Harnessing the Potential of Special Economic Zones for Private Sector Development and Inclusive Industrialization in Southern Africa 

Tempo de leitura: 4 minutos

The term “special economic zones” (SEZs) is a generic term encompassing various forms of specially designated clusters of industrial and high-value-added activities whose operators receive incentives not received by other economic operators. SEZs can also be defined as geographically demarcated areas where economic laws are more liberal than in the rest of the country. As a result, they include a variety of forms and types. The key message of the present study for the Southern African subregion is that countries around the world are replacing old-fashioned, export-focused, rigid schemes with a broader, more flexible form of SEZ as an appropriate policy tool to support two key objectives: private-sector development (including that of micro-, small and medium-sized enterprises) and industrialization. 

The Subregional Office for Southern Africa of the Economic Commission for Africa commissioned the present study to identify measures, policies, partnerships and institutional frameworks that will enable Southern African countries to harness SEZs to drive private-sector development (including that of micro-, small and medium-sized enterprises) and achieve sustainable industrialization. The study aims to improve our knowledge and understanding of how relevant and effective SEZs are as tools for private-sector development to inform policymaking. 

To meet these objectives, the study provides a literature review; examines the conceptual framework, including the various forms and types of SEZs applicable in the subregion; describes the status of SEZ development; and assesses the role of the zones in driving private-sector development and industrialization in the subregion. Furthermore, it highlights the key emerging development issues and their implications for the development of the zones in the subregion. These include the Africa Continental Free Trade Area, the Fourth Industrial Revolution, green industrialization and the impact of the coronavirus disease (COVID-19) pandemic. The main findings are as follows: 

1. Although countries have prioritized SEZs in their economic development policies and strategies, SEZ programmes in Southern Africa are largely still in the development stage. Implementing such programmes remains an enormous challenge, mainly because of relative weakness in capacity, policy coherence and government-wide commitments. As a result, most countries are grappling with setting up favourable policies and business environments to attract investment. Although SEZs have not kept up with best global and subregional practices (e.g., in China and Mauritius, respectively), their impact on trade, job creation and foreign direct investment has already been quite promising. 

• National and subregional policy strategies are needed to enhance the integration of micro-, small and medium-sized enterprises in SEZ programmes to support inclusive industrialization. Important as those enterprises may be, policies and initiatives to support their inclusion in SEZs are inadequate. Their high level of informality and weak capacity have proved to pose significant challenges to promoting the desired linkages. 

• SEZs can play a critical role but should not be considered a panacea for harnessing significant opportunities in the subregion to support increased private-sector investment. The subregion is highly endowed with natural resources, especially minerals, natural gas and agricultural products. Notably, there is a need to tap into opportunities arising from subregional value chains and subregional supply chains to make Southern Africa a global leader or centre of excellence for products such as copper, precious minerals, agro-industrial activities and services. The subregion’s geographical position also gives it an exclusive advantage in providing logistics services to promote subregional and global trade gateways. More important, countries in the subregion could harness the diverse economic structures and the level of economic development to promote further private-sector growth and industrialization. 

• Southern Africa could be a natural champion for border economic zones (or cross-border development zones) to complement the existing development and transport corridor initiatives. It would be logical for subregional organizations and development partners to support these prospects. Border economic zones could harness the prevailing high demand for logistics services between coastal and land-locked countries and the significant potential for cross-border (intra-subregional) trade among countries to support mutual industrial and private-sector development. 

• While the effects of some of the emerging issues (e.g. COVID-19) are already harming economies, some solutions (e.g. the African Continental Free Trade Area and the Fourth Industrial Revolution) could provide real opportunities. Member countries should adopt a positive outlook and properly prepare to address the ultimate challenges. Clearly, some of the emerging issues require subregional solutions, in particular in terms of preparing guiding frameworks and funding certain public goods, such as access to and the use of information. 

• While moving from export processing zones (EPZs) to SEZs is a significant policy milestone, the diversity of economies and the various stages of development provide healthy ground for the cross-fertilization of learning within the subregion. However, the complex and heterogeneous environments in which the zone programmes operate indicate the need for a clear framework to guide SEZ development in Southern Africa. Such frameworks would be useful to facilitate a common and shared vision of how the subregion can attract, promote and facilitate investment from within and outside the subregion. Implementation challenges are bound to occur along the way, but having a broad blueprint in which member countries subscribe to a set of minimum conditions for making SEZs “special” nests will boost private-sector development and industrialization in the subregion. 
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