Kenya export development support

The project, to be implemented by the Ministry of Finance, will increase investment in the export sector and develop a more favorable trade environment through: (1) support to key Government of Kenya (GOK) entities; (2) firm-level assistance; (3) creation of an Export Processing Zone (EPZ) Swap Facility; and (4) a studies component. The public sector component will improve the GOK"s trade policy analysis capabilities, stimulate public-private policy dialogue, and foster a reduction in a wide range of GOK controls over exports and imports. The primary recipients of assistance will be the Ministry of Finance"s newly established Export Promotion Programmes Office (EPPO), and the Export Processing Zone Authority (EPZA). The project will fund provide long- and short- term TA, U.S. study tours for ten EPPO and EPZA officials, 20 one-day training seminars, and commodities (i.e., computers, office equipment). Firm-level assistance will take two forms: (1) direct short-term TA to 15-40 export firms for market assessments, quality and production assistance, planning for business expansion, and export promotion; and (2) institutional support to trade associations, including development of export market databases and dissemination of market information, 15 seminars and workshops for exporters, trade association participation in 15 overseas trade fairs, and studies on regulatory and fiscal constraints to export growth. Both types of support will be delivered through a project-financed Private Enterprise Management Unit (PEMU). Additionally, an Export Development Fund will co-finance specialized firm-level advisory services, either from the PEMU or the International Executive Service Corps (IESC). The project will provide $4 million to co-finance a pilot EPZ Swap Facility (Kenyan shillings for U.S. dollars) to provide medium-sized Kenyan firms access to the foreign exchange they need to set up operations in Kenya"s newly created EPZ"s. The Facility will be housed in the Central Bank and will operate through commercial banks. In addition, A/PRE will establish a guaranty facility covering 50% of the credit risk of the foreign currency loans. Although its output targets are modest -- establishment of 8-11 firms in the EPZ"s -- the pilot Swap Facility will, it is hoped, be expanded by the GOK and other donors. To complement the other components, the project will finance 8-12 studies -- mostly by the EPPO, but also by the Central Bank and the PEMU -- on topics such as removing constraints to trade (e.g., regulations, lack of information, etc.), improving trade policy and finance, identifying new areas for exports, and gauging the impact of project interventions. Results will be disseminated through ten workshops.