Nairobi Gate Industrial Park, the first Special Economic Zone (SEZ), with a fully consolidated customs-control area in East Africa, has launched a manufacturing and warehouse park for the country’s textile and apparel industry.

The 100 000m² Textile Park will benefit tenants and create job opportunities in Kenya’s second-largest manufacturing industry (after food processing). It will support the country’s economy significantly, attracting foreign direct investment, especially in bulk infrastructure projects.

“The cotton, textile, and apparel industry in Kenya is rapidly growing – and this has resulted in an increased demand for modern manufacturing and warehouse facilities to enhance efficiencies and productivity,” comments Dean Shillaw, Managing Director at Impact North, developer of the Nairobi Gate Industrial Park and a company formed by unlisted SA property investment group Improvon, and private equity investor Actis.

“Kenya is expected to become Africa’s textile and apparel hub. Nairobi Gate’s excellent location and SEZ status provides several financial and non-financial benefits for licensed tenants. With available land and capital, Nairobi Gate could be the first, and leading development in East Africa to offer a dedicated and sustainable textile park.”

As an approved Special Economic Zone (SEZ), the 100-hectare Nairobi Gate offers fiscal benefits including corporate tax rate reductions from 10% – 30%, zero-rated VAT, reduced withholding taxes, preferential import duties, excise duty, import declaration fees, a 100% investment deduction allowance and lower business permit fees.

Shillaw believes that Kenya stands a good chance of capitalising on geo-political uncertainty in Ethiopia, traditionally a mainstay of international textile and apparel manufacturers because of the introduction of industrial parks in that country during the late-1990s.

The global Covid-19 pandemic, US-imposed sanctions in January 2022 that ended Ethiopia’s preferential market access under the Africa Growth and Opportunity Act (AGOA) – its largest client – and ongoing conflict in northern Ethiopia, has forced international manufacturers occupying more than 2 million square metres of industrial space in Ethiopia to rethink their location.

Well-known international brands including Calvin Klein, Tommy Hilfiger, Michael Kors, Jockey, Dickies and Victoria’s Secrets among others employ manufacturers like Hela Clothing, a Sri Lankan apparel manufacturer which pioneered the development of the apparel manufacturing sector in Africa. It has factories in Sri Lanka, Ethiopia, Egypt, and Kenya.

According to the group’s 2022/2023 Annual Report, Kenya is the largest manufacturing facility outside of Sri Lanka employing over 4 000 people. The factory, one of the most extensive apparel manufacturing facilities, accounted for nearly 20% of Kenya’s total apparel exports, and generated 39% in revenue – second to Sri Lanka at 46%, with Ethiopia contributing 7%.

As a result of its stability and high economic growth, Kenya has emerged as a preferred location for many international tenants, especially since 2021, despite the country’s lack of A-grade warehouse parks and facilities.

Shillaw says when looking for new space, tenants primarily consider location, the availability of labour, the available skillset, quality, and size of warehouses as well as utility costs. Nairobi Gate’s new Textile Park is in the SEZ closest to the inland container depot and the Jomo Kenyatta International Airport. It furthermore offers easy highway access to regions north and south of Nairobi via the Thika Highway and is close to labour markets.

The consolidated customs-control area provides for sophisticated weighbridges and offers all regulatory services such as Kenya Revenue Authority (KRA), Kenya Ports Authority (KPA), Special Economic Zones Authority (SEZA), customs, and other agencies under one roof, significantly smoothing the administrative burden and increasing efficiencies.

“The development of the textile park at Nairobi Gate will address a significant need in the market while taking advantage of a growing textile industry, considering the increasing demand for clothing globally, and the lack of A-grade warehouse space in Nairobi.”

Nairobi Gate’s textile park sets a precedent for quality-built warehouse facilities and could act as a catalyst to drive growth in the market. It offers built-to-suit solutions based on tenant’s requirements with units measuring from 5 000 m².

The A-grade warehouses incorporate office components on the ground and first floors, with tenant allowances for partitioning, doors, ceilings, electrical lights, and painting. Viewing panels overlook the warehouse floors.

The warehouse component comprises a minimum 9 metre height to underside of the lowest eaves for racking, multiple roller shutter doors and on-grade dock access as well as large panel, FM2 steel fibre reinforced floors. Yards are 35 metres deep to allow for efficient truck circulation. Three-phase power is provided with optional solar back-up and individual utility metering.

“All our units are equipped with modern fire and safety provisions, such as smoke detection, fitted hose reels, fire extinguishers, and fire hydrants. The warehouses are fit for purpose, offering tenants plug-and-play convenience to International Labour Organisation standards,”adds Shillaw.

Globally, traditional textile parks employ about 100 million people and started in emerging markets including India and Sri Lanka.

According to the Textile Global Market Report 2024 by Research and Markets, the textile industry is expected to grow from US$638.03 billion in 2023 to US$689.54 billion due to growing population, increased demand for man-made fibers, government initiatives supporting the textile industry, robust economic growth in emerging markets, and the implementation of restrictions on plastic usage.

Shillaw says Kenya’s textile and apparel industry has massive potential to create employment for the growing population while contributing positively to the economy.