President William Ruto is keen that each county allocates some space on which should be developed special economic zones that provide basic facilities that investors require to set up manufacturing enterprises.
This is a welcome idea, though to successfully build the SEZs will require more than the Sh100 million that the President has reportedly promised each county once it is ready to start work.
To demonstrate serious intent here, a number of governors, deputies and county executives last Thursday spent time in Nairobi visiting the Tatu City Special Economic Zone in Ruiru.
They visited the impressive Twiga Logistics Centre to appreciate the operations of a fully operational firm built within an SEZ, visited the KIRDI establishment and finished the programme with a lunch at State House hosted by the President.
The time it has taken from mooting the idea, arranging the orientation tour and meeting the President to progress the plan has been very short, testimony to a refreshing agility in execution.
A number of facts should have been clear to the governors though. Putting up an SEZ requires very careful planning. From their visit, they must have confirmed that the location of a SEZ is chosen very deliberately.
Access in and out of the facility is important to allow for ease of moving raw and finished products. Well-maintained roads, parking spaces, access and space redundancies are key. General cleanliness weighs positively. Proximity to international airports could be very important if SEZs are to welcome investors producing exportable brands.
Availability of energy and backup systems is paramount, even if the cost of power in this country remains atrocious, and is likely to get to worsen once Kenya Power gets its way (as it is likely) to increase the tariff. It is alarming that the government is claiming that it did not promise cheaper power as one of its election pledges. It promised to lower the cost of production, which should drive down prices.
That aside, the important point here is that SEZs will need power – whatever the price. They need water, they need security, and they need access to manpower.
To reap fully from an SEZ investment will require careful alignment between which industries will set up shop there, especially if they are agricultural.
Twiga’s choice to locate in Ruiru was significantly due to the fact that it sought to improve logistics through which farm produce would reach most of Nairobi’s residents.
Eliminated brokers
They wanted — and have largely achieved the ambition — to supply fresh food to Nairobi markets by ensuring the route to market for those that finally sell tomatoes and onions to end users is efficient and cost-effective. On the routes they serve, they have eliminated brokers that make the lives of anyone attempting to reach the mama mbogas directly miserable.
Twiga’s ambition is vastly larger than many of those that will invest in the county SEZs, but learnings are important. Not many of them may want to build facilities as grand as the one Twiga has — among others it has Africa’s largest banana ripening facility. This can ripen one million bananas at a go but is achieving only 30 per cent capacity partly because of the challenge of aggregating and cost-effectively getting supplies from producer locations like Nyamira and Kisii counties.
Counties will find value in coordinating their investment plans to maximise opportunities. It makes little sense, for instance, for counties producing similar raw produce to set up SEZs to attract investors in similar fields. This stunts scaling and quickly leads to excess and idle capacity. We do not hear much about the regional development bloc that was set up in the first decade of devolution. These could serve as excellent coordinating mechanisms to achieve optimal utilisation of county SEZs.
Here is a chance for county investment teams to really generate interesting investment ideas, in collaboration with the team at the Kenya Investment Authority, which has developed county investment handbooks with pointers to what areas investors could possibly put their money in.
While Kenya has an impressive number of entrepreneurs, most of these have tended to shy away from manufacturing because of the high cost of doing business and because of planning on short investment time horizons.
Governors must see in SEZs opportunities to sell their products globally. Ethiopia set up special economic zones that attracted global clothing brands, creating tens of thousands of jobs. Technology companies with satellite production hubs in Asia, China and elsewhere are constantly looking for more cost destinations to set up factories. Food will remain a key area of opportunity for Africa.
These are just a few areas that present enormous opportunities for counties that approach the SEZ initiative with focus and real ambition. The pettiness we saw in the wasteful county investment forums must not come into play. BY DAILY NATION