TRALAC - Trade Law Centre

Kenya: Riddle of jobs boom in export zones amid gloom in economy

Tuesday, 20 August 2019 Published: | Dominic Omondi

Source: Standard Media (Kenya)

If your perception of Kenya’s labour market is that of a glass half empty, you could blame it on recent media headlines.

But if you want to see it as a glass half full, then you might want to walk up to the offices of Export Processing Zones Authority (EPZA) and have a little chat with one of the officials.

Even as the country’s major industries continue to shed jobs, the EPZs seem to be creating more employment opportunities.

True, some EPZ firms, like many others in a slow economy, might also be slashing workers from their payrolls, but the net effect for most of them has been job creation.At least according to EPZA Chairman Paul Gicheru.

Mr Gicheru noted that in the last six months alone, 2,600 jobs have been created by EPZs.January 2020 will see a Sri Lankan apparel and textile manufacturer Mas Group increase the numbers to over 5,000.“When Mas Group opens in January, there will be an additional 3,100 jobs,” said Gicheru, noting that the Sri Lankan firm will be coming with two other companies with an average of 600 people.

Another EPZ company that will fully commence operations in 2020 is pharmaceutical firm B Braun, which could push the job numbers even higher. Textile and apparel, leather and agro-processing are projected to create over 300,000 new jobs by 2022 and have a significant representation in the EPZs.

Although the country lags behind agro-processing in terms of the number of firms, textile and apparel firms under EPZ employ the biggest number of Kenyans and contribute almost 80 per cent of the export earnings.

One of the most lucrative markets for Kenya’s garments is the US. Through the African Growth and Opportunity Act (Agoa) Kenya has been able to export most of its textiles.

Agoa was approved by the US Congress in 2000 to assist the economies of sub-Saharan Africa and improve economic relations with America.

In 2018, EPZ companies exported goods worth Sh72 billion, a good chunk of which was textiles.

The value of the exports under Agoa increased significantly by 25.8 per cent from Sh33.1 billion in 2017 to Sh41.6 billion in 2018, official data shows. “We have not been meeting our target with Agoa. Do you know that most nurses in the US wear work garments made in Kenya?” posed Gicheru.

Although Petroleum products have continued to account for the largest portion of Agoa exports to the US from Africa, clothes such as those worn by US nurses have not.

“The volume of Agoa trade remains modest. In the Agoa clothing sector, for example, we get about $1 billion (Sh100 billion) per year from Africa,” Constance Hamilton, assistant US trade representative for Africa, an Agoa Forum in Abidjan, Ivory Coast recently.

This amounted to only one per cent of all US clothing imports. Under the textile sector, the State targets 100,000 new jobs - and another half a million in cotton growing.To achieve this, the State has lined up a raft of policies aimed at incentivising the sector.

This regeneration will begin at the cotton plantation level, where farmers have struggled to supply ginneries with quality cotton lint.

To this end, 200,000 acres of land will be put under a new type of disease-resistant cotton seed.Not only will it increase earnings for farmers but also ensure that machines in the ginneries keep rolling.

Conventional varieties

The hybrids and Bacillus Thuringiensis (Bt) cotton increase production yield thrice compared to present conventional varieties.Up to the value chain, the State will oversee the building of five million industrial sheds.

“Successful implementation of these measures is expected to increase revenue from the textile industry from $350 million (Sh35 billion) to $2 billion (Sh200 billion),” said the National Treasury in its Budget Policy Statement, 2019.

“We are ready for the task at hand. We started by streamlining the zones to revive the confidence that had been lost,” said Gicheru.

He said the EPZ programme will up the manufacturing sector’s output to Gross Domestic Product from nine per cent last year to 15 per cent by 2022 under the Big Four agenda.

Heads have already rolled at the authority, with some senior managers kicked out in a scandal in which Sh1.3 billion tender was allegedly inflated.

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