Special Kenyan export zones increase sales:regulator
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Special Kenyan export zones increase sales:regulator UPDATED 05 Aug 2009 | 06:10  
Special Kenyan export zones increase sales:regulator

By Helen Nyambura-Mwaura

NAIROBI (Reuters) - Sales by factories in Kenya's special Export Processing Zones (EPZs) have increased nine-fold in the last 15 years they have been in existence, the regulator of the sector said on Wednesday.

The first such zone was set up in 1994 and exported merchandise worth three billion shillings, but total sales have grown over 800 percent since to 28 billion shillings last year and 26 billion in 2007.

"The experience has been success stories. Since we started the EPZ program in this country, things have never been the same again in the manufacturing sector," said Joseph Kosure, acting chief executive of the Export Processing Zones Authority.

The exclusive zones were created to attract investment by giving incentives such as a 10-year tax holiday for both corporate and income tax for foreign directors.

Factories situated in the special regions also have continuous availability of water and electricity, utilities that normal industries outside the EPZs are not assured of and often complain about.

"We attempt to maintain world class standards for the operators," Kosure said. "We give them investor support - they don't have to suffer immigration, labour, customs issues."

The zones, for example, have custom officers and will soon enjoy the services of labour and immigration officers on site.

"We do not want fiscal incentives only. We are attempting to depend on procedural incentives also."

The introduction of the African Growth and Opportunity Act (AGOA), a programme by the United States to encourage exports from the continent through duty- and quota-free trade has also boosted EPZ output.

"When AGOA came in 2001, there were leaps and bounds in terms of attraction of investors from outside and from the technology transfer. Kenyan entrepreneurs also believed that yes, there is something here that they could try," Kosure said.

Twenty five percent of EPZ investors are now Kenyan-owned companies, he said.

He spoke to Reuters on the sidelines of an annual AGOA meeting attended by U.S. government officials including Secretary of State Hillary Clinton and Trade Representative Ron Kirk.

EPZs were established in 1990 to address issues such as foreign exchange controls, unemployment, disinvestment, lack of technology and skills in Kenya.

But investor interest was sluggish at first because of poor infrastructure and ignorance as to what potential they held.

"We had to put infrastructure in place that was capable of attracting foreign investment because at that time even Kenyans were sceptical about investing in the EPZ programme," he said.

There are now 38 zones countrywide processing a wide range of merchandise including textiles, apparel, semi-precious stones and providing business outsourcing services. About 70 percent of output is exported to the United States and Europe.

"We have participated effectively in Kenyan trade because we constitute 14 percent of manufacturing output in this country. Our exports also constitute a huge percentage of total kenyan exports," Kosure said.

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