SEZ Entrepreneurship in Kenya: An Insight into Licensing and Regulatory Compliance

SEZ Entrepreneurship in Kenya: An Insight into Licensing and Regulatory Compliance
SEZ Entrepreneurship in Kenya: An Insight into Licensing and Regulatory Compliance

Discover how SEZ entrepreneurship operates in Kenya with a spotlight on licensing and regulatory adherence. From tax incentives to license types (developer, operator, enterprise), learn the criteria for each and the importance of meeting environmental and legal requirements. Explore SEZ license validity and renewal, and access tailored guidance through CM SME Club to navigate the intricate SEZ landscape.

1. Introduction

Special Economic Zones (SEZs) are established under the Special Economic Zones Act, No. 16 of 2015, upon the declaration - through Gazette notice, by the Cabinet Secretary responsible for Trade, Investment and Industrialization.

Such SEZ-declared areas sit on designated geographical locations where business enabling policies, integrated land uses and sector-appropriate on-site and off-site infrastructure and utilities have been provided, or which has the potential to be developed, whether on a public, private or public-private partnership basis.

Businesses that set up operations within SEZs are offered a range of incentives to attract and retain investments. These incentives may include tax breaks, customs and import duty exemptions, streamlined regulatory processes, and access to services like business support and export facilitation. See our detailed article on advantages of operating under SEZs .

2. Requirement to obtain a license

The Act establishes the Special Economic Zones Authority whose key mandate is to recommend sites for designation as SEZs, appraise applications and grant licenses.

The Authority grants three (3) main licenses: SEZ developer license, SEZ operator license and SEZ enterprise license. These licenses are issued subject to applications being made in the prescribed form to the Authority, assessment of the project’s financial viability, environmental and social impact and the subsequent payment of the annual license fee of USD 5000 for developers and operators and USD 1000 for enterprises.

a. SEZ developer licence

The SEZ developer licenseis granted toan appraised and licensed corporate body responsible for developing the horizontal, vertical and utility infrastructure in the zone. A SEZ developer may choose to operate a SEZ or outsource an entity responsible for operating the SEZ.

b. SEZ operator license 

The SEZ operator license is granted to an appraised and licensed corporate body responsible for managing a SEZ.

Qualifications to obtain the SEZ developer and SEZ operator license

  1. be a company incorporated in Kenya, for the purpose of undertaking special economic zone activities; 
  2. have the financial capacity, technical and managerial expertise, and associated track record of relevant development or operational projects, required for developing or operating the special economic zone; and 
  3. own or lease land or premises within the special economic zone as stipulated under the Special Economic Zones (Land Use) Regulations to be enacted within one hundred and eighty days of the coming into force of this Act.

c. SEZ enterprise license

The SEZ enterprise license is granted toappraised and licensed corporate bodies that carry out business activities (as per the granted SEZ license) within a gazetted SEZ.

Once the infrastructure is in place, businesses – including small and medium-sized enterprises (SMEs), can apply to establish their operations within the SEZs. The business will however have to meet certain criteria that has been laid out and adhere to the regulations set by the SEZ Authority.

Qualifications to obtain the SEZ enterprise license

The Authority shall grant a licence if the application meets the objectives of the SEZ Act, and if the proposed business enterprise — 

  1. is incorporated in Kenya; 
  2. proposes to engage in any activity or activities eligible to be undertaken by a special economic zone enterprise in the special economic zone; 
  3. does not have a negative impact on the environment or engage in activities impinging on national security or presenting a health hazard; and 
  4. conducts business in accordance with the laws in force save for any exemptions under the Act.

 3. Validity of SEZ licenses

SEZ licenses remain valid up to a year, renewable upon payment of the prescribed fees.

 

How we can help

Navigating the regulatory landscape of SEZs can be complex, at CM SME Club we offer tailored guidance to streamline the application process. Our advisory services cover the entire spectrum, from understanding the eligibility criteria to preparing a compelling application that meets the objectives of the SEZ Act. Our expertise extends beyond mere application support; we're committed to empowering you with knowledge about the various licenses, their implications, and the responsibilities associated with each. 

By leveraging our advisory services, you can make informed decisions that pave the way for your business to thrive within a Kenyan SEZ. Book a consultation via email or call +254 745 342 125 to learn more on our services.

Published on Aug. 22, 2024, 1:10 p.m.