Established in 1990 through the Export Processing Zone Act, the Export Processing Zones Authority of Kenya (EPZA) promotes and facilitates export-oriented investment and develops an enabling environment for such.

EPZA initiates, promotes and provides attractive investment opportunities for export-oriented business ventures in Kenya. The Export Processing Zones (EPZs) are strategically located across the country and offer a compelling case for companies to contemplate Kenya as a fiscally sensible destination for assured returns on investments.

The EPZs scheme offers a range of attractive incentives to ensure low cost, smooth and fast set up operations for investors. A one-stop-shop service at the EPZA facilitates the investment process.

As a catalyst for investment and economic growth, the EPZA has conceived programmes and policies that provide an enabling environment for investors in order to take advantage of the numerous investment opportunities in Kenya.

Tax benefits include:

• 10 year corporation tax holiday and 25% tax thereafter
• 10 year withholding tax holiday
• Stamp duty exemption
• 100% investment deduction on initial investment applied over 20 years
• Perpetual duty and VAT exemption on company input including machinery, spare parts , construction material, raw materials, office equipment, packaging, heavy diesel and fuel oil, excluding other petroleum based fuel, motor vehicles that are from outside the zone and motor vehicle spare parts.

Where to invest

The EPZA welcomes all export-oriented investments but is keen to develop projects and attract companies in the areas of food processing, fresh produce, packaging for shelf ready products, wooden products, leather and animal based products, jewellery and gemstones, pharmaceutical products and herbal medicines, medicinal supplies, cosmetic and personal care products.

Other investment areas include packaging products, textiles, commercial handicrafts, transport equipment, electronic and electrical goods, building materials and furnishings, data processing, audio-visual services and consultancy, and professional services.

The ICT sector is one of the key target areas for SMEs desiring to set up under the EPZA's Export Business Accelerator (Incubator) program. Recognising the impact of the ICT sector to the economy and the realisation of Vision 2030, the authority established a partnership with M:Lab East Africa Limited, a business incubator and testing facility for mobile applications and related software applications. The Business Accelerator program aims to grow SME exporters operating in EPZs and seeks to nurture SME exporters into medium and large exporting enterprises through alleviation of operational constraints.

Revised strategic plan

The EPZ concept has evolved from just promoting manufacturing for export to encompass more economic activities under the Special Economic Zones (SEZs). In 2009, the EPZA published a five-year strategic plan that will transform the EPZs to SEZs. The process has begun, with the Special Economic Zones Bill now awaiting enactment in parliament.

The SEZs will be knowledge-based parks that produce innovative ideas, create jobs and grow the economy. Another benefit expected from the SEZs is taking further advantage of opportunities under the Africa Growth and Opportunity Act (AGOA), which gives certain 6,500 products duty free access to the US market. AGOA has particularly benefited the textile sector in Kenya. Statistics released by EPZA indicate that exports of apparels to the U.S increased by 16% from Ksh.16.1m recorded in the year 2010 to Ksh.18.7m in 2011. 

Doing business

The cost of doing business is a big challenge for investors operating in EPZs particularly the high cost of electricity, which is a key input in industrial production. Consequently, the additional cost of sourcing alternative energy means final products are expensive and uncompetitive regionally and internationally.

However, the government recognises this challenge and is investing in new power generation projects, which will over time increase supply and reduce average costs. To this end, increased emphasis will and is being given to geothermal and other renewable energies.

Critical to the success of the zones is the development of infrastructure to enable trade and investment. Kenya’s infrastructure, particularly roads and transport networks, are currently being expanded and revamped to cater for growth in the economy. The 2012/2013 financial budget made important allocations to infrastructure including a significant increase for the energy sector, which received Kshs.79.9bn up from Ksh.57.5bn in 2011/2012 budget.

Contact details for information on investing in Kenya's export processing zones.

Margaret Waithaka, manager of the New Investments Department at the EPZA.
Email: info@epzakenya.com
Tel: +254-45-6626421/6
Website: www.epzakenya.com