opportunities for our youth, farmers and other groups in rural parts of the country, where three-quarters of the population resides.

What are the key challenges hindering the achievement of the EPZA objectives and vision?

At the EPZs in Athi River and other areas, we require more resources to expand the infrastructure, including godowns, warehouses or sheds to be used by investors. We also need stability in the trade policies we have, which at times are changed without wide consultations. Another key challenge is the high cost of production caused by the high costs of energy and other operations. The government should look into ways of cutting the costs of energy as an incentive to investors.

What do you target to achieve in the near future at the EPZA?

With improvement in investments and the necessary environment, we target to create an additional 100,000 jobs through expanding the zones within the next five years. We will double the exports and hence foreign earnings for the country. We will seek investors and partners to venture into new areas like processing of camel milk, honey, French beans and others, which can directly benefit our farmers. Value addition is key, so we have our farmers and other producers not just doing things the traditional ways but venturing in ways to be more competitive globally.

The world over, Kenyans are rated as highly friendly and welcoming people. Kenyans are also known to be hard working. We need to tap into our strengths and focus on development areas that will help to grow our country, as always emphasised by President Kenyatta.


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