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

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I write a monthly 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.

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

 

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.”Poorly-skilled labour has also been identified as a constraint.Still, it is important to point out that whileAfrican SEZs have been underwhelming, there are a few exceptions.Mauritius is one. Kenya, Madagascar and Lesotho have been somewhat impressive as well. Undoubtedly, however, African industrial parks have underperformed relative to their Asian counterparts. 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. 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.

Studiesfind African SEZs to be relatively more expensive to develop. Weak linkages between African SEZs and local economies have also been observed. Job creation objectives have been somewhat elusive as well. 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. … Read More...