IN THE ZONE

Zambia 2015 | INDUSTRY | FOCUS: MEFZS

Special economic zones not only bring capital into countries, but also new technologies. By doing so, these areas have contributed significantly to GDP, increased employment, and supported the adoption of management best practices.

The government of Zambia, in collaboration with the Japan International Corporation Agency (JICA), has been working in what has become known as the Zambia Investment Promotion Project—the Triangle of Hope (ZIPP-ToH). This project aims at creating a more conducive business environment to attract both foreign and local investors and achieve more comprehensive and faster economic development.

The Multi-Facility Economic Zones (MFEZs) have fallen under this initiative, and are designed to promote the creation of a manufacturing sector that increases GDP growth, boosts trade, and has other knock-off effects in transport, agriculture or services.

According to the government, these MFEZs combine the best characteristics of the free trade zones (FTZs), export processing zones (EPZs), and Industrial Parks. Not only do these areas offer investors ready physical infrastructure and access to amenities, they also come with financial incentives. Among these incentives are a zero percent tax on profits for companies working in priority sectors for a period of five years, 50% tax from years 6 to 8 and 75% for years 9 and 10. Additionally, there is a zero percent import duty rate on raw materials, capital goods, machinery and specialized vehicles for five years.

Currently there are six areas that the government has designated as MFEZs or Industrial Parks: Chambishi, Lusaka East, Lusaka South, Lumwana as MFEZs, and Ndola (Sub Sahara Gemstone) and Roma as an Industrial Parks.

CHAMBISHI

According to the Ministry of Commerce, Trade and Industry, this MFEZ is the home to 14 enterprises that injected up to $800 million into the local economy and created more than 5,600 jobs. Infrastructure developments have also exceeded $100 million to provide the area with power and water resources as well as roads and drainage.

LUSAKA EAST

This MFEZ is situated adjacent to the Lusaka International Airport. This area is focused on light manufacturing activities and specializes in services such as hotel accommodations and conference facilities. According to the government's website, investors have already injected more than $5 Million into infrastructure development there.

LUSAKA SOUTH

The Lusaka South MFEZ started operations in 2013 with an area of 2,100 hectares. Dr. Fortune Kamusaki, Managing Director of the Lusaka South MFEZ explained to TBY that they expect up to 400 companies to move into the area, creating 100,000 jobs for Zambians over a period of 20 years, when the area is supposed to be fully developed. So far, the government of Zambia has invested $400 million to provide the area with infrastructure and utility services.

LUMWANA

This MFEZ of 1,300 sq km focuses on light and heavy industries. According to the website of the Ministry of Commerce, Trade and Industry, the master plan for this zone includes $1.2 billion and 13,000 jobs are expected to be created. Some of the sectors in this MFEZ will include the manufacture of explosives, agro processing, horticulture, fisheries, and the like.


NDOLA SUB SAHARA GEMSTONE INDUSTRIAL PARK

This industrial park is a 100-hectare piece of land on the Kabwe - Ndola Road that is being promoted by a Zambian company. According to the government $8 million have been invested to rehabilitate infrastructure and have already attracted three companies, with 20 expected. This Industrial Park has potential to create 4,000 new jobs in the area.

ROMA INDUSTRIAL PARK

This industrial park is located in Lusaka on a 113-hectare piece of land along the Zambezi Road. This park will ultimately accommodate light industries and act as an incubator of micro, small and medium local enterprises. The total investment is estimated at $46 million with the potential to create 2,800 new jobs. Even though MFEZ are widely believed to boost investment, employment, and exports, experts have raised concerns about the subsidized nature of infrastructure, the lack of domestic investors, and environmental issues. A proper cost benefit analysis should always accompany MFEZ policies so that both the government as well as the private sector can take advantage of a win-win situation.