Banks ink Sh107b deal to fund Kilifi's special economic zone

 Vipingo Special Economic Zone is a 2,000-acre industrial hub designed to lower costs, streamline operations, and maximize profitability. [Courtesy]

KCB Group and the African Export-Import Bank (Afreximbank) have signed an $800 million (Sh107 billion) joint funding agreement to operationalize the Vipingo Special Economic Zone (SEZ), a mega project aimed at positioning the country as a manufacturing and export hub. 

Under a memorandum of understanding announced on Thursday, the pan-African lender will provide an initial $500 million (Sh67 billion) while Kenya's largest bank by assets will contribute $300 million (Sh40.2 billion) in financial and trade facilitation support to investors setting up operations in the zone located in Kilifi County. 

The deal, signed on Tuesday during the Arise Integrated Industrial Platforms (Arise IIP) - Kenya Investment Forum 2025, is designed to provide competitive financing for manufacturing, agro-processing, and logistics enterprises within the SEZ. 

"This agreement marks a significant step in our mission to catalyse sustainable industrial growth in Kenya and across the region," said KCB Group chief executive Paul Russo.

He said the partnership would leverage "economies of scale, shared infrastructure and access to global markets" to help export-oriented industries thrive. 

The funding is part of a broader push to develop industrial parks under Kenya's Vision 2030 economic blueprint, even as the government contends with high public debt that has prompted cautionary notes from ratings agencies like Fitch and Moody's. 

"Special economic zones are powerful engines for export growth, and economic diversification," said Afreximbank managing director for export development Oluranti Doherty. 

"This financing framework will not only enable enterprises to scale but also support the creation of sustainable supply chains that uplift local communities." [Brian Ngugi]

The Vipingo SEZ is managed by ARISE IIP, a pan-African infrastructure developer. The zone is a key project under Kenya's Special Economic Zones Authority (SEZA), intended to attract foreign direct investment, create jobs, and boost exports.

The $500 million from Afreximbank falls under a broader $3 billion country-specific programme for Kenya signed in 2023, which also supports the development of the Naivasha and Dongo Kundu industrial parks. The bank has already disbursed $40 million (Sh5.3 billion) for the zone's infrastructure development.