TRALAC - Trade Law Centre

East Africa: EPZ investors push for a larger local market

Wednesday, 11 November 2009

Source: Daily Nation (Kenya)

With the expansion of the East African market taking shape at the end of the month when the Common Market Protocol is signed, the Export Processing Zones Authority (EPZA) is pushing for investors in the sector to be allowed to sell 70 per cent of their products locally.

Currently EPZs are allowed to dispose only 20 per cent of their products in the local market. After the adoption of the common market protocol, this means that all the five countries will constitute a local market.

"The region has a combined population of over 200 million people which means that if EPZs are allowed to sell 70 per cent in the region they will enjoy a wider market," EPZA chairman Mathenge Wanderi said on Wednesday.

He said although the products will have to be subjected to normal taxes and a 2.5 per cent surcharge, this is not expected to dampen the benefits of a larger market since investors will now move bigger volumes.

The chairman was speaking to EPZ investors at the Mombasa beach hotel during the third EPZA investors forum.

The authority was further pursuing efforts to market EPZs to other countries so as not to rely on the African Growth and Opportunity Act (AGOA) which allows preferential exports to American markets, such as Europe, Asia and China, he said.

"We are targeting the fast growing ICT (Information and Communication Technology) sector, electronics and other fast growing sectors of the economy and we are seeking investors who can come up with industrial ICTs," Mr Wanderi said, adding that already, a team of marketers was in Malaysia targeting the electronics.

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Trade minister Mr Amos Kimunya who was represented at the forum by a director in the ministry Mr Leonard Ngaithe said increase in domestic expenditure by the EPZ program from Sh500 million in 1998 to Sh11.3 billion last year was a clear indication of the important role the sector plays in the development of the country's economy.

"I would like to impress on the EPZ investors to pursue strategies of improving on efficiency in production in order to increase the scope of operations and enhance productivity which will help counter the challenge posed by the high cost of production," Mr Kimunya said.

The government is in the process of transforming the EPZs into Special Economic Zones (SEZ) whose draft policy Wednesday's forum was expected to discuss and make suggestions on the best operational model to be adopted.



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