NAIROBI, Kenya – The government has unveiled fresh reforms to tighten the Special Economic Zones (SEZs) framework, removing tax and housing incentives from developers putting up projects not directly serving workers of enterprises within the zones.
Investment Promotion Principal Secretary Abubakar Hassan Abubakar said the changes, contained in the Business Laws (Amendment) Bill, 2025, will ensure that only staff housing tied to SEZ enterprises qualifies for fiscal benefits.
“We have seen residential buildings coming up in some SEZs, but our position is that such developments should not enjoy SEZ incentives unless they are meant to accommodate employees working within the zone,” Abubakar said during the commissioning of the Kifaru Exim SEZ at Tatu City.
Officials argue that speculative real estate projects are exploiting SEZ benefits, undermining the programme’s main goal of boosting industrial and service growth.
The Bill introduces five key reforms:
- Scrapping incentives for speculative housing projects.
- Clarifying tax stability for investors.
- Admitting specialised training institutions.
- Opening space for Business Process Outsourcing (BPO) companies.
- Extending capital gains tax exemptions.
PS Abubakar said the reforms are part of President William Ruto’s directive to refine SEZs to make them globally competitive, emphasising stability of incentives, industrial spaces, and financing access.
He noted that 15 major changes have been made in the last three years to strengthen the programme, with the latest proposals expected to create more opportunities for BPOs, training institutions, and SMEs.
Kenya Association of Manufacturers CEO Tobias Alando welcomed the Sh500 million Kifaru Exim SEZ, describing it as a “major boost” that will accelerate industrial growth and provide critical opportunities for small and medium-sized enterprises.
