Why Is Kenya Promoting Special Economic Zone To Chinese Firms

Credit: The Star

Many development scholars have agreed that industrialization is key to Africa’s socio-economic development. As a development partner, most African countries have factored in China in their industrialization agenda. Kenya is currently looking to lure Chinese firms to its new Special Economic Zones (SEZs). 

The Star reported that, through the Kenya Investment Authority (KenInvest), the government is marketing at least nine SEZs in Mombasa, Naivasha, and Machakos with about 9,000 acres designated for investments. The government is leveraging on the SEZs as part of its plans to boost Foreign Direct Investment (FDIs) in post-Covid-19 economic recovery.

Speaking ahead of the Kenya International Industrial Expo scheduled in Nairobi, between November 26–28, KenInvest managing director Moses Ikiara said Kenya’s government has set up 75 Export Processing Zones (EPZs) across the country. He added that these come with a lot of incentives for investors. Ikiara said, “we encourage Chinese firms to invest in these special economic zones where we can have manufacturing and value addition investments.” Some of the incentives include cheaper electricity tariffs of as low as at $5 cents (about Sh5) per kilowatt-hour.

According to The Star, at least 93 Chinese companies, of which 50 are from the industrial rich and China’s economic hub of Shandong Province, are expected to showcase at this year’s expo. The forum seeks to link local businesses to potential partners in China in the area of general machinery, which includes agricultural, construction, food processing, packaging, and textile machinery.

“One of the ways of ensuring local enterprises grow is by forging a partnership with the likes of China. We are urging the Chinese companies to set up industries here in Kenya by tapping into the government’s industrial parks,” Ikiara said.  On his part, Afripeak Expo Kenya Limited managing director Gao Wei stated that “Kenya is a strategic investment destination and gateway to the East Africa region. It is an industrial hub where many Chinese firms are keen to invest in, especially in machinery and industrial development.”

Touching on how Kenya can bridge its trade deficit with China, Vice President of Kenya National Chambers of Commerce and Industry(KNCCI), Erick Rutto said, “we must engage in joint ventures with our Chinese counterparts in order to balance the trade between Kenya and China, we can tap into the experience of Chinese enterprises to grow our local capacity.” 

Sino-Kenya Relations

The bilateral relations between the East African giant and its Asian counterpart dates back to 1963, two days after the formal establishment of Kenyan independence, when China became the fourth country to open an embassy in Nairobi. 

There has been an increase in Chinese investment in Kenya, particularly in the transport sector. Chinese companies have been involved in the construction of major road networks in Kenya, including Nairobi- Thika Highway, Airport road in Nairobi, Kipsigak – Serem – Shamakhokho in Rift Valley, Kima-Emusustwi Road, and GambogiSerem road in Western Kenya. According to data for the China-Africa Research Initiative at the John Hopkins University, Kenya received Chinese loans of about $9 billion between 2000 and 2018.

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