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JOURNAL OF UWC FACULTY OF LAW | ISSN 2077-4907 | Short URL www.ldd.org.za

Fiscal incentives in Kenya’s free zones: To what extent are they consistent with the WTO rules on subsidies? pp 219-249

Volume: Volume 26 - 2022

Article type: Refereed article

Author/s: Olufemi Oluyeju and Nelly C Rotich

In Kenya, free zones take the form of Special Economic Zones (SEZs) and Export Processing Zones (EPZs), and are offered a myriad fiscal and non-fiscal incentives. At the same time, Kenya, as a member of the World Trade Organization (WTO), is a signatory to the Agreement on Subsidies and Countervailing Measures (ASCM), which prohibits subsidies that are contingent on export performance or use of domestic over imported products. Although free zones are not mentioned specifically, fiscal incentives constitute subsidies since they are financial contributions, incomes or price supports given by the government or their agencies which confer benefits. It is in this regard that the article examines whether the fiscal incentives offered in Kenya’s free zones meet the specificity test and are therefore consistent with the provisions on prohibited and actionable subsidies under the ASCM. The conclusion is that though the fiscal incentives offered in Kenya’s free zones constitute financial contributions, they meet the specificity test and are consistent with ASCM rules on subsidies contingent on export performance and use of domestic over imported products, given that Kenya is allowed to grant export subsidies and none of the subsidies offered under the EPZs Act and SEZs Act require the use of domestic over imported products.

About the author/s

Olufemi Oluyeju

Senior Lecturer, Department of Public Law, School of Law, University of Venda, Thohoyandou, South Africa https://orcid.org/0000-0001-9748-3798

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Nelly C Rotich

LLD Candidate, Faculty of Law, University of Pretoria; Advocate of the High Court of Kenya https://orcid.org/0000-0002-1232-696X

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