Geothermal energy could attract textile factories to Olkaria, Kenya

Kenya will set up investors near geothermal plants to cut the cost of electricity and offer subsidies in order to compete with her neighbours.

Mr Mohamed said on Thursday that they will set up investors at the shores of Lake Naivasha near the geothermal power plant to cut transmission charges to make Kenya attractive.We are going to set them up at Naivasha near the geothermal plant where power is much cheaper since it is at the source, he said.He was speaking when he met a trade delegation composed of investors from China, the US, Australia, the Netherlands and Bangladesh who will also be visiting Tanzania and Ethiopia.

Ethiopia is the leading investor destination of choice because of low labour costs with low minimum wage (Sh6,000). Furthermore, it is easier for foreigners to obtain work permit in the country.Ethiopia also has low electricity prices and the government is building a separate grid for new industrial zones currently under development.

Following the extension of the African Growth and Development Act (AGOA) trade agreement with the USA for the next ten years, Kenya has been tipped to enjoy a boom as companies in the apparel industry target the East African economies to enjoy the duty free access to America.

A survey by McKinsey and Company shows that East Africa--in particular, Ethiopia, Kenya, Tanzania, and Uganda have the potential to trade Sh300 billion in the garments and apparel industry by 2025.

In 2013, these four countries' apparel exports totalled only Sh34 billion.Structural shift in the global apparel industry, which is looking to move factories from China and South-East Asia in response to rising labour costs.

Kenya expects to set up a major industrial park in the next two years at Naivasha which will serve as the main location for textile and apparel industries.