Kenya's Dongo Kundu Naivasha Tatu City SEZs Investment Update

• Kenya's manufacturing sector contribution to GDP remains below 10% despite efforts to create Special Economic Zones (SEZs).
• Dongo Kundu, Naivasha, and Tatu City SEZs have seen slow commercial development due to delays in land acquisition, compensation, and financing constraints.
• Recent developments suggest progress is being made at Dongo Kundu with the government signing lease agreements with Afreximbank for $1 billion industrial infrastructure funding.

The success or failure of Kenya's flagship SEZs will have significant implications for the country's manufacturing sector and regional trade agreements.

Kenya has struggled to increase its manufacturing sector contribution to GDP, despite efforts to create Special Economic Zones (SEZs) that offer tax incentives and simplified regulation. The country's flagship SEZs - Dongo Kundu, Naivasha, and Tatu City - have seen slow commercial development, with delays in land acquisition, compensation, and financing constraints identified as key factors. However, recent developments suggest progress is being made at Dongo Kundu, with the government signing lease agreements with Afreximbank to mobilize $1 billion for industrial infrastructure. Named investments include a gas terminal and an oil refinery, while 97 land applications have been received by the Kenya Ports Authority covering nearly 7,000 acres.

The Special Economic Zones Act came into force nearly a decade ago, establishing SEZs as purpose-built industrial enclaves to attract export-oriented manufacturers and logistics firms. The National Investment Strategy 2024-2028 aims to increase realized investment in SEZs to $1.5 billion by 2028, creating 26,000 jobs. However, current figures show a significant gap between approved investments and fully operational industrial activity, with only $960.7 million invested in SEZs as of early 2024, creating 4,392 jobs. The government has also invested Sh3 billion in additional SEZ infrastructure at various locations.

The success or failure of Kenya's flagship SEZs will have significant implications for the country's manufacturing sector and regional trade agreements. If these zones fail to deliver investment, factories, and jobs as promised, it could undermine investor confidence and hinder industrialization efforts. On the other hand, successful implementation of SEZs could position Kenya as a regional export powerhouse, driving economic growth and job creation.

Lawyers should watch for updates on the implementation of Special Economic Zones (SEZs) in Kenya, particularly at Dongo Kundu, Naivasha, and Tatu City, as these developments may impact manufacturing investments, job creation, and regional trade agreements.

Source: Original reporting via Inside Kenya's SEZ Strategy