12 Oct 2021 / Article

Special economic zones: Catalysts for African industrialisation

SEZs are geographically designated areas designed to attract foreign investment, create jobs and develop certain sectors of activity through tax and customs incentives. These zones are also intended to offer more streamlined administrative procedures than those in the surrounding national territory. SEZs are an instrument for industrialisation and development in numerous countries across the globe, championed particularly by China and other Asian economies, but such zones have not always been synonymous with success in Africa. Yet the continent offers a favourable landscape for SEZs due to low labour costs, advantageous trade agreements and exceptional wealth in raw materials. For Africa to capitalize on these resources and accelerate its industrialisation, competitive SEZs are a clear way to advance. 

By learning the lessons from past failures and accomplishments, the aim of this report is to provide tomorrow’s private and public decision makers with a new SEZ model, designed to catalyse the continent’s industrial development. The 1970s saw SEZs sprouting up across Africa with the promise of reproducing the “Asian miracle”. But insufficient sector specific specialisation (89% were multisector) and delays led, in most cases, to failure. The lacklustre appeal of legal and fiscal frameworks and operational problems caused by weak infrastructure and services (electricity, water, roads, administrative delays etc.) were largely to blame. Some prospered notwithstanding, providing inspirational lessons that are worth heeding. SEZs in Morocco, Mauritius, Madagascar, Ethiopia and Gabon created over 300,000 jobs and made a considerable contribution towards ramping up exports.  

 

Further to an in-depth analysis of over twenty case studies and major issues arising from the creation of SEZs, OKAN PARTNERS and the AFRICA CEO FORUM present in this report six pragmatic and ambitious recommendations for the future. 

 

  1. Choose a strategic site
  2. Align with domestic industrial strategy
  3. Provide a high performing ecosystem
  4. Invest pragmatically and in phases
  5. Foster public/private governance
  6. Design to deliver green and sustainable industrialisation

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