Business

EPZ companies shed 8,135 jobs


Economy

EPZ companies shed 8,135 jobs


epz

Workers at the United Aryan EPZ Limited on Ring road off Thika Super Highway. PHOTO | SALATON NJAU | NMG

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Summary

  • The employment opportunities fell below the 66,000 that had been targeted by the State despite the number of operating EPZ firms rising by four to 140.

Firms operating in export processing zones (EPZs) shed 8,135 jobs in the financial year ended June as Covid-19 pandemic disrupted export markets, forcing them to trim their workforce.

Data from the State Department of Trade shared with the Treasury shows that the number of Kenyans employed in these special economic zones dropped from 60,733 at the end of June last year to 52,598 last June.

The employment opportunities fell below the 66,000 that had been targeted by the State despite the number of operating EPZ firms rising by four to 140.

“(The job losses are) attributed to scaling down of operations by EPZ firms due to adverse impact of Covid-19 in Financial Year 2019/20,” says the state department.

Major export markets for EPZ-made products, including the US and large parts of Europe, from January started shutting down airports and sealed off their borders in efforts to curb the spread of the virus, effectively cutting off EPZs’ exports.

The huge disruption forced Treasury secretary Ukur Yatani to temporarily lift the restriction that compels EPZs to sell only 20 per cent of the annual production in the local market to 100 per cent effective March.

EPZ firm exports declined by 4.1 per cent or Sh2.98 billion to Sh70.57 billion during the review period, highlighting the extent of Covid-19 disruptions.

The State department has not made public how EPZs fared on local market with Mr Yatani window having come at a time Kenyans were grappling with reduced cash in their pockets on stagnated salaries and layoffs occasioned by coronavirus.

However, EPZs attracted Sh109.1 billion direct investments as opposed to Sh105.76 billion in the previous year. The rise was attributed to extensive marketing promotions efforts by the Export Processing Zones Authority.

The direct investments helped increase the total amount of funds — both foreign and domestic — to Sh156.94 billion in contrast to Sh68.33 billion in the previous financial year.

“FY 2019/20 target surpassed due a higher number of investments in construction sector,” says the state department.

The majority of EPZ firms are in textiles and apparels and largely exports to the US under quota- and duty-free Growth and Opportunity Act, which expires in September 2025.



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