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Kenya's Special Economic Zones - Part 1

Published on October 16, 2015

Kenya embraces Special Economic Zones (SEZs) as a strategy to attain its Vision 2030 economic goals. (Vision 2030 is the country's development blue-print). SEZs are designated administrative areas within a country's borders that are accorded privileges that do not apply to the rest of the country, such as tax waivers. They are designed to attract investors, particularly in export-oriented industries. Businesses located within such zones benefit from lower cost of operations and a more conducive operating environment. The use of SEZs can result in increased investment (particularly Foreign Direct Investment), more productivity, more trade and more jobs. The strategy has been effective in country's such as China in gearing up economic growth.

The recently passed Special Economic Zones Bill sets the legislative framework for the establishment of SEZs in strategic towns in Kenya with the view of attracting FDI, growing export trade and spurring economic growth. The law is an integral part of the country's strategy towards industrialization. The Ministry of Industrialization and Enterprise Development plans to roll out the SEZs in the first quarter of 2016. Kenya's president, Uhuru Kenyatta, in a recent visit to the U.S. was keen to invite U.S. investors to take advantage of the SEZs:

“Our new special economic zones law allows you to manufacture goods that you can sell to Kenya and export to the region as well as the rest of the world,” the President said when he addressed a meeting hosted by a consortium of US companies and the Corporate Council on Africa .. (Source: Kenya Broadcasting Corporation).

With export trade promotion being an integral part of the Hub's mandate, we are keenly following this development. In the next part of this two-part blog, we will turn to our in house trade and investment experts to get their opinion on the use of SEZs in Kenya and the opportunities and risks that the country should watch out for in rolling them out.