Working Paper
Special economic zones in Southern Africa: white elephants or latent drivers of growth and employment?

The successful use of special economic zones as economic tools for export-led industrial development in East Asia propelled a wave of similar initiatives across Africa. In Southern Africa, Zambia and South Africa instituted special economic zones in their respective legal and institutional frameworks in the 2000s as mechanisms for catalysing industrialization and employment creation by means of domestic and foreign investments.

Using a case-study approach, we find that special economic zones in the Eastern Cape, South Africa, are largely latent drivers of growth and employment hampered by inadequate infrastructure financing and provision and weak local supplier capabilities.

Special economic zones in Lusaka, Zambia, face similar constraints but are further hampered by inadequate business services provision, burdensome regulations and business procedures, a fragmented incentive framework, institutional coordination failures, and a weak design that does not leverage strategic anchor industries for greater agglomeration economies, thus rendering them more of white elephants.