macroafricaintel | African SEZs & GVCs in the age of automation (2)

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

I write a research paper series for NTU-SBF Centre for African Studies at Nanyang Business School in Singapore. The following is the second part of the highlights of the issue published in June 2019.

2.0       Why have African SEZs underperformed?

Indicators of physical & institutional infrastructure in SEZs
  Average Africa sample Average non-Africa sample
Power outages (in hours downtime):
Within SEZ 44 4
Outside SEZ 95 46
Import customs clearance times (in days)
Within SEZ 7.1 3.4
Outside SEZ 10.3 11.0

Source: Newman et al. (2016)7, Farole (2011)17

Factors identified for the poor record of SEZs in Africa thus far relate to “problems with infrastructure, local management, policies and incentives, location, design and maintenance, and promotion.” 3,4 Poorly-skilled labour has also been identified as a constraint.9 Still, it is important to point out that while African SEZs have been underwhelming, there are a few exceptions.17 Mauritius is one.17 Kenya, Madagascar and Lesotho have been somewhat impressive as well.17 Undoubtedly, however, African industrial parks have underperformed relative to their Asian counterparts.17 One reason why is that the manufacture-to-export Chinese model that East Asian countries replicated successfully, which African countries have been trying to replicate, may soon become obsolete.20 Because even as SEZs are a way to circumvent the many trade constraints that African countries face, they may still not be able to match the current advantages of already entrenched Asian players early enough; before automation likely closes the window.

Studies find African SEZs to be relatively more expensive to develop.17 Weak linkages between African SEZs and local economies have also been observed.17 Job creation objectives have been somewhat elusive as well.17 Because even as incremental job creation on the back of these zones has been observed, the jobs tend to be low-skilled ones. And even those have not been on the scale expected or seen in better performing Asian ones.13,17 Consequently, the realisation of the immense potential of African SEZs to become major beneficiaries of labour-intensive manufacturing foreign direct investment (FDI), from China especially, is increasingly doubtful.17 The continent’s continued, or in some cases, marginally improved, but still relatively lower levels of competitiveness and harsh investment and business climate are attributed.17

Market size vs. Competitiveness of Africa’s 10 largest manufacturing countries
  Large market Small market
High competitiveness Egypt, South Africa, Morocco Tunisia, Kenya, Cote d’Ivoire, Ghana
Low competitiveness Nigeria Zambia, DR Congo

Source: Signe (2018)12

True, infrastructure and trade facilitation are reportedly better for firms inside African SEZs than for those outside them.17 Even so, they have been observed to be below international standards.17 For example, reported average downtime in production due to power cuts or shortages of about 44 hours per month is way too high when that for non-African SEZs of 4 hours per month is countenanced.17 Also, clearance of goods at ports take longer relative to non-African SEZs.15,17 Against this backdrop, it is not too difficult to see how firms in African SEZs might be ill-equipped to compete in a fiercely competitive global trade environment that is already within the tight grips of “factory Asia”.17 That said, a number of African countries like Egypt, South Africa and Morocco, which have large markets and high competitiveness, can still compete favourably with their Asian counterparts.12

Relatively new Chinese-backed SEZs in Ethiopia, Egypt, Mauritius, Nigeria and Zambia, initiated in the early 2000s, have a decent chance of succeeding as well.13 Companies in China’s own successful SEZs are behind the African operations, for instance: Tianjin TEDA in Egypt, Nanjing Jiangning Development Zone in Lekki, Nigeria, and the Suzhou Zhangjiagang Free Trade Zone in Ethiopia.3 There are also self-interested reasons why their probability of success is relatively high. Chinese motivations for developing them include the creation of demand for their machinery and equipment, to take advantage of preferential African trade agreements with America and Europe, and to gradually wean China off low value-added labour intensive manufacturing.16


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  1. Saleman, Y. & Jordan, L. (2014). The implementation of industrial parks: Some lessons learned in India (Policy Research Working Paper No. 6799). Washington DC: World Bank. Retrieved from
  1. Brautigam, D. & Xiaoyang, T. (2011). African Shenzhen: China’s special economic zones in Africa, Journal of Modern African Studies, 49 (1), 27-54. Retrieved from
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  1. Newman, C., Page, J., Rand, J., Shimeles, A., Soderbom, M. & Tarp, F. (Eds.). (2016). Manufacturing Transformation: Comparative studies of industrial development in Africa and Emerging Asia. (1st ed.). Oxford: O.U.P. Retrieved from
  1. Newman, C., Page, J., Rand, J., Shimeles, A., Soderbom, M. & Tarp, F. (2016). Can Africa Industrialize? In C. Newman, J. Page, J. Rand, A. Shimeles, M. Soderbom, & F. Tarp (Ed.), Manufacturing Transformation: Comparative studies of industrial development in Africa and Emerging Asia (1st ed., pp. 257-276). Oxford: O.U.P. Retrieved from
  1. Auty, R. (2011). Early Reform Zones: Catalysts for Dynamic Market Economies in Africa. In T. Farole & G. Akinci (Ed.), Special Economic Zones: Progress, Emerging Challenges, and Future Directions (pp. 207-226). Washington DC: World Bank. Retrieved from
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  1. Newman, C. & Page, J.M. (2017). Industrial clusters: The case for Special Economic Zones in Africa, (WIDER Working Paper No. 2017/15). Helsinki: United Nations University World Institute for Development Economics Research. Retrieved from
  1. Cusolito, A.P., Safadi, R. & Taglioni, D. (2016). Inclusive Global Value Chains: Policy options for small and medium enterprises and low-income countries. Washington DC: World Bank/OECD. Retrieved from
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  1. Brautigam, D. & Tang, X. (2014). “Going Global in Groups”: Structural transformation and China’s special economic zones overseas, World Development, 63, 78-91. Retrieved from
  1. Farole, T. (2011). Special Economic Zones in Africa: Comparing performance and learning from global perspectives. Washington DC: World Bank. Retrieved from
  1. Farole, T. & Akinci, G. (Eds.). (2011). Special Economic Zones: Progress, Emerging Challenges, and Future Directions. Washington DC: World Bank. Retrieved from
  1. Dollar, D. (2018, January 19). Foresight Africa viewpoint – African economies and global value chains [Blog post]. Retrieved from
  1. Hallward-Driemeier, M. & Nayyar, G. (2018). Is automation undermining Africa’s industrialization prospects? In B.S. Coulibaly (Ed.), Foresight Africa – Top priorities for the continent in 2018 (pp. 70-71). Washington DC: Brookings Institution. Retrieved from

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