Africa (Commonwealth) _We explore the fascinating world of Special Economic Zones (SEZs) and how they may change the economic landscape of Africa in this edition of Business Africa.
A loud cry is being heard for African countries to make the switch from developing and using fossil fuels to an energy transition, in the wake of the historic pronouncement made during the last days of COP28.
In the meanwhile, Rawbank adopts a daring strategy in the Democratic Republic of the Congo to combat climate change. Come explore with us the dynamic convergence of environmental responsibility, economic innovation, and the changing face of the African business scene.
Special Economic Zones (SEZs), which are vital tools in the dynamic field of economic development, are essential for promoting free trade principles throughout the continent and driving economic progress.
These zones are becoming essential drivers of economic growth and the advancement of free trade throughout Africa. It begs the question, “How do these zones become key drivers of the circular and sustainable economy on the continent?”
For a considerable amount of time, special economic zones, or SEZs, have been promoted as a powerful tool for boosting trade, FDI, and employment creation in both developed and developing nations.
SEZs can take many different shapes, but they are often restricted regions where businesses are granted tax breaks and other legal privileges. They are established with the goal of luring in foreign capital and increasing employment. They were originally implemented in industrialized nations in the late 1950s, and word of them swiftly traveled to East Asia and Latin America.
The first Special Economic Zone (SEZ) in Africa was established in Mauritius in 1970. Ghana and Senegal followed towards the end of the decade. There were 237 SEZs in 38 of the 54 nations that make up Africa by 2020.
According to the paper, a comprehensive analysis of SEZs in Africa reveals that their use is rapidly increasing and is expected to spread to the vast majority of the continent’s nations. Kenya had 61 zones, more than any other country. Nigeria had 38, Ethiopia had 18 and Egypt had 10 zones.
According to Amelia Santos Paulino, who oversaw the report’s composition, the advantages of Special Economic Zones (SEZs) include enhanced local industrial base as a means of attracting foreign direct investment, support for the innovation agenda, and knowledge generation and dissemination.
According to the research, Senegal, Kenya, and Ghana are the three nations where SEZs have been effectively established.
Improved governance, social, and environmental (ESG) requirements can further increase the competitiveness and allure of SEZs for international investment. Changing policies and tactics to concentrate on both the regional environment and global economic trends, as well as establishing reasonable goals based on a nation’s competitive edge and value offer, are other factors.
Since SEZs are often established for companies focused on exports, governments have to do a thorough strategic analysis to determine which goods would be able to compete in global markets. Developing international alliances with other countries’ governments, businesses, or organizations is essential for acquiring best practices.
However, the research issues a warning that knowledge transfers between partners are not always spontaneous and suggests that formal transfer channels are vital in order to facilitate an efficient exchange of know-how. Furthermore, measures taken to reduce the possibility of clashing interests, mistrust, and misaligning goals all have a significant impact on how well international collaborations work out.
According to Santos Paulino, Mauritius is an excellent illustration of a Special Economic Zone (SEZ) that has effectively used global collaborations to implement best practices.
She states, “Mauritius and South Africa have been recognized as effective examples in Africa, using theirs SEZ for economic development.” “It was very successful in fostering global relationships through a cross-border zone.”
