Kenya is banking on agreements entered with China and Korea to boost foreign investments in the local manufacturing sector.
The country has signed MoUs with the Asian Tigers that will allow foreign corporations set up their facilities in Kenya for production.
Kenya Investment Authority (KenInvest) has signed an MoU with the Kenya Chinese Chamber of Commerce and the Kenya Chinese Corporation to allow Chinese wholesale facilities set up in the country.
“This will enhance easy access of products by retailers, in turn promoting and facilitating export-oriented investments in a bid to boost inflows,” said Sally Mahihu, the chairperson at KenInvest.
DL Group Kenya also signed an understanding with Wise Bridge Korea, a home appliances manufacturer to allow production in the country.
These took place on the sidelines of the 2023 Kenya International Investment Conference in Nairobi.
The move comes at a time the government plans to propel local manufacturing by tapping into the Special Economic Zones (SEZs) across the country.
It includes the recent rolling out of key initiatives and supporting infrastructure at the Dongo Kundu Special Economic Zone to make it ready for investors by end of next year.
Speaking in January in Mombasa while meeting the county leadership on trade talks, Investments, Trade and Industry Cabinet Secretary Moses Kuria said the government is fast-tracking the flagship project in Mombasa.
“In parallel, the state department for investment promotion under my ministry will be rolling out local, regional and international promotions to attract and facilitate early investor entry to the Dongo Kundu SEZ,” Kuria said.
He said the country was also keen on attracting investors to other SEZs in Lamu, Naivasha and Kenani Leather Park in Athi River.
In March, the government enforced a new electricity tariff geared towards improving investor climate in the wake of increasing competition from countries that offer investors cheap electricity.
The new tariff will see all the investors domiciled in the 15 SEZs pay a special tariff of Sh10 per kilowatt-hour.
The tariff is the lowest rate per unit of power across all the consumption bands under the new government.
Energy and Petroleum Regulatory Authority (EPRA) in a statement said this is a move to harmonise rates and entice more firms to set up in the tax-free regions.
Kenya has 15 SEZs with official status, which are a part of the bold goals to increase employment and exports in order to fuel economic growth by 2030.
Special economic zones are designated areas aimed at promoting and facilitating export-oriented investments.
They are spread across Naivasha, Mombasa, Kisumu and Machakos with plans to provide more land for the facilities.
SEZs in the country also enjoy special taxes and infrastructure that facilitate a wide range of activities such as storage, export and re-exports.
Investment promotion PS Abubakar Hassan, on Tuesday said that the government has reduced the tax on foreign companies in the country from 37.5 per cent to 30 per cent, to attract more investments, boosting the manufacturing sector’s contribution to GDP.
Data by Trading Economics shows the GDP from manufacturing increased to Sh217 billion in the fourth quarter of 2022, from Sh202.9 billion the previous quarter.
This as the GDP from the sector is projected to grow to Sh241.3 billion in 2024 and Sh254.9 billion in 2025, according to the markets researcher.