THE Zimbabwe Economic Policy Analysis and Research Unit (ZEPARU) has warned government not to exclusively rely on Special Economic Zones (SEZs) in its desperation to end a worsening economic crisis.
In its 19th edition of the Economic Barometer released last month, the economic think-tank said without complementary policies and well thought-out initiatives, SEZs might not offer any respite to the economic crisis.
In order for SEZs to be successful, ZEPARU said institutions set up to administer the zones must be autonomous.
There must also be unwavering commitment on the part of government to follow through established policies; a better business climate as well as ease of accessibility to the zones.
ZEPARU said government must also roll out reliable infrastructure, rope in foreign partners to work with local investors and make sure that companies inside the zones operate on a commercial basis.
“A key lesson drawn from international experience is that SEZs are not a panacea to solving all economic challenges,” said ZEPARU, in the report.
“They need to be complemented by the implementation of other policy initiatives and strategies outlined in the country’s development programme, the Zimbabwe Agenda for Sustainable Socio Economic Transformation. In the Zimbabwean context, initiatives to reduce the debt burden, expanding and modernising infrastructure, improvement in public service delivery, a conducive business environment and improvements in productivity will all facilitate the success of the proposed SEZs,” ZEPARU said.
In November, Vice President, Emmerson Mnangagwa said Zimbabwe had made progress towards establishing the SEZs.
“Government is seized with the issue of SEZs and I can tell you that we are finalising the SEZs Bill, which would be passed into law soon,” he said.
Government has identified the establishment of SEZ as one of the pillars critical to attracting foreign direct investment, promoting industry competitiveness and resuscitating industries.
Bulawayo, Beitbridge, Mutare, Norton and Victoria Falls are set to be declared SEZs.
SEZs are geographically delimited business hubs, specially administered by a single agency, which offer incentives for companies.
They include free trade zones, Export Process Zones (EPZs), industrial parks, economic and technology development zones and science and innovation parks.
SEZs offer a variety of benefits to companies involved, including export growth, foreign exchange earnings, technology transfer, economic diversification, productivity enhancement to local firms and employment generation.
Following the collapse EPZs in 2006, government has revived its interest in attracting investment.
Despite their eventual failure after government started mismanaging the economy from 2000, EPZs improved earnings by exporting 80 percent of their products.
They had generated US$172 million worth of investment between 1996 and 2006, when they were abandoned and replaced by the Zimbabwe Investment Authority.
About 205 companies were established in the zones, generating a cumulative US$1,2 billion in export earnings during the period.
The EPZs also generated 32 512 jobs for the country.
ZEPARU admits, however, that case studies elsewhere have confirmed that 4 300 other SEZs in 130 countries worldwide have been largely successful, providing employment to 68 million people.
It said SEZs would “catalyse deeper economic reforms and become a major engine for national development through backward and forward linkages with the rest of the economy”.
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