THE IMPACT OF CHINESE SPECIAL ECONOMIC ZONES IN AFRICA – BHAVITA KESHAV

Image: Markus Spiske (Unsplash)

China has a long history of political contact with Africa, going as far back as 759 AD. The fact that China has never made attempts to conquer Africa makes the current relationship considerably positive. In hindsight the slow move of Chinese businesses and investments into Africa have been seen as beneficial. The consequences of rapid globalisation as a new phenomenon of the post-Cold War International Political Economy (IPE) has been largely negative to many developing countries due to the inherent contradictions brought about by the process. 

The one thing I would like to expand on is Special Economic Zones (SEZs). SEZs are geographically designated areas of a country set aside for specific economic activities, supported through special arrangements and systems that are often different from those that apply to the rest of the country. When it became known that the Chinese government was launching a new program, over ten African countries expressed their interest to be a potential host for Chinese led SEZs. After two rounds of tenders seven zones in Africa were chosen; Nigeria, Zambia, Egypt, Ethiopia, Mauritius and Algeria.

Aside from China benefitting, the host countries also need to benefit from SEZs such as creating a needed influx of trade from other global regions, increasing exports, creating employment for the local communities and growing the economy. Aside from zones in Mauritius and Ethiopia which are fully owned by the Chinese, Nigeria has a joint venture. Another positive impact that Chinese SEZs have in Africa is infrastructure. There has been substantial development assistance in SEZ regions. What makes this unique is that the development is being initiated by the Government of the People’s Republic of China (PRC). Rather than being the initiators of this process African governments are the recipients of the Chinese led initiatives.

One can argue that with any sort of initiative there will be pros and cons which is the case with these SEZs. The growth of industrialisation is one which is very important for the Chinese as well as various African countries; however there are not enough SEZs in Africa to spark an efficient industrial push. China has dented Africa’s efforts at industrialisation by perpetuating Africa’s dependence on natural resources, instead of shifting away from agro-industry they are making Africa rely more on it, to benefit the Chinese. There has been a rise in cheap Chinese imports and this has had a negative effect on the local industry, for example in Ethiopia despite competition from Chinese shoe imports forcing the local footwear industry to be creative in their businesses, a number of producers have been eliminated while surviving firms have had slow growth. Situations like these are difficult to avoid due to SEZs having their own unique trade laws which are different from that of the rest of the country therefore a checks and balance system does not exist.  In Mauritius for example, where unlike Nigeria, the Chinese own 100% of the SEZ, this has resulted in the loss of 25 000 jobs (28% of employment) in the Mauritian garment sector between 2001 and 2005, as many foreign businesses have relocated. Foreign businesses would struggle to thrive because it is difficult to compete and match the price-quality ratio that the Chinese offer. The Chinese are reluctant to have joint ventures with the local communities due to fears of differences in the business models of Chinese and the host country firms. 

The Chinese have a responsibility to ensure that their SEZs are not only beneficial to themselves but to the communities they operate in. This is already occurring with a number of privately owned Chinese zones in South Africa and Botswana but it is not at a level where it needs to be. It not only sits on the shoulders of the Chinese to ensure success in their SEZs but it is also the duty of host countries to put policies in place to maximise the impact of these zones on their industries. Africa can no longer take the back seat but needs to take the initiative to explore its horizons. Chinese SEZs are aiding in this method but Africa must use the opportunity to ensure that it does not become completely reliant.

What does this mean for your ordinary citizen? Well, all major events and changes will naturally always affect ordinary people. There is no shield to protect us from negative economic and political changes. This is why it becomes important to hold the government liable and to be actively involved in expressing our concerns.

IS THIS A NEW FORM OF NEO-COLONIALISM???

Bhavita Keshav has an undergraduate degree in International Relations from the University of Pretoria and is currently completing an honors degree in International Politics at the University of South Africa (UNISA). She is current working as a research assistant at CoronaNet and in her spare time she runs a blog and community awareness page on Facebook (South African Youth Supporting Palestine).


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