The entry into force of the African Continental Free Trade Area (AfCFTA) in January 2021 has ushered in a new era for trade on the continent. With the ambition of creating the world’s largest common market, encompassing 1.3 billion people and a combined GDP of $3.4 trillion, the AfCFTA represents an unprecedented opportunity for African economic integration. At the heart of this dynamic, Special Economic Zones (SEZs) are emerging as essential tools to realise the full potential of this historic agreement.
The establishment of the Continental Free Trade Area (CFTA) in 2021 marked the beginning of a phase of economic integration on the African continent. Special Economic Zones (SEZs) are crucial to realising this potential. These incentive zones, which are subject to different legal and economic regulations from the rest of the country, aim to attract foreign investment, develop regional value chains and stimulate the production of goods and services for the continental market, reducing dependence on imports. According to Wamkele Mene, SEZs are fundamental to achieving the objectives of the AfCFTA.
The role of special economic zones is absolutely crucial. That’s why we’re here. According to the African Economic Zone Outlook, Africa is home to more than 200 special economic zones, with more than 70 projects currently under development. To support this dynamic, our heads of state and the assembly of heads of state and government of the African Union, on the advice and recommendation of the trade ministers, have adopted a ministerial regulation on the treatment of products from special economic zones.
Wamkele Mene, Secretary General of the AfCFTA Secretariat – South Africa
To maximise the benefits of the AfCFTA, the Secretary General is urging African states to strengthen their SEZs and align them with the objectives of the agreement. In his view, this will ensure that goods and services produced in these zones, in accordance with the rules of origin, will enjoy full access to the single African market, thereby promoting their competitiveness, cost-effective production and Africa’s industrial development.
‘This regulation ensures that goods and services produced in special economic zones, originating in these zones and complying with the rules of origin, are fully integrated into the African single market. This will guarantee that our special economic zones will be competitive, that they will be able to produce at profitable costs and that they will contribute to Africa’s industrial development’.
Wamkele Mene, Secretary General of the AfCFTA Secretariat – South Africa
According to Wamkele Mene, in the context of the introduction of tariffs by the United States, the harmonisation of SEZ policies, the sharing of successful experiences and enhanced regional coordination would maximise the positive effect of these zones on trade between African countries. According to data from the United Nations Economic Commission for Africa, the number of Special Economic Zones on the continent has risen from 20 in 1990 to 237 in 2020, an increase of 1085%. They are concentrated mainly in Kenya, Nigeria, Ethiopia and Egypt.
‘We know that African countries will be negatively affected by the imposition of tariffs, especially those countries exporting to the United States under AGOA. We must therefore see this crisis as an opportunity for our continent to seize the moment, an opportunity to deepen and accelerate intra-African trade. This includes accelerating Africa’s industrial integration as well as integrating Africa into its own industry, the African FTAA market into its own special economic zones of production.
Wamkele Mene, Secretary General of the AfCFTA Secretariat – South Africa
African free trade zones are playing a key role in the African Continental Free Trade Area (AfCFTA), according to a report by the Oxford Business Group and the World Association of Investment Promotion Agencies. The AfCFTA, which comes into effect in January 2021, aims to create the world’s largest common market, with a population of 1.3 billion people and a combined GDP of $3.4 trillion.
