Kisumu’s dream on ice as Dongo Kundu, Naivasha special economic zones advance

Residents of Kisumu may have to wait a little longer for the promised Miwani Special Economic Zone after the government failed to allocate funds for the project.

The project also remains in limbo due to the lack of proper policy guidelines for implementation even after a parcel of land was provided for the scheme, which seeks to transform the region’s economy and provide jobs for locals.

Once it is established, Kisumu’s SEZs will join the Naivasha industrial park in Nakuru County and Dongo Kundu in the Coast region, which the national government hopes will spur local industrial activities.

However, in the national budget for the 2021/22 financial year, only Sh350 million was allocated for the SEZ textile park in Naivasha, Kenanie leather industrial park, and the Athi River textile hub.

Another Sh8.3 billion has been set aside for Dongo Kundu while no allocation was made for the Kisumu zone.

The Kisumu County government has, however, set aside Sh10 million for building SEZ offices in the 2021/22 financial year budget.

During President Uhuru Kenyatta’s last tour to the region in June this year, he was expected to break ground for the Miwani zone.

But Kisumu Deputy Governor Mathews Owili explained that the President had a tight schedule in the region and did not find time to commission the project.

“The zone provides for a two-way benefit of the Kisumu port and Mombasa. We are hoping it is established as soon as possible so that it is able to transport goods produced because of a robust manufacturing and industrial centre in Miwani,” Dr Owili said.

Dr Owili added that Kisumu is at a vantage point because it has road, rail and water transportation. Coupled with the industrial park and Kisumu International Airport, he believes the region will be a net exporter of many products.

He said there are investors who want to set up factories manufacturing floor tiles, cement, pharmaceuticals and sugar as skilled locals are untapped.

Despite the lack of funds, Governor Anyang’ Nyong’o’s administration has crafted a policy setting the stage for engagements with potential investors already lined up to pump funds into the much-awaited SEZ.

The Kisumu SEZ draft policy has set in motion plans aimed at boosting the economic and industrial development of the county and generating massive employment and business opportunities for Kisumu and neighbouring counties.

Critical success factors

In the 10-page draft policy developed by the county government and Brimark consulting company, Finance and Economic Planning executive George Okongo said Kisumu is adopting flexibility in land use and avoiding rigid sector-specific constraints.

He said they have studied the evolution of economic zones globally and their critical success factors, and that the county will use the lessons carefully to emerge as an industrial and economic hub.

“Our policy choice is to allow up to 20 percent of the goods coming from the Kisumu SEZ to be sold locally into the Customs Territory without paying import duty. The opportunity cost of this concession is the foreign exchange saved that would have been used to import similar goods,” Mr Okongo said.

Business environments, he said, are usually dynamic and many SEZ investors are plagued by economic slowdowns, poor market response, lack of demand for space, change in fiscal incentives and all manner of other challenges, including the impact of Covid-19.

In the policy, Kisumu will also request the national government to provide direct air links to Kisumu International Airport to facilitate the export of goods from the zone.

The Miwani industrial park intends to develop and implement an efficient and effective one-stop-shop system.

To ensure cost-effectiveness to Kisumu investors, the policy indicates that raw materials, services provided and labour supplied by local organisations and employees will be paid for in Kenya shillings and not foreign exchange.

Kisumu SEZ developers will be allowed to source external funding and borrowing for the zone’s infrastructure or to opt for joint ventures and public-private partnership funding.

There is also the Kisumu County SEZ Authority Bill, which once passed, will lead to the establishment of a corporate body that will perform functions such as promoting and marketing the zone among investors.

It will also act as a one-stop centre through which the zone enterprises can channel all their applications for permits and facilities not handled directly by the national authority.

The authority will also enforce within the zone compliance with customs procedures and other requirements for preventing the unauthorised use of designated special economic zones and enterprises.

A board will manage the authority and it will consist of a chairperson appointed from among the independent members of the board, a CEO of the national authority and the deputy governor, among others.

There will also be the Kisumu County SEZ summit, which will be the apex body for the zone.

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