SEZs a vehicle to drive devolution

Special economic zones, which the New Dispensation is establishing in various parts of the country, are a clear intention to attract investment to help develop the economy.

These specially reserved zones will be useful in advancing the concept of devolution, as provinces can leverage on the returns from those established within their jurisdictions.

It is important to notice that the nexus between special economic zones and devolution will contribute to provinces being able to attract investors in various fields to help, especially with value addition and beneficiation.

Writing a paper for the Investing in Africa Forum recently, Chinese expert Mr Douglas Zhihua Zeng said the definition of special economic zones varied and covers a broad range of areas.

Mr Zhihua’s paper was aptly titled: “Global Experiences with SEZ — With a focus on China and Africa”.

“The term “SEZ” here covers a broad range of zones such as free trade zones, export processing zones, industrial parks, economic and technology development zones, high-tech zones, science and innovation parks, enterprises zones and others,” he wrote.

“The basic concept of SEZs includes several specific characteristics: (a) it is a geographically delimited area, usually physically secured, (b) it has a single management or administration; (c) it offers benefits for investors physically within the zone and (d) it has a separate customs area (duty-free benefits) and streamlined procedures.”

In other words, special economic zones “are set up when a country delimits a special area where, through exemption of customs duty, it formulates various preferential conditions and provides public facilities so as to attract foreign investors set up factories whose products are mainly for export”.

A number of areas have since been declared as special economic zones in Zimbabwe, and these include Beitbridge and Bulawayo, which is the traditional manufacturing hub for the country.

In Bulawayo, there will be the Belmont-Kelvin-Donnington Corridor and the Umvumila area close to Joshua Nkomo International Airport for manufacturing and logistics.

Cabinet recently approved the Conceptual Development Framework for the Victoria Falls-Binga Special Economic Zone and the related nodes following presentation by the Minister of Local Government and Public Works.

The following 10 nodes, most of them being tourist resorts, were identified within the Special Economic Zone: Victoria Falls Municipality Area; Jafuta (Masuwe) Stateland; Batoka Town; Mlibizi Resort; Binga Centre; Sijarira Resort; Binga hinterland; Gwayi-Shangani Dam Resort; Hwange Town and the Hwange Aerodrome Centre.

In Harare, Sunway City has been established as a special economic zone which covers about 1 220 hectares and designated as a high tech and manufacturing area to encourage value chains in industries.

Apart from special areas being reserved as special economic zones, companies can also be declared as private sector special economic zones.

Firms which have so far gained the status of private sector special economic zones are Surewin, Trade Kings, Nkonyeni, Varun, VSLink, Chingases, Colmin, Shepco, Lentsloane, Ecosoft, Afrochine and Prospect Lithium.

In establishing the special economic zones, it is important to take lessons from other countries and China is a good example, since most of its advancement in development is attributed to the establishment of such special trading areas.

From the 1980s, the Asian economic giant embarked on special economic zones as part of its economic reform programme. And the move is paying dividends, as cities which were established 35 years ago as special economic zones are now driving the economic success story of China.

China is now the second largest economy in the world after the United States, yet this feat could not have been achieved without the aid of the special economic zones. What needs to be observed in implementing the special economic zones is to offer a package of attractive incentives that will entice the investors.

The investors bring not only foreign currency, but also high-tech equipment, new technologies and create employment for the host nation.

To start with, China created special economic zones in 1980 in four cities — Shenzhen, Zhuhai and Shantou in Guangdong province and Xiamen in Fujian province.

Shenzhen, which was a fishing village before being declared a special economic zone, has witnessed phenomenal growth and is now ranked among the top four cities in China.

It is now being referred to as the city of invention because of its emphasis on technological innovation.

This is because the Chinese authorities allowed investors to import capital goods, consumer goods, raw materials, components and any articles intended for use in the special economic zones at concessional customs duty.

In this way, incentives are important if the local special economic zones are going to realise their full potential and help advance the devolution concept.

Provincial leaders in charge of devolution have to start reflecting on what type of special economic zones are appropriate for their areas.

The incorporation of the special economic zones into the one-stop investment centre under the newly formed Zimbabwe Investment and Development Agency (ZIDA) is expected to quicken development in those designated areas, and attract more investors.

ZIDA repealed the Special Economic Zones Act, and it is expected that the new entity will drive establishment of the special economic zones with urgency to ensure the country reaps the much-needed benefits.

Investors in special economic zones are interested in getting a worth from their investments, and the stabilisation of the economy, which the country has witnessed, is set to assure them of such a benefit.

The progress being made is reflected by the stabilisation of the foreign currency exchange, the harnessing of inflation and the fight against corruption.

This is being complimented by the establishment and rehabilitation of infrastructure which include roads, power generation stations and water reservoirs. It is also important that appropriate infrastructure is established within the areas designated for the special economic zones, as this conforms with the expectations of both local and international investors.

In many other countries, especially in Asia where the industrial parks development model is popular, investors find factory shells already in place, and all they do is bring in their machines, install them and start work.

Projects under the special economic zones should be licensed on the basis of their orientation towards export or import substitution and how they will promote industrialisation of the domestic economy.

Skills transfer is also emphasised, as well as the creation of employment and development of human resources.

What should make the special economic zones a viable model of economic development is that they are implemented on a win-win basis, with both sides — the country and the investor — benefiting.

Special economic zones are known to attract investors because of the incentives on offer, which makes sense for the investors to bring with them new technologies and foreign capital.

For Zimbabwe, what is important is that Government has already demonstrated political will from the top to vigorously push for establishment of special economic zones.

What is now needed is a thorough follow-up from the provinces where the special economic are being established to ensure that they offer a comfortable landing for investors.

There is also need to market the country, especially the areas where the special economic zones are to be established in a way that leaves potential investors in no doubt of the benefits they will drive.

There is no doubt that Government is on the right track by promoting more foreign investment through special economic zones, and the sooner an aggressive approach is adopted in establishment such zones, the better.-hrald.cl.zw