Kenya seeks bids in plans to create free trading zone

 

Cargo awaits collection at the Mombasa port. The government plans to build a Free Trade Zone in the port to increase the volume of regional business. FILE 

By George Omondi

In Summary

• In building an FTZ, Kenya is taken the path already trodden by regions such as Dubai whose desert economy rides on goods distributed to other parts of the world.
• An FTZ creates a haven where goods on transit face less strict customs regulations.

Kenya has pushed its campaign to deepen trade with neighbours one step further with the floating of tenders for feasibility study on the planned Free Trade Zone (FTZ) in Mombasa.

Industrialisation and Enterprise Development ministry on Friday invited consultants to submit bids by end of next month, marking the start of an exercise that will pave way for the construction of a FTZ on a 1,000-acre piece of land.

“The intention is to set up a zone that is accessible from Kilindini seaport, the Mombasa-Kisumu railway line, Mombasa Nairobi highway and the Moi International Airport,” Industrialisation PS Wilson Songa said in a public announcement.

Unlike the current practice at Mombasa port where all goods are subjected to slow customs procedure, an FTZ creates a haven where goods on transit face less strict customs regulations.

In the case of Mombasa, the area will be reserved for re-exports to the 400 million-people Common Market for Eastern and Southern African (Comesa), allowing for transshipment of cargo without inspection or paying customs duty.

Dr Songa said the FTZ would make Kenya a preferred distribution hub in the continent, boosting its handling re-exports such as electronics, motor vehicles and machinery destined to other countries in the region.

The Comesa bloc is already the single-largest export destination for Kenya’s goods accounting for 35 per cent of Sh517.9 billion worth of goods exported last year.

In building an FTZ, Kenya is taken the path already trodden by regions such as Dubai whose desert economy rides on goods distributed to other parts of the world.

(Read: Malaysia to invest in Mombasa free port project, says governor)

“The planned FTZ will elevate the Port of Mombasa from a pure centre for transport to become more directly involved in added value activities such as cargo processing and logistics,” the Standard Investment Bank said in its update last week.

The push for free trade zone comes hot on the heels of recent administrative and regulatory changes ordered by President Uhuru Kenyatta to boost flow of goods through Mombasa port.

In the changes, President Kenyatta ordered Commissioner for Customs and other agencies involved in cargo clearance to work under the managing director of Kenya Ports Authority (KPA).

The police, weighbridges and Kenya National Highways Authority were also directed to ensure goods cleared at the port moved faster on the country’s trans-national roads.

(Read: Uhuru moves to enhance efficiency at Mombasa port)

In a statement released after its meeting last week, the cabinet noted that the presidential directive had already increased cargo cleared in the first three weeks of July to 200,000 tonnes, up from 160,000 tonnes in the whole of June.