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Kenya: Tragedy in the Making
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The Nation (Nairobi)
EDITORIAL
21 May 2008
Posted to the web 21 May 2008
Nairobi
On Monday, thousands of workers at the Athi River-based Export Processing Zone rioted, seeking arrears, and complaining of poor pay. It's not the first time this has happened.
When in 1990 the World Bank doled out Sh30 million to start the ventures, it was envisaged the EPZs would anchor Kenya's industrialisation. Then in 2001, the American Growth and Opportunity Act (Agoa) gave the zones a shot in the arm when it allowed Kenya duty-free access to the US market.
Unfortunately, this came at the same time as the end of the multi-fibre agreement (MFA), which removed restrictions on Chinese textile exports.
The result has been dramatic: most of the firms, which concentrate on textile products have slowly closed down. With Kenya's fabrics remaining uncompetitive, even the tax breaks and relatively good infrastructure around Athi River won't help too much.
A major casualty has been the workers who, even during the best of times, were suffering. Things have taken a turn for the worse with the post-election crisis which disrupted the export market.
Investors came to these zones because of cheap labour, which is no longer available. Kenya cannot, and should not pretend to, compete with Asian manufacturers.
It should, instead, go for the next best option of converting the light industry zones into ICT cities. The other option would be to subsidise the EPZs, but that can only be at the expense of other sectors.
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We need to rethink the issue radically so as not to make unemployment worse as more manufacturers move elsewhere.
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