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To be transformative, the development of Special Economic Zones must be mindful of land justice, work’s right and environmental sustainability.

12 June, 2024
To be transformative, the development of Special Economic Zones must be mindful of land justice, work’s right and environmental sustainability.

Yaounde, 12 June 2024 (ECA, UNDP, IIED) - "The impact of special economic zones (SEZs) on Africa's sustainable development has remained weak due to many factors. Our discussions have enabled us to draw up the ideal profile for a sustainable and transformative footprint of what we call "new generation" economic zones in Central Africa. We are calling for well-defined perimeters that bring added value, respect land ownership through adequate compensation and recruit local workers while being mindful of environmental preservation", concluded Jean Luc Mastaki, Director of ECA Office in Central Africa, at the end of a webinar jointly organized with UNDP and IIED.

The 98 experts who took part in the June 12, 2024 webinar with the theme "Fostering responsible business practices for inclusive and sustainable SEZs in Africa: Regional and International perspectives" recommended 6 flagship measures to this end. Firstly, make SEZs pillars of sustainable development policy through the local processing of raw materials. Secondly, invest in the sustainability of industrial activities through regeneration and recycling. Thirdly, ensure effective and adequate compensation for those dispossessed of the land resources destined to house these industrial clusters. Fourth, reinforce corporate social responsibility to improve living conditions for local populations through better development of basic infrastructure. Fifth, promote the linking-up with the local economy by involving local businesses and workers in SEZs and their benefits on a long-term basis. Sixth, mitigate the negative social impact of the development of these platforms by enabling the continuation and integration of the subsistence activities of local populations within the business model.

UNDP supported the development of a SEZ in Sierra Leone. Based on its experience, "incentives for the development of SEZs must respond to a well-defined triple logic: economic, social and environmental. The allocation of these incentives should be linked to the development of the local workers, the improvement of skills and the construction of basic infrastructure. Such an approach would make it possible to select projects with a high socio-economic impact. National enterprises, especially SMEs, should also benefit from the facilities offered by SEZs, which are destined to play a key role in building local competitiveness," stressed Ligane Sene, Economic Advisor, UNDP South Sudan.

IIED calls for all these requirements to be incorporated into the legal texts and other strategic documents of countries and regional organizations. "To succeed in the challenge of new-generation SEZs, the legal elements must be binding through the insertion of social aspects into laws and policies beyond the notion of 'do no harm'. Effective and accessible channels must also be used for communication, accountability and redress," said Lorenzo Cotula, Principal Researcher and Head of Law.

According to ECA, there is a strong stake in strengthening the regional dynamic in developing SEZs for better integration of value chains, certification of skills, realization of economies of scale and creation of common standards. ECA's Sub-Regional Office for Central Africa is putting into practice the establishment of the cross-border SEZ between the DRC and Zambia for the processing of cobalt, copper, manganese, lithium and other mineral resources to better position Africa within the vibrant battery and electric vehicle (BEV) value chain. DRC and Zambia have set up a Center of Excellence for the development of battery-related skills through an innovative partnership involving the public, private and academic sectors. ECA's Office for Southern Africa, which is also involved in the BVE initiative, has developed an agro-industrial park between Zimbabwe and Zambia. This other experience underlines the importance of governments and investors taking responsibility for meeting the socio-economic and environmental requirements expected of SEZs.

Africa currently boasts over 230 industrial clusters or SEZs, with varying degrees of success. For Afreximbank, institutional investors are increasingly making the financing for SEZs conditional on compliance with environmental and social criteria. Christian Ndikumagenge, Afreximbank economist, "the Bank's advocacy or intervention in promoting good business practices and ethical commitments consists in defining the responsibilities of the players, and assessing the environmental, social and ethical impacts of the various projects. During implementation, the Bank's business model includes the mobilization of an independent engineer to carry out effectiveness checks".

Emmanuel Mbarga, advisor for Central Africa and lead expert for market access issues at the ZLECAf Secretariat, emphasizes that "SEZs are elements of industrial policy in Africa. The manufactured products and intermediate goods they produce will circulate freely according to the preferences of the AfCFTA, as stipulated in the directive issued by the African Union Ministers of commerce".

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