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Industrialization and Industrial Hubs

This chapter examines the performance of special economic zones (SEZs) in African countries, specifically in Kenya, Rwanda, and Tanzania, in three dimensions: (i) zone design; (ii) zone development; and (iii) zone spillovers and complementary policies. Most experiences of African zone design are underwhelming and none of the countries examined has reaped clustering or scale effects at the level seen in Singapore, China, or Ireland. While lead zones in Kenya, Rwanda, and Tanzania offer impressive, localized economic results, these are behind best-practice benchmarks. In particular, there is little evidence on significant spillovers from African SEZs to country-wide economic transformation, though spillovers do exist to a limited extent. We expect more significant spillover benefits from SEZs to emerge over time when active linkage and capability policies are in place and are adequately implemented. The current lack of complementary policies is a significant gap in the African experience of using zones for development.