How old industrial hubs suffer neglect at expense of new parks

Milly Glass Works in Mombasa is considering closing shop. [Jeckonia Otieno, Standard]

Upcoming industrial parks appear to offer the best deal for the industry.

From easy access to stable and cheaper power, they easily connect to existing transport infrastructure and embody modern industrial take-off.

With some of the parks having direct lines to the railway, they fulfil the dreams of every manufacturer.

This is as the Government rallies its agencies to ensure industrial parks, many of them in their planning stages, have all the required facilities to fit global manufacturing standards and that those who shift to the facilities have it easy in a bid to resuscitate the country’s manufacturing sector.

Those operating from special economic zones will also enjoy fiscal incentives. Take the case of Northland City that is partly the reason the Eastern Bypass is being expanded.

Eastern Bypass

The Thika Superhighway’s intersection with the bypass is being redesigned and there will be provision to link the city to the Greater Eastern Bypass.

Then there are industrial parks in Naivasha, Dongo Kundu, Eldoret, and Kisumu – also in their formative stages – where the Government is planning to offer special electricity tariffs.

They will enjoy lower power rates mainly because they sit next to power producers or high voltage lines that minimise losses.

They will at the same time be linked to the Standard Gauge Railway.

There are also numerous new parks and cities that have been designated as Special Economic Zones (SEZ) that will also enjoy tax holidays.

Since President Uhuru Kenyatta signed the SEZ Act in September 2015, the Government has given the SEZ status to numerous parks coming up in different towns, in what appears to be an arbitrary mechanism that lacks a clear strategy. Initially, only Lamu, Mombasa, and Kisumu were to have SEZs, but today, the list has expanded to include Eldoret, Athi River, Naivasha, Nairobi, and Kiambu.

Operating in areas designated as special zones would mean that firms are exempted from paying taxes such as value-added tax, income tax, custom and excise duties, stamp duty and work permit quotas.

In its pursuit, however, the State could be chasing after the proverbial two birds in the bush and not thinking much about the one in hand.

There are hundreds of industries operating from old industrial areas in major towns across the country.

These firms are, however, struggling to get by owing to a huge infrastructure gap that the State has been slow to bridge. Years of underinvestment in existing infrastructure have resulted in poor roads, sewer lines that are always blocked and unstable and costly power.

Many firms have closed shop and fled from Nairobi’s Industrial Area, Thika town whose name was for decades preceded by the adjective ‘industrial’ and even Nakuru, where the manufacturing hub is a shadow of its former self.

It is a scenario that is replicated in every other major town in the country. The situation is no different in Mumias and Webuye where the collapse of the sugar and paper mills respectively has left the towns at a crossroads.

Nairobi’s Industrial Area is in a sorry state. For years now, what had been a critical cog of Kenya’s manufacturing sector and indeed, the economy, continues to suffer from poor road networks, unstable power supply and lack of working sewer systems.

This is demonstrated by the stalling of works on Enterprise Road, the artery that cuts through Kenya’s manufacturing hub that has for close to a decade been under construction. This has been a major blow to the firms that heavily rely on roads to get raw materials to their factories or goods to market.

The sorry state of Industrial Area is in contrast to upcoming cities and manufacturing hubs, with the State lining up incentives in a bid to woo investors.

These include new roads that easily merge with the existing infrastructure and connectivity to stable and even cheaper power.

The state of neglect is despite most members of the Kenya Association of Manufacturers (KAM) having their operational bases in Nairobi’s Industrial Area.

“The Industrial Area is a hub for many industries in Kenya. In fact, 75 per cent of the KAM members are based in the Industrial Area. Infrastructural development is paramount in attracting long-term, sustainable investments,” said KAM Chief Executive Phyllis Wakiaga.

“Whilst the number of firms setting up in Industrial Area has increased, the pace has been slower than anticipated. This slow rate can be attributed to poor infrastructural development, among other challenges. (For instance), Enterprise Road, in Industrial Area, which falls under Kenya Urban Roads Authority, is strategic for these industries. However, industries have been waiting for the expansion of the road for more than four years,” added Wakiaga.

“The delays in the finalisation of construction of Enterprise Road has led to increased traffic along the road, which has a spillover effect to adjacent roads such as Lunga Lunga and Likoni Road. Furthermore, the roads get flooded due to poor drainage, even on low rainfall account, which disrupts manufacturing activities and increases the cost of doing business in the area.”

Ms Wakiaga said the neglect of infrastructure is not unique to Nairobi but is a common feature in other industrial hubs, including Thika that was once the State’s blue-eyed boy of manufacturing.

“This issue is not only specific to Nairobi Industrial Area. For instance, manufacturers in Thika town and other industrial areas in the country experience the same challenges. The main cause of the delays from the Government’s side has been lack of adequate budgetary allocation and mandate overlap of the various agencies involved in road infrastructural development,” she said.

Project contract

A major manufacturer based in Industrial Area in Nairobi tells of how difficult it is to get a client to visit his firm’s premises on Lunga Lunga Road due to traffic congestion on Enterprises Road - a key artery for the hub that has been under construction for about a decade now. “We, in Industrial Area, have had a tough time over the years because of this long delay on such projects. Whilst construction of Enterprise Road dates back to 2013, the actual project contract was awarded much earlier, perhaps over 10 years plus ago,” said the manufacturer. “We struggle every day, getting caught up in traffic for long hours and losing business owing to the situation on the ground.”

The case is the same for Nairobi National Park East Gate and Mara roads that lead to the Nairobi Inland Container Depot (ICD).

Nakuru is no different. Iconic brands such as Eveready, Elliot’s Bakeries, Flamingo Bottlers, and Sam-Con Ltd - a vehicle body fabrication manufacturing firm - have unfortunately shut down their plants alongside dozens of other companies.

Some of the firms have contracted Chinese manufacturers and now import finished products to Kenya.

They cited the age-old challenges bedevilling the sector such as the high cost of power and poor infrastructure. These have seen their products easily overrun by imports.

A recent report by Knight Frank titled Africa Horizons shows that poor infrastructure is among the factors that have seen Industrial Area lose its allure.

New entrants to the manufacturing or warehousing sectors now prefer to set up in other areas.