A Look at Export Processing Zones in Kenya
- Admin
- Dec 11, 2016
- 2 min read
What are Export Processing Zones?
Export Processing Zones also known as the EPZ are manufacturing firms that produce goods for export only with a small percentage allowed within the country. Companies seek authorization from the Ministry of Industry and Trade in Kenya to do this. The EPZ companies fall under the umbrella body of Export Processing Zones Authority (EPZA) a parastatal under the Ministry of Industry and Trade. There are several different types of companies under this agreement. Companies ranging from services providers to agricultural firms.
Employees
The EPZ firms hold quite a large number of staff. Approximated to 10,000. These people either work in shifts or full day working hours. Some companies provide in-house daycare facilities children of employees.
Investors and Taxation
The investors are from the Western countries, Asia, Middle East and the European Union. They are on a ten years corporate tax holiday. The companies are always exempted from VAT but have to produce their tax exemption letters whenever they buy the goods and services. All products leaving the Export Processing Zones to local markets should have tax paid in full. Other commodities destined to other countries must be approved by Kenya Revenue Authority as for Export Only.
Challenges
Some of these firms have faced several issues in recent times. There have been demonstrations by employees who claim to not have been paid full salaries.. Other factors that have affected the firms are the high cost of power and unreliable supply. There have been to some level unreliable supply of the raw materials where investors have had to import raw materials. As a result, some firms have been shut down and moved to countries where all these raw materials and services are readily available.
Other companies have changed management, but this has not solved the problem either. The cost of labour has also affected some businesses. Poor quality and low production is also a factor that has led to these firms being shut down.
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