Why Naivasha Special Economic Zone is a game changer for Nakuru

William Ruto, SEZ, Rigathi Gachagua

President William Ruto and Deputy President Rigathi Gachagua with Nakuru Governor Susan Kihika and other leaders at the commissioning of the Naivasha Special Economic Zone 90 MVA sub-station on January 13, 2024.

Photo credit: Boniface Mwangi | Nation Media Group

Change is afoot at the sprawling Mai Mahiu trading centre nestled in the picturesque hills of Naivasha in Nakuru County.

After decades of failing to attract major investment, Mai Mahiu is finally on the cusp of a new era of prosperity.

Taking its name from the nearby hot springs, Mai Mahiu -- Kikuyu for 'hot water' -- was a semi-arid town dominated by sand harvesters, small businesses and cattle traders who sustained the economy.

Despite being less than a two-hour drive from the capital, Nairobi, many investors avoided the town, arguing that it was not economically viable.

As a stopover for truckers travelling to western Kenya and neighbouring countries, the town has become famous for its nightlife.

Now Mai Mahiu's prospects have received a shot in the arm, thanks to the national government's nearby multi-billion dollar Naivasha Special Economic Zone (SEZ).

The project is breathing new life into the region, from the recently commissioned power plant to the Sh1 billion water project, the multi-million dollar Level Four Hospital and other key facilities that will serve the SEZ, as the drive to transform Mai Mahiu and Naivasha into major economic hubs gathers pace.

President William Ruto last week inaugurated a power plant that will serve the Naivasha Special Economic Zone and issued licences to six investors -- local and foreign companies -- who will inject Sh24 billion into the project.

Extraction of plant essences

The investors are expected to create 2,486 jobs in various sectors including bottling, EV cars, logistics, power, energy, steel mill, extraction of plant essences and a regional car auction.

“By equipping our Special Economic Zones with clean energy and essential infrastructure, we aim to attract foreign direct investments, drive industrial growth and enhance exports," said Dr Ruto during the launch.

The 90 MVA Naivasha SEZ substation will have a sub-station at Mai Mahiu, which will supply power to industries in the zone at a reduced cost.

“Kenya is now the top choice for investors, offering stability and growth. The Naivasha Special Economic Zone is set to attract investors from across the world," said President Ruto.

The six investors join five others who have expressed interest in injecting more than Sh50 billion to develop industries in the area.

The development has raised the stakes in the region as investors, locals and leaders are optimistic that the projects will boost economic growth in the region.

The economic hub has been described as a game changer that will make Naivasha a major industrial hub in Kenya and East Africa.

Some of the investors setting up shop at the Mai Mahiu-based park include Turkey's Special Economic Zone (SEZ) Limited, which is setting up a Sh91 billion business.

Motors SEZ Limited will also assemble electric vehicles at the SEZ. The government has allocated two acres to the company with an expected investment of Sh1.6 billion.

Global investment

Others include; Jumbo AAA Limited, Jafro SEZ, Turkish Industry Holdings, Sino Excellence and Eriken MFG Limited.

The global investment is expected to not only boost the country's economy, but also help Kenya gain foreign exchange advantage by exporting locally manufactured finished products to the global market.

The initiative is expected to generate foreign exchange through high technology and raw material advantages as well as leveraging on the African Continental Free Trade Area.

According to local authorities, about 2,800 people will be directly employed, which will indirectly create jobs for more than 30,000 locals.

"We are happy that the Naivasha Special Economic Zone is coming up and we are hoping a minimum of at least 10,000 direct jobs and another over 20,000 indirect jobs for locals will be created. The much-awaited economic zone will be a major boost to Nakuru and the country's economic growth," said Nakuru’s Trade and Industrialisation Executive Stephen Kuria.

The factories will export seventy per cent of their output and earn the country $350 million (Sh42 billion) in foreign exchange each year, boosting Kenya’s economy.

The SEZ Authority says it has so far signed lease agreements with investors and issued letters of offer to two others to set up industries in the zone.

Investors will pay corporate tax at 10 per cent for the first 10 years of operation, 15 per cent for the next 10 years and 30 per cent thereafter.

The government has also pledged to provide cheaper electricity tariffs to encourage investment, offered at a rate of Sh5 per unit, which will drastically reduce the cost of production.

“At least 75 per cent of the zone space has so far been occupied, and the authority seeks to accelerate the activities, to enhance operationalisation,” said a senior official at the SEZ Authority.

1,000-acre plot

The multi-billion-shilling zone was set up by the government as a special economic zone on a 1,000-acre plot of land to drive the country's industrialisation agenda.

The national and county governments have also spent more than Sh1 billion on a water project. The Nakuru County Government has funded the construction of the Sh154 million state-of-the-art hospital and is also building other infrastructure, including roads, as the economic hub takes shape.

“The county has also constructed living quarters to house healthcare workers, to ensure the facility offers a 24-hour service,” said Nakuru Governor Susan Kihika.

The Nation has also learnt that a Sh1 billion water project in Naivasha town is expected to pump at least 8 million litres of water daily to the much-anticipated special economic zone.

Residents of Longonot and Mai Mahiu, where the main water pipeline will pass, will benefit from kiosks that will provide water at subsidised rates.

"The Naivasha Special Economic Zone will be a game-changer in the region. We encourage local investors, including Small and Medium Enterprises (SMEs), to take advantage of this opportunity and apply for space at the Special Economic Zone, through the Department of Trade. The businesses at the Naivasha Special Economic Zone will enjoy cheaper geothermal power to run their industries and pay favourable taxes," Kihika told the Nation.

Some residents interviewed by the Nation are upbeat about the project.

"It will attract enormous growth in the hospitality industry, housing sector, transport sector, among others. This will be a major boost to the economy as it will open up the region to the rest of Africa,” said Dennis Kariuki, a local businessman.

In 2020, former President Uhuru Kenyatta issued a title deed for at least 50 acres of land within the Naivasha Special Economic Zone, which will be used by local investors to set up shops and other businesses next to the Naivasha Industrial Park.

Nakuru County has been luring both local and international investors to take advantage of the affordable geothermal energy at Menengai and Olkaria to set up shop in the region.