Africa can learn valuable lessons from China's zones

Updated: 2016-10-07 07:48

By Philip Etyang(China Daily Europe)

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In the past few years, Africa has experienced unprecedented economic growth, with seven out of the top 10 global economies reporting the fastest growth rates coming from the continent.

A heavy reliance on international trade has helped these developing countries achieve high and sustainable economic growth year-on-year.

However, an adverse international trade imbalance is exacerbating the challenges of economic growth, especially in sub-Saharan Africa.

The continent is importing more than it is exporting, a situation which is wearing down economic gains achieved through growth indicators such as infrastructure development, capital stock and government spending.

Visionary African leaders are however, advocating the industrialization of Africa and are mainly looking at China, a country that has succeeded on that front.

Africa can learn valuable lessons from China's zones

A strong industrial and manufacturing base will, among other things, increase a country's attractiveness to foreign direct investment, increase the flow of goods for export, create employment opportunities, and add value to goods and services while putting a trade imbalance in check and ensuring sustainable economic growth.

Today, more African countries are focused on establishing synergies with China, especially on special economic zones to bolster their industrialization sector so as to spur economic growth. These special zones in countries such as Malaysia, Singapore, South Korea and China have proven to be very effective forms of growing the industrial and manufacturing sectors.

Special economic zones, which come in different forms such as export processing zones, free trade zones and industrial parks. are not new to Africa. Others include enterprise zones, economic and technology development zones, high-tech zones and free ports.

The first official export processing zone to be established in Africa was in Mauritius back in 1971.

Several other African countries, notably Ethiopia, Nigeria and South Africa, followed the trend, and by 2010, at least half of all African countries had established these special economic zones, which were hugely successful in contributing to the overall national GDP.

Today, most of these zones are not only lackluster, but have also failed to live up to expectations of raising industrialization. They have infrastructural weakness, lack proper legislations to govern them, are deficient of government commitment and lack modern technology.

In contrast, countries like China have experienced the best results from special economic zones because of myriad reasons that Africa should take note of to avoid pitfalls on its path to economic freedom.

African countries should set up zones in areas that have access to the international market so as to ensure the goods produced find an exit there.

This will significantly reduce overall production costs while increasing market competitiveness of goods.

Proper feasibility studies and planning should be carried out before the establishment of these zones away from coastal and border regions, as these are the main gateways to the international market.

Shenzhen is the best example Africa should look at. It is China's oldest and largest special economic zone and is strategically and geopolitically located at the heart of the international market.

The port of Shenzhen has a 260-km coastline with at least 10 major sea ports. It is also home to more than 40 shipping companies with over 130 international container routes. Industries located in the town therefore have easy access to these international routes and markets.

Other than location, African countries should be ready to engage with countries such as China that have proven success stories in its quest to accelerate economic growth through establishment of special economic zones. Today, China has over 100 economic zones, which have fostered positive economic growth, increased employment opportunities and raised foreign direct investments in the country.

Environmental degradation is yet another challenge that Africa may have to contend with when implementing special economic zones. China has put in place a raft of fiscal policies to ensure enterprises adopt green and efficient renewable energy that Africa can borrow from. This was as a result of China spending a significant amount of its GDP (estimated at 8 percent) on environmental costs.

On the other hand, China has a role to play if it is to implement its 2006 going global strategy of establishing up to 50 overseas economic and trade cooperation zones across the globe. Beijing maintained that at least five would be created in Africa.

The author is a PhD student at Kenyatta University in Nairobi and a contributor to China Daily. The views do not necessarily reflect those of China Daily.

(China Daily European Weekly 10/07/2016 page13)

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