New rules to allow more foreign direct investment in Kenya

Tuesday August 16 2016

The Export Processing Zone (EPZ) in Athi River.

The Export Processing Zone (EPZ) in Athi River. The government has ratified new rules allowing foreign direct investment in the establishment of special economic zones. FILE PHOTO | NATION MEDIA GROUP 

JAMES KARIUKI
By JAMES KARIUKI
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The government has ratified new rules allowing foreign direct investment (FDI) in the establishment of special economic zones (SEZ), where products will be manufactured for the export market.

In a Kenya Gazette notice, Industry Trade and Co-operatives Cabinet Secretary Adan Mohamed said county governments were also at liberty to allocate land to any local or foreign investor planning to put up an SEZ.

The identified facilities will also enjoy a one-stop regulatory regime manned by officers from the Special Economic Zones Authority (SEZA) who will help foreign investors acquire all documentation that will allow them to launch their operations within the shortest possible time.

The 2016 Special Economic Zones Regulations state that SEZA must maintain an open investment environment to facilitate and encourage business via the setting up of “simple, flexible and transparent procedures for registration of the investor”.

The new regulations also seek to enable foreign investors to put up plants within the shortest possible time, as the SEZA will be required to establish a resident office that will help investors have all their architectural designs and environment impact assessment audits approved quickly.

ONLINE SERVICES

The one-stop shop facility will be connected online to all regulatory agencies, enabling investors to get visas and work permits for their expatriate workers within the SEZ facilities with the assistance of officers seconded from relevant government agencies.

To facilitate the development of manufacturing plants, the minister said all environmental permits will be processed on site thereby discarding the age-old tradition where regulatory agencies delayed applications for construction for up to two years.

The gazette notice comes hardly a month after Israeli Prime Minister Benjamin Netanyahu, Turkey’s President Recep Tayyip Erdoğan and India’s Prime Minister Narendra Modi led business delegations to Kenya and expressed interest in setting up shop in Kenya.

WORLD LEADERS VISIT

The world leaders said this would help improve the trade imbalance where they exported more to Kenya and imported less.

The visits saw a raft of agreements signed with President Uhuru Kenyatta aimed at enhancing trade links.

The new rules also empower county governments to set aside public land for establishment of industrial zones and to collect levies on behalf of the government from operators, developers and factory owners.

The move will also help increase access to SEZ-processed products on the Kenyan market via a 20 per cent window while the rest must be exported to foreign markets.

The move promotes the government’s intention to lure foreign direct investment in manufacturing and especially companies seeking access to affordable labour with an eye on establishing markets in Europe and America.

Under the African Growth and Opportunities Act (Agoa), the American government gave special treatment to African-based companies to process and export the goods to their markets on preferential terms.

The new regulations are a departure from past practice where the government, which owns the land, funds the construction of necessary infrastructure before allowing investors to put up factories.