24 February 2016

East Africa: Special Economic Zone At Mombasa to Boost Business

The Kenyan government's approval of the development of a Special Economic Zone (SEZ) in Dongo Kundu, Mombasa, expected to boost job creation and regional trade, has been welcomed by business people.

The Dongo Kundu bypass, which is part of a three-phase plan to decongest the port city of Mombasa, is set for completion in 2018.

Eng. Jean-Baptiste Gasangwa, the Private Sector Federation (PSF) resident representative in Mombasa, told The New Times on Monday that two things are taking place in Mombasa currently, including the extension of the Port of Mombasa to increase its capacity to handle 50 per cent more containers in two years' time.

"This is good news for business in the regional countries as increasing imports and exports including recently discovered oil will reach the market faster and cheaper because of less congestion as is the case with existing capacity in the port of Mombasa," he said.

The other development at the port, according to Gasangwa who has lived and worked in Mombasa for 27 years, is the establishment of the Special Economic Zone.

"For our country and the region, this also is good news indeed. To shed a clearer picture, Dubai is a known example of such a zone but this time it is coming to our door step," he added.

"Our importers will not need to go very far to buy whatever they need with expensive visa, flight and accommodation expenses. Rwandan industries can also easily establish themselves in the zone-within the East African Single Customs Territory, and transform by adding value to our exports before they are sent to overseas markets."

Rwanda uses the port of Mombasa for its imports and exports to the tune of 40 per cent, the rest passing through the Tanzanian port of Dar es Salaam.

The free-trade zone (FTZ) project will be established on a site of between 300-500 acres of land available to investors and it will host wholesale and retail trading, breaking bulk, re-packaging logistics, warehousing and handling and storage of goods.

Developed as an industrial and commercial hub with potential for the creation of jobs for the youth, the facility is expected to gain immensely from the ongoing expansion and modernisation of the port of Mombasa.

The entire Mombasa Port Area Development Project (MPARD) is expected to take 36 months and, at the end - after a three-phased construction plan - the main purpose will be to decongest Mombasa port and ensure a quicker turnaround time for freight logistics companies delivering and collecting cargo.

"Upon completion of the three phases, the Dongo Kundu bypass is expected to bring far-reaching benefits and a very positive impact to traffic flow management at the Coast," Kenya National Highways Authority (KeNHA) Board Chairman, Erastus Mwongera was quoted saying last week.

Forecasts by the government of Kenya point to a population of 27,000 workers within the SEZ. Currently, the practice at the port is that all goods are subjected to slow customs procedure. Once the FTZ is complete, however, goods on transit will face less strict customs regulations.

"There will be immense economic opportunities arising once the road is built and will spur development and ease movement within Mombasa, which has been a challenge for a while," said KeNHA Acting Director General Linus Tonui.

In building an FTZ, Kenya joins economies such as Dubai that gain much from distributing goods to other parts of the world.

Meanwhile, Kenya is this year also constructing another container terminal - projected to have a capacity of 450,000 twenty-foot equivalent units (TEUs) - in Mombasa to handle increased trade within the region. This new terminal is expected to rise to 1.2 million by 2019.

The port of Mombasa handled one million TEUs of cargo last year.

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