Mombasa is set to get a free trade zone (FTZ) for motor vehicles this year in a policy move that could create thousands of new jobs for traders and service providers.
An FTZ, such as the world renowned Dubai, is a re-export gateway where goods in transit are temporarily stored to avoid strict customs regulations and lengthy administrative procedures that home-bound imports face.
The establishment of such a facility in Kenya - almost four years after the Cabinet gave its nod to the plan - means vehicle imports destined to other markets in the region will first be received and sorted in Mombasa.
Goods in such a customs haven only get taxed when they end up in the local market. The country benefits from the job opportunities created for citizens and from collecting cargo handling fees.
The 1,000-acre Mombasa re-export gateway will initially handle 100,000 vehicles annually, Treasury secretary Henry Rotich estimates in a draft Budget Policy Statement (BPS) released on Friday.
The State-owned facility is tipped as one of the flagship projects that the government is banking on to raise the 2018 export earnings by 10 per cent and 20 per cent annually by 2022. “We intend to strengthen trade facilitation programme,” Mr Rotich says in the draft BPS.
The Mombasa FTZ is conceived to serve the landlocked states under the Common Market for Eastern and Southern Africa (Comesa). All the vehicles on transit will be moved directly from Kilindini seaport to the FTZ from where they can be evacuated by railway or roads to the final destination.
Mr Rotich says 500 motor vehicle inspectors will be trained this year and stationed at the facility to ease clearance. That means the vehicle owners will no longer have to incur demurrage charges faced by home-bound imports that have to undergo lengthy clearance including obtaining number plates.
The Cabinet approved the plan to set up FTZ in February 2014, allowing the industrialisation ministry to start planning for the hub.
Apart from motor vehicle re-exports, the ministry has been mulling over FTZ to handle electronics, machinery and building materials.
Mombasa County has also been planning set up its own FTZ with Governor Hassan Joho setting aside cash from as early as 2013/2014 for land purchase.
The FTZ model established Dubai as a distribution hub for re-exports such as electronics, motor vehicles and machinery destined to other countries around the world.
The Comesa bloc is already the single-largest export destination for Kenya’s goods accounting for 35 per cent of Sh578 billion worth of goods exported in 2016.