Chinese investor to make Kenya a medical equipment manufacturing centre

Zhende Medical, a Shanghai Stock Exchange-listed medical device maker has decided to establish US$180m state-of-the-art manufacturing facilities in Kenya. These facilities, situated approximately 20 km north of Nairobi, will be housed within the Tatu Industrial Park special economic zone and the adjacent Oaklands development. The company's ambitious project aims to cater to the growing international and regional demand for disposable medical consumables and devices.

One of the factories, funded with US$100m by the International Finance Corporation (IFC), the private sector arm of the World Bank, is scheduled to be operational by January 2024. The firm will produce medical supplies such as gowns, gauze, syringes, and other basic consumables. This investment could make Kenya a hub for the company’s global operations. Zhende Medical has an annual target of exporting US$320m worth of medical products to its international clients. The firm aims to expand the distribution of medical supplies throughout sub-Saharan Africa.

Tatu Industrial Park offers an array of financial incentives to attract investments. These incentives include a reduced corporate tax rate of 10% for the first ten years, which subsequently increases to 15% for the subsequent decade. Investors at Tatu Industrial Park can also enjoy exemption from withholding taxes for a decade, followed by a reduced rate of 5% thereafter. Additionally, the park provides exemptions for import duties, VAT, and withholding taxes. It also guarantees reliable access to essential utilities like power, water, and other infrastructure, creating an ideal environment for investors.

Africa is heavily reliant on imported medical supplies. Despite having abundant primary materials for health-related product manufacturing, such as rubber, fabrics, and ethanol, these commodities are often exported without further value addition. It imports over 70% of its surgical gloves, primarily from countries like Malaysia, China, and India. Notably, the continent, which produces only 0.2% of the world's surgical-grade gloves, exports 1.5% of the global latex. Countries rich in rubber resources like Côte d’Ivoire, Ghana, and Cameroon play a significant role in these latex exports but do not manufacture surgical gloves. According to a report published by the International Trade Centre redirecting just 5% of their monthly latex exports towards glove production could result in a production of nearly 13 million gloves each month.

Similarly, Africa contributes 3.5% to the global exports of synthetic nonwoven fabrics, crucial materials for manufacturing masks and gowns. Despite this potential, local production of these protective items remains limited. A mere 7% utilization of this fabric could suffice for the entire demand for filtered masks within Africa. Notably, both Egypt and South Africa are major exporters of polypropylene, a key component in producing these fabrics.

This development follows a similar investment initiative in 2021 when the Singapore-based Japanese investment firm, AAIC, invested in Revital Healthcare. Situated in a special export zone near Mombasa on the Kenyan coast, Revital Healthcare is a renowned medical supplies manufacturer. Among their flagship products are auto-disable syringes, designed for single use to reduce the transmission of pathogens, including hepatitis B and HIV, between patients. The demand for these syringes surged due to Covid-19 vaccinations and is anticipated to remain strong due to the rollout of new malaria vaccines and ongoing childhood immunization efforts.

 Zhende Medical's investment in Kenyan medical supplies factories marks a significant step towards strengthening healthcare infrastructure in Kenya and across the African continent. This development aligns with broader efforts to enhance local manufacturing and reduce the continent's reliance on imported medical supplies, ultimately fostering economic growth and self-sufficiency in the healthcare sector.

 

References

‘Medical industries in Africa: A regional response to supply shortages’, International Trade Centre, July 2020

‘Japanese investor doubles down on the African healthcare market’, NTU-SBF Centre for African Studies, 23 February 2023

‘Zhende Kenya’, International Finance Corporation, 28 June 2023

‘China's Zhende Medical announces expansion to Tatu City’, Tatu City, 17 October 2023

‘Tatu Industrial Park Special Economic Zone’, Tatu City, Accessed 23 October 2023