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Dongo Kundu ring road to open up region, grow trade

In the second installation of a three-part series, business writer JAMES MOMANYI looks at the benefits of Mombasa Southern bypass to the economy and Coast’s traffic flow

In August this year, the government secured a Sh27.3 billion from Japan to construct an industrial and commercial hub in Dongo Kundu, Mombasa. Months later, the 17.5 kilometre Dongo Kundu bypass, which starts from Miritini and aims to link Mombasa mainland west to mainland south without passing through the island, is taking shape.

First part of the bypass will be a 10.4km four-lane expressway starting at Mombasa Road interchange at Miritini to Mwache and Kipevu Link Road. The section will also have a link road connecting Moi International Airport, the Standard Gauge Railway (SGR) Freight Terminal and Mombasa Port. The Sh11.52 billion tender for this section has already been issued.

Second section will be 8.96km four-lane road from Mwache to Dongo Kundu, which will have two bridges, two kilometres long and a viaduct at Tsunza. The contract is under valuation. The last section will stretch from Mteza in Dongo Kundu to Kibundani junction in the South Coast. The contract is also currently under valuation.

The Acting Technical Manager Special Economic Zones Authority Francis Gitau observes that the Dongo Kundu road will provide an alternative route to the current ferry services.

He said cargo, and even people using the Mombasa–Nairobi Highway can go straight from or to South Coast without passing through Mombasa Island while goods and passengers from Nairobi will arrive at Miritini and take a detour to South Coast through the Dongo Kundu bypass.

“Tourists from Moi International Airport will also travel to the South Coast through a link road to the bypass without passing through Mombasa city and the ferry,” Gitau said.

According to Vision 2030 Delivery Board chairman Dr James Mwangi, the Dongo Kundu bypass will open the South Coast, which is the country’s major tourism artery and create thousands of job opportunities.

“Construction of the road will enable the area to be served by the port and SGR and have an easier and effortless connection to Mombasa hinterland away from the traditional ferry services,” he said.

Mwangi further said that the government will provide the required infrastructure to enable private investors to set up various companies in the area carved for the Dongo Kundu Special Economic Zone (SEZ) in an attempt to create an economic engine in the region and a regional production hub. As indicated earlier, in the special economic zone, businesses will enjoy relaxed regulations and exemptions.

In particular, manufacturers importing raw materials and producing goods in SEZ and exporting them at port will be able to trade goods at a globally competitive price because of a number of exemptions.

Speaking during the unveiling a grand industrialisation roadmap that seeks to make Mombasa a food processing hub targeting export markets recently, Industrialisation Cabinet Secretary Adan Mohamed said Kenya would use the SEZ to earn a significant fraction of the Sh400.4 billion ($3.8 billion) that East Africa spends on processed food imports.

“We want to take advantage of the Mombasa Port to serve the regional and global markets with processed food,” he said. The CS said that local investors will have access to a Sh10.5 billion ($100 million) State-backed fund to accelerate industrial investment, especially among financially challenged firms.

“The fund will be scaled upwards, depending on demand and readiness of commercial banks to be part of it,” said Mohamed during the launch of the industrialisation blueprint, adding that interest rates will be “favourable” to the borrowers. Manufacturing sector’s contribution to the Gross Domestic Product (GDP) has averaged at 11 per cent in the past 10 years showing a general stagnation.

The food processing hubs will occupy slightly over a fifth of the land set aside for the special economic zones, with the rest hosting other industries.

The zones, Mohamed said, will process both locally sourced and imported raw materials for re-export – a move that could improve Kenya’s current account and create jobs that would help reduce high unemployment rates currently at 40 per cent.

All goods manufactured and exported from within the free trade area will not attract any tax. However, if the same goods are sold locally, they will be considered as manufactured from outside the country, hence will attract tax and other charges.

While most people may think that offering free trade incentives for export goods will starve the country of the much-sought revenues, the opposite is true. Gitau said this arrangement would allow Kenya to attract foreign direct investments because several foreign firms will invest in the country because of the incentives.

“Since goods manufactured in the free trade area will be exported for free it will improve our export ratio and also create employment opportunities for our people and the attendant technology transfer,” he said.

Furthermore, Gitau said, there will be numerous ripple effects in the tourism, real estate, transport and industrialisation sectors, among others. According to the master plan, at peak operation, it is expected that the zones will employ 27,100 people. TOMORROW: Land-based challenges facing Dongo Kundu Special Economic Zone.

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