Kenya has renewed the push to increase the quantity of products that manufacturers operating in Export Processing Zones sell within the region.

At a meeting of East African Community (EAC) ministers for Finance and Trade, the country called for the region’s law to be amended to allow firms in EPZs to sell all their products in the domestic markets.

Currently, companies are restricted to off-loading 20 per cent of their annual production to the EAC markets.

This proposal was based on a study carried out last year indicating that 26 EPZ companies had withdrawn their investments from Kenya between 2010 and 2012, leading to a loss of about Sh40 billion in investments.

“In this regard, Kenya recommends (the Sectoral Council on Trade, Industry, Finance and Investment) to consider enhancing domestic market access thresholds for EPZ firms in the EAC from the current 20 per cent to 100 per cent of annual production subject to payment of all taxes, duties and levies,” reads the report prepared following the meeting in Arusha, last week.

“We have seen growth in the number of firms setting up increase even as the 26 companies withdrew after they lost some of their immediate markets,” said EPZ Authority chief executive Cyrille Nabutola.

KENYA STANDS ALONE

Kenya stands alone with Rwanda, Uganda, Tanzania and Burundi opposing the idea of raising the domestic sales limit. The countries argue that EPZ companies are inherently export-driven. If they wish to target markets within the community, then they ought to shift to Special Economic Zones (SEZs).

Kenya first proposed raising the limit of EPZ products that can be sold within the regional trade bloc in 2011, a year after the Customs Union Protocol came into force.

Prior to its adoption, the 20 per cent limit applied only to countries within which the EPZ companies were operating. However, the Customs Union changed the definition of domestic market to incorporate all the five EAC partner states.

The Kenya Association of Manufacturers has opposed the proposal to raise the domestic sales limit, arguing that it will be detrimental to local industries.

The sectoral council has directed the EAC secretariat to recommend an appropriate threshold for the amount of EPZ products that should be sold within the community.

Source: Daily Nation

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.