Kenyan authorities have reached out to Chinese businesses in a bid to improve their industrial production capacity by establishing manufacturing hubs and special economic zones (SEZ) nationwide.
The developing nation is looking to attract investors from several sectors, including textiles, electronics, pharmaceuticals, lifts and elevators, and medical equipment.
The initiative forms part of the East African country’s ambitious ‘Vision 2030’ plan to become an industrialised middle-income state by the end of the decade.
The country is fast becoming an attractive location for foreign investors, said Kenneth Chelule, CEO of the Kenya Special Economic Zones Authority.
Kenya intends to woo foreign investment by offering preferential rates and tariffs, Chelule added.
Kenya has signed preferential trade agreements with prominent trading blocs, including the US, Britain and the European Union, according to Business Insider Africa.
Energy and Petroleum Regulatory Authority (EPRA) Director General, Daniel Kipoto, announced investors operating out of SEZs will enjoy their own power rates until June 2026.
Businesses within the Kedong SEZ in Naivasha will only pay five Kenyan shillings per kilowatt-hour, said Kipoto.
Rates within the country’s remaining SEZs will only be required to pay 10 Kenyan shillings per kilowatt-hour after EPRA updated electricity tariffs in March 2023.
The Kedong SEZ has such favourable energy prices because the rate was secured four years ago as part of a pilot program for Vision 2030.
Currently other SEZs are in Mombasa, Kisumu and Machakos, but the Kenyan government is securing land for a reported 10-15 SEZs going forward.
Apart from special tax and electricity rates, businesses working from special economic zones will have access to storage, free trade zones and various auxiliary services, like conference and exhibition halls and tourism.
Some of the mission’s other primary objectives are to increase Kenya’s GDP by $4-7 billion every year.
Most of that growth needs to be driven by Kenya’s manufacturing base, which only represents 11% of the country’s total GDP – well shy of Kenya’s 20% target, according to Kenyan SEZ Authority’s official strategy.
The hope is that a shift from a predominantly agricultural-based economy towards a more manufacturing-heavy economy will diversify Kenya’s export mix and lift thousands out of poverty.
Vision 2030 also prioritises increasing foreign direct investment to match the rest of sub-Saharan Africa.
Some of Kenya’s regional neighbours attract up to three times more investment from abroad, according to the SEZ Authority.