Slow infrastructure rollout delays investment at Dongo Kundu SEZ

Investors at Mombasa’s Dongo Kundu Special Economic Zone (SEZ) have raised concerns over the slow pace of the development of basic infrastructure required to support industrial operations.

They warn that further delays in electricity connectivity, construction of access roads, water supply and sewer systems could slow down investment timelines if not addressed urgently.

The Dongo Kundu SEZ is one of Kenya’s flagship industrialisation projects and has attracted strong interest from logistics companies, manufacturers and energy investors.

The long-term vision for Dongo Kundu is to transform Mombasa from a transit-based port city into a value-adding industrial hub serving regional markets, including Uganda, Rwanda, Burundi, South Sudan, the Eastern Democratic Republic of Congo and Ethiopia.

Its proximity to the Port of Mombasa and key regional transport corridors positions it as a strategic gateway for trade within East and Central Africa.

Investors view the SEZ as an opportunity to reduce logistics costs and improve efficiency by locating production closer to port facilities.

Despite this optimism, several investors say that readiness to invest has not been matched by the availability of basic utilities needed to support industrial activity.

Some firms have already secured land and begun preliminary development, but full-scale investment decisions are being delayed until infrastructure gaps are resolved.

During a recent visit to the SEZ, Cabinet Secretary for Investments, Trade and Industry Lee Kinyanjui acknowledged the progress made so far, particularly at the Taifa LPG gas storage project. The facility is currently about 80 per cent complete and is expected to become operational within the next two months. Storage tanks have already been installed at the site.

Kinyanjui said the project will add 30,000 metric tonnes of liquefied petroleum gas (LPG) storage and distribution capacity, strengthening energy supply in the region and supporting industrial growth within the SEZ.

Zero basic infastructure

“We first visited this site about a year ago when construction was still at the foundation stage and today we are encouraged by the significant progress made,” Kinyanjui said.

A key component of the infrastructure plan is the construction of Berth I by the Kenya Ports Authority (KPA), whose progress is currently at about six per cent, according to port officials.

The berth is designed to directly serve industries operating within the SEZ, allowing manufacturers to access maritime transport more efficiently and reducing dependence on existing port terminals.

Once completed, the berth is expected to improve cargo handling efficiency and strengthen integration between port operations and industrial production.

Stakeholders say this will be critical in positioning Dongo Kundu as a competitive logistics and manufacturing hub serving both domestic and regional markets.

However, investors note that while large-scale infrastructure projects such as port facilities are progressing, basic internal infrastructure remains a significant challenge.

Delays in power connections, internal road networks, sewer systems and reliable water supply are cited as major risks to timely investment implementation.

Milly Glass, a Mombasa-based manufacturer of glass bottles, containers and tableware used in the food, beverage, pharmaceutical and hospitality industries, has already secured land at the SEZ and fenced off the area earmarked for its new plant.

The company’s move signals confidence in the long-term potential of the project, but its investors say actual production timelines will depend on the availability of supporting infrastructure.

Other investors have opted to slow down investment commitments until essential services are in place. One investor with a stake in the project, who requested anonymity, said uncertainty around infrastructure timelines remains a concern.

“I am holding back from committing significant investment at the site for now. Once the necessary supporting infrastructure is in place, we will mobilise resources,” the investor said.

According to KPA, supporting infrastructure is still undergoing procurement and implementation processes. Construction of port access roads will be undertaken by the Kenya National Highways Authority (KeNHA) and is expected to begin once contractual processes are completed.

Contracts already awarded

KPA indicates that the contractor has already been awarded the project and will mobilise to the site after contract signing. Power and water infrastructure projects are also at procurement stages through government agencies, including the Kenya Electricity Transmission Company (Ketraco).

Financing support is being provided by the Japan International Cooperation Agency (JICA) under the broader Mombasa Port Development Project.

In 2024, KPA awarded the SEZ civil and building works tender to Toa Corporation. According to information published by the contractor, construction is expected to take approximately 1,156 days, or about 38 months, at a contract value of 33.5 billion yen (approximately Sh27.7 billion).

Despite the ongoing progress, investors interviewed say timelines remain critical because industrial operations depend on guaranteed utilities. Without reliable electricity, water supply and transport access, companies face higher costs and operational uncertainty, which can slow investment decisions.

Industry expert and warehouse operator George Wachiuri said that while investor interest remains strong, infrastructure delays risk undermining confidence if not addressed quickly.

“We have seen strong investor confidence, with many moving quickly to develop facilities and commit capital. However, industrial investments depend on reliable supporting infrastructure,” Wachiuri said. “Delays in power supply, access roads, water and sewer services increase costs, create uncertainty and slow investment decisions.”

He added that if infrastructure challenges persist, the progress achieved so far could slow down and weaken the broader industrialisation agenda linked to the SEZ.