Textile revival project in a spin, thanks to tax, energy incentives

Industrialisation Cabinet Secretary Adan Mohamed (centre) during a visit to Rivatex firm in Eldoret in the past. Twenty one companies have expressed interest in cotton manufacturing in Kenya. PHOTO | JARED NYATAYA | NATION MEDIA GROUP 

In Summary

• Former African Cotton and Textile Industry Federation director Rajeev Arora said: “You can have duty free imports for the exports, and no value added tax for local manufacturing in the EPZs.”
• Industrialisation Cabinet Secretary Aden Mohamed has hired Mr Arora to advise the ministry on reviving the sector. Mr Arora said two of the multinationals had signed up to set up shop.
• Following the extension of the African Growth and Opportunities Act (Agoa) with the US for the next 10 years, Kenya has been tipped to enjoy a boom.

By OTIATO GUGUYU
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Twenty one companies have expressed interest in cotton manufacturing in Kenya as the government targets to raise Sh100 billion in textiles and apparels by 2017.

The government will give tax incentives to 10 local and 11 multinationals, as well as reduced energy rates, to encourage them to set up shop.

Export firms will pay US cents 9/kwH, against the industry average of US cents 14/kwH, with a promise that the rate will be cut further to US cents 7/kwH in two years.

The companies will also enjoy the benefits of export processing zones (EPZs) and will require only one licence from the county and national governments.

Other incentives include 10-year tax rebates and a 20-year period to amortise capital investments.

They will also be allowed to employ more than 2 per cent expatriates. The ministry will help these employees get work permits.

The firms will also access local markets through a window to sell 20 per cent of what they export without paying duties.

Former African Cotton and Textile Industry Federation director Rajeev Arora said: “You can have duty free imports for the exports, and no value added tax for local manufacturing in the EPZs.”

Industrialisation Cabinet Secretary Aden Mohamed has hired Mr Arora to advise the ministry on reviving the sector. Mr Arora said two of the multinationals had signed up to set up shop.

Following the extension of the African Growth and Opportunities Act (Agoa) with the US for the next 10 years, Kenya has been tipped to enjoy a boom.

Meanwhile, China’s Jiangsu Lianfa firm is planning to set up a textile factory in Naivasha, worth Sh40 billion. It is set to produce textiles worth Sh153 billion ($1.5 billion).

The factory will source cheaper power from Olkaria geothermal plant.