1KENYAAGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

Margaret WaithakaExport Processing Zone Authority

AFRICA GROWTH AND OPPORTUNITY ACT (AGOA) AND AFRICA AS A SOURCING AND

INVESTMENT DESTINATION

2KENYA

INTRODUCTION TO KENYA (1)

AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

• Centrally located• Regional Hub• Globally

connected• 4 weekly direct

flights (KQ) to Guangzhou

3KENYA

INTRODUCTION TO KENYA (2)

AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

Political Demographic

Democracy with New Constitution (2010)

Population 43 million

Jubilee Govt. of President Uhuru Kenyatta since 2013

Rapidly urbanizing, 2.7% annual pop. growth rate

Two levels of Govt. – national + 47 county governments

English as official language

Politically stable – elections every 5 years, only 4 Presidents in 51 years.

Sustained investment in education, literate population

Vision 2030 Economic Blue Print 325,560 students in universities

4KENYA

INTRODUCTION TO KENYA (3)

AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

Economic Indicator

GDP ( US$ million, 2013) 55,243

GDP Growth rate (2013) 5.7 %

Inflation Rate (2013) 5.7%

Total Exports ($ million, 2013)

5,834

Globally 7 out of 10 fastest growing economies are in Africa.

5KENYA

KENYA-CHINA RELATIONS• China fourth to open embassy in Kenya after

Independence • His Excellency, President Uhuru Kenyatta visited

China in 2013, held talks with His Excellency Xi Jingping and signed deals worth US$ 5 billion

• Chinese Premier, Mr Li Keqiang, visited Kenya in 2014. 17 multi-billion shilling infrastructure deals signed

• Major infrastructure projects in Kenya executed by Chinese companies – Lamu Port Project, Airport Expansion, Standard Gauge Railway, Major highways

AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

6KENYA

KENYA’s ECONOMY

AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

25.3%

1.1%

8.9%

1.4%4.4%

10.7%1.5%9.1%

4.8%

4.1%

6.7%

6.7%

15.3%

Composition of Kenya's GDP % 2013

Agriculture

Other Primary activities

Manufacturing

Electricity and Water Supply

Construction

Wholesale/retail trade, repairs

Hotels/Restaurants

Transport/Communication

Financial Intermediation

Real Estate, Rental and business services

Public Admin and Defence

Education

Other activities

7

Africa’s Apparel Sector exports to USA under AGOA (2014) US $ million

AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

KENYA

LESOTHO

MAURITIUS

SWAZILAND

MADAGASCAR

TANZANIA

ETHIOPIA

0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0

KENYA – LEADING SSA EXPORTER TO USA (US$ 379 million)

1AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

KENYA TEXTILE ADVANTAGE (1)- COST EFFECTIVE LABOUR

CATEGORY OF WORKER CITIES (US$ PER MONTH)

RURAL TOWNS (US$ PER MONTH)

Machinist 150 92

Machine assistant 115 58

• Workforce with good English language and Mathematics skills• 87 % literacy levels and 100% primary school enrollment• Good work ethic, adaptable, trainable• Government supported skills training for clothing industry• 30 universities and over 100 vocational training institutions around

country

1AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

KENYA TEXTILE ADVANTAGE (2)- TAX BENEFITS TO INCREASE PROFITS

• 10- year Corporate Tax holiday and 25% corporate tax for next decade

• 10 year Withholding Tax holiday for payments to non-residents e.g. dividends, license fees, consultancy charges

• Exemption from Import Duty, Excise Duties and Value Added Tax on machinery, building materials, raw materials, inputs, contracts, supplies and services

1AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

KENYA TEXTILE ADVANTAGE (3)- MARKET ACCESS AND SPEEDY HANDLING

• Single License Issued by EPZ Authority• Accelerated approvals• Fast Track Import/export facilitation at

Port and inland• Customs, Immigration and Utility

Facilitation• Duty Free Access to US Market under

African Growth and Opportunity Act for 6,000 products including clothing and textiles (can use non-African fabric and stitch in Kenya)

• Duty free access to European Union market under Economic Partnership Agreement (can use non-African fabric and stitch in Kenya)

• Preferential duty on sales to COMESA member states

1AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

KENYA TEXTILE ADVANTAGE (4)- COMPETITIVE INFRASTRUCTURE & ENERGY

• Lower electricity cost for textile, apparel and leather industry (US $ 0.09 per Kilo Watt Hour)

• Serviced land with water, electricity, sewer and roads in EPZs

• Land rent US$ 5,000 per hectare (10,000 sq meters) per year or pay once at US$ 100,000

• Up to 50 year leases on land• Ready factory buildings, warehouses

and office of many sizes (600 sq m to 3,000 sq m) for lease

• Rental US$ 25-35 per sq m per year for buildings

• Cluster of support services and accessories – buying houses, zips, washing plants, chemicals

1AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

KENYA TEXTILE ADVANTAGE (5)- SUMMARY

Politically stable strong economy

Top exporter in SSA to US market under AGOA

Preferential market access arrangements

Differentiated wages depending on location

Government focus

Attractive incentives

Green channel at ports

Lower power costs

Well established textile and apparel sector

Highly productive educated labour

1AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

KENYA TEXTILE ADVANTAGE (6)- INVESTMENT OPPORTUNITIES

TO MEET INCREASING DEMAND AND PROVIDE JUST IN TIME INPUTS, INVEST IN:• Textile Yarn units to produce Man Made

Fibre and Cotton Yarns and threads• Textile Mill investment to product knit

and woven fabric to meet demand of apparel exporter

• Accessory production plants to supply buttons, chemicals, zips and labels for apparel sector

TO EXPAND OUR EXPORTS OF FINISHED GARMENTS, INVEST IN:• Apparel stitching plants to export to

USA and EU as well as regional COMESA market

• Buying houses

1AGOA and Africa as a Sourcing and Investment Destination. EPZA Kenya - InterTextile Shanghai Apparel Fabrics 19 March 2015

KENYA TEXTILE ADVANTAGE (7)- OUR CONTACTS:

Chief ExecutiveExport Processing Zones AuthorityAthi River EPZ, Off Namanga Road

P.O. Box 50563 - 00200 Nairobi, Kenya

Tel: +254-45-6621000, Email: info@epzakenya.com,

Website: www.epzakenya.com

THANK YOU!