CDongo Kundu by-pass construction is underway following the government’s reaffirmation of its commitment to fully implement port projects in cooperation with the Japan International Cooperation Agency (JICA) by Kenya Ports Authority (KPA) Managing Director Captain William Ruto. This promise was made by the KPA MD during a meeting with a JICA team at KPA Headquarters regarding the advancement of the Dondo Kundu Special Economic Zone development, which JICA is funding.
Leading JICA’s delegation was senior vice president Ando Naoki, who also pledged that the two countries will keep advancing economic cooperation and bilateral relations. The Dongo Kundu Special Economic Zone (SEZ) is one of the components of the Mombasa Port Development Project (MPDP), which is expected to spur related economic activities within the region and transform Mombasa into a regional logistics and manufacturing hub.
The SEZ seeks to expand the capacity of Mombasa Port and enhance logistics along the Northern Economic Corridor. The port serves Uganda, Rwanda, Burundi, the Democratic Republic of Congo (DRC), South Sudan, Somalia, southern Ethiopia, and northern Tanzania.
KPA awarded the SEZ Civil and Building Works tender to Toa Corporation early this year. In a post published on its website, Toa said the construction is expected to be completed in 1,156 days (approximately 38 months) and the contract amount is around 33.5 billion yen.
“This project is funded by the Japanese ODA loan from the JICA and will conduct port construction related to the Mombasa Special Economic Zone Development Project, which is in the Dongo Kundu area on the southern coast of the Port of Mombasa. Also, this project will utilize the STEP (Special Terms for Economic Partnership) as one of the ODA schemes, and the jacket-type pier construction method will be used as the Japanese superior technology,” the JICA statement reads in part.
The government of Kenya has formulated a long-term development plan (Kenya Vision 2030) aiming to become a middle-income country by 2030 and has identified the development of a SEZ as one of the priority projects to achieve this goal,” said Toa’s statement, adding that the Port of Mombasa is the largest trading port in East Africa and has played an important role as the starting point of the Northern Economic Corridor.
“Toa will consistently carry out the construction work by utilizing its specialized technologies and decades of expertise to complete the project. In Kenya, there are various demands for infrastructure development in line with economic growth and development, and we will continuously contribute to the further development of Kenya and other African countries by participating in many projects in the future.’
The jacket-type pier construction method is one in which a factory-made steel jacket is welded together to steel pipe piles that are driven into the sea in advance. Compared to other vertical pile methods, this method is characterized by earthquake resistance due to its large horizontal rigidity and economic efficiency because of the reduced number of piles. Also, since it is factory-made, it ensures stable quality and reliability, according to Toa.
The SEZ is strategically located near the port, Mombasa Southern Bypass, Standard Gauge Railway (SGR), and Moi International Airport. Already, several logistics infrastructure projects and facilities have been completed. Dongo Kundu has been subdivided to accommodate a freeport area, road network, water distribution center, enterprise area, industrial parks, and free trade zone. The Free Port, which will be connected to the sea through a road network, will have several berths for general cargo, vehicles, and bulk grain handling facilities.
As a duty-free area with other tax-friendly measures, the project has generated immense enthusiasm from investors who have already expressed interest in its progress. Some of the fiscal incentives of SEZs include a lower corporate income tax of 10 percent for the first 10 years, 15 percent for the next 10 years, and 30 percent thereafter.
The establishment of the SEZ will transform several business models and translate to lower costs of goods and services for Kenyans. With vehicle assembly units at SEZ, the cost of cars will drop significantly because freight will not be a cost component, while there will be flexibility in applying the 8-year-old import rule for used vehicles. Vehicle dealers will have the opportunity to import them as parts for local assembly, which will create jobs for Kenyans.
The textile and apparel industry, through the US African Growth and Opportunity Act (AGOA), will get a huge boost. Kenya’s textile and apparel sector has recorded major growth, with monthly exports hitting Sh4.5 billion, or Sh150 million per day, in the last year.
The sector also experienced steady growth in capital investment, with a 7.2 percent increase from 2018 to 2022, in which 36 firms with a capital investment of Sh24.88 billion employed 66,260 people and generated exports worth Sh54.12 billion. Since most of the materials for making garments are imported, it will be easier to make clothes at SEZ for re-export.
The SEZ will boost the value addition of agricultural products such as coffee and tea before export. Also, oil dealers who extract several products from crude oil can ship the consignment and make several products at the SEZ for local and regional markets. This will translate into more ships calling at the port, which will boost KPA’s revenues.
The Dongo Kundu SEZ has the potential to transform the region’s economic dynamics since it connects the Indian Ocean with the rest of Africa, stimulates regional investments, revitalizes economic activities, and creates thousands of jobs.
With an ideal location for regional Pan-African operations—an area dedicated to the Africa Continental Free Trade Area (AfCFTA)—the port will provide access to regional markets and provide a catalyst for local private sector development.
This article was published by Githua Kihara, an editorial consultant for FEAFFA’s Freight Logistics Magazine. For any inquiries, please contact us via email at editorial@feaffa.com or freightlogistics@feaffa.com, or reach out to Andrew Onionga directly at onionga@feaffa.com / +254733780240.
