The challenge of developing special economic zones in Africa: Evidence and lessons learnt

Abstract

Special economic zones (SEZs) are mushrooming across the developing world. Increasingly, policymakers resort to zones with the aim of turning around their countries' economic fortunes. Zones are expected to deliver greater innovation, exports, knowledge and technological spillovers. Yet, little is known about the state of play of SEZs in Africa, where almost half of SEZ programmes are less than 10 years old. The recent proliferation of SEZs in the continent has rendered the need to ensure that SEZs deliver on their objectives more impelling, given the often non-negligible opportunity costs associated with SEZ development. This article addresses this knowledge gap and sheds light on African SEZ practices. The analysis of a novel dataset highlights that (i) African SEZs are on a steep upward trend and are changing in nature; (ii) the ability of African SEZs to attract industrial activity, proxied by firms, and generate employment remains limited; and (iii) African SEZ governance policies (over)rely on fiscal incentives and performance requirements. Case studies from Ethiopia, Morocco and South Africa suggest that those African SEZ programmes that have a well-targeted strategic focus, promote institutional collaboration and take a proactive approach to create linkages with the local economy are more likely to succeed.

Towards Transformative Policies for Fast-Tracking Special Economic Zones Development in Africa

“…These institutions are responsible for formulating policies and strategies, promoting investment, formulating industrial park policies, managing day-to-day operations, attracting investors to targeted sectors, and regulating industrial park developers, operators, and firms. Their collaborative efforts have significantly contributed to Ethiopia's progress in SEZ development (Rodríguez-Pose et al, 2022). By implementing similar policies and establishing dedicated institutions, African countries can create a conducive environment for SEZs, promote investment, and ensure effective management and coordination among relevant stakeholders.…”

Place-based Policies and Household Wealth in Africa

“…The establishment of SEZs has only spread across the continent in the last two decades. However, by 2022, most countries had adopted active SEZ programs, resulting in approximately 203 operational SEZs and nearly 100 more under construction (Rodríguez-Pose et al, 2022). This notable trend reflects the adoption of SEZs by policymakers to align with the goals of the African Union's Agenda 2063 and the UN Sustainable Development Goal 9, which underscores the role of industrialization in generating employment and elevating living standards.…”

Interaction between islands and special economic zones: Spatial processes of containment and exclusion

“…Others suggest that SEZs can be ‘low‐end’ or ‘high‐end’ (Arnold, 2012), loosely or tightly regulated (Moberg, 2015). SEZs often combine cost‐reducing benefits and high‐end elements, such as exceptional infrastructure and quality‐oriented regulations (Rodríguez‐Pose et al, 2022).…”