Vehicles at the port of Mombasa.[Photo/businessdaily]

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Mombasa is set to get a free trade zone (FTZ) for motor vehicles in a policy decision that could create thousands of new jobs for traders and service providers.

An FTZ which is like the world renowned Dubai is a re-export gateway where transit goods are temporarily stored to cut down on strict customs regulations and lengthy administrative procedures that home-bound imports face.

Such a facility in Kenya being launched almost four years after the Cabinet gave its nod to the plan  shows that vehicle imports destined to other markets in the region will first be received and sorted in Mombasa.

Goods in such a customs haven only get taxed when they end up in the local market. The country benefits from the job opportunities created for citizens and from collecting cargo handling fees.

The 1,000-acre Mombasa re-export gateway will at first be able to handle 100,000 vehicles annually, Treasury secretary Henry Rotich estimates in a draft Budget Policy Statement (BPS) released on Friday.

The State-owned facility is tipped as one of the flagship projects that the government is focusing on to raise the 2018 export earnings by 10 per cent and 20 per cent annually by 2022.  “We intend to strengthen trade facilitation programme,” Mr Rotich says in the draft BPS.

The Mombasa FTZ is meant to serve the landlocked states under the Common Market for Eastern and Southern Africa (Comesa). All the vehicles on transit will be moved directly from Kilindini seaport to the FTZ from where they can be evacuated by railway or roads to the final destination.

According to Mr Rotich 500 motor vehicle inspectors will be trained this year and stationed at the facility to ease clearance. This means that the vehicle owners will not have to incur demur-rage charges faced by home-bound imports that have to undergo lengthy clearance including obtaining number plates.

The Cabinet approved the plan to set up FTZ in February 2014approving the industrialization ministry to start planning for the hub.

Apart from motor vehicle re-exports, the ministry has been mulling over FTZ to take care of electronics, machinery and building materials. 

Mombasa County has also been putting up its own FTZ with Governor Hassan Joho setting aside cash from as early as 2013/2014 for land purchase.