Patrick PLANE, CNRS UCAuvergne: “The structural transformation of Africa is likely to lead to an intensification of the role of SEZs

Patrick PLANE is Director of Research at the CNRS, CERDI-UCA, in charge of the Sustainable Competitiveness Observatory at the Foundation for International Development Studies and Research (FERDI) © DR

Source : Patrick PLANE, Directeur de recherche CNRS-UCA : « La transformation structurelle de (…) – AfricaPresse.Paris

Interview with Alfred MIGNOT, AfricaPresse.Paris (APP)

@alfredmignot | @africa_presse.

AfricaPresse.Paris (APP) – What is your point of view on the issue of SSEZs (Secured Special Economic Zones) in the acceleration of Europe-Africa co-development, which is the theme of the webinar?

Patrick PLANE – The quality of institutions and infrastructures conditions the march of development. There can be no structural transformation without clear and properly applied rules to manage interactions between agents. There can be no densification of the productive fabric if the public service infrastructures are not up to the industrial challenge in a context of heightened competitiveness.

It is true that Africa has made remarkable progress in these different areas of reform over the past three decades, but the gap with other developing regions, particularly Southeast Asia, has not been significantly reduced. The business environment remains problematic, as international assessment procedures show. We can naturally hope for rapid catching-up processes, but this is without taking into account the difficulties faced by countries in making investment choices and in coordinating public policies within often weak governments.

Promoting a major push around a few territorial poles and in the closest possible consultation between public and private, local and international partners, is a more than reasonable option.

In China, after 1978, Special Economic Zones (SEZ) flourished. They have been a powerful vehicle for catching up with the developed economies. It is obvious that the context of operationalization is not the same in Africa, so that identical translations are illusory, if at all desirable! While the instrument must find its mark and originality with an acceptance of the right to make mistakes, the structural transformation of the continent is probably moving in the direction of an intensification of the role of SEZs.

APP – What are the three points of the report that interested you the most?

Patrick PLANE – The proposed report is conceptual in the best sense of the word. It offers a clear discussion of the different instruments that allow for territorialized development and the institutional modalities for bringing interactions between companies to life. On what basis should a Special Economic Zone be established and with which dominant actor?

The report provides a complete and commented country-by-country radioscopy of the Special Economic Zones established in Africa. The authors take the trouble to identify the factors of success and failure, an important step for those who are convinced that one learns as much from one’s mistakes as from one’s successes.

The reader will note that the African continent is not virgin in terms of SEZs. More than 70% of the countries have them, but in relation to the size of the working population and the level of development, the instrument is far from reaching what can be observed in other developing regions.

APP – Among the proposals made at the end of the Report, which ones do you consider essential?

Patrick PLANE – I would particularly like to highlight these:

– Coordinate industrial development strategies and the establishment of SEZs in different countries at the sub-regional level: this is important, given the objectives of integration within the RECs and the promotion of the African Free Trade Area (AFTA)

– Putting SEZs at the center of an industrial strategy to develop niches

– Modify the rules of competition? Should Europe exempt products imported from African SEZs from customs duties? Be careful not to penalize, by a very flexible interpretation of the rules of origin, African trade that would be based on real African added value. The opportunism of foreign companies seeking easy access to European or U.S. markets should not be underestimated.

– The “12 golden rules” mentioned by Moubarack Lô [this contribution will be made public later this week, and the full report will be distributed to webinar participants after the webinar] are all equally relevant. On some of them, I might add a few nuances, especially in relation to the number of SEZs that can be simultaneously launched in a national territory.

It is important to avoid being too dependent on the political agenda, to avoid creating zones exogenously by the sole will of the executive branch and a minimal consultation with the private sector. The legitimization and conceptualization of the project with the private sector is important.

It is true that the plan is an anti-hasard and provides the beacons of roads, but beyond the project documents there is the capacity for implementation, both public and private. It is also important not to disperse debt-generating financial resources over too many SEZs. It is advisable to give time, to have feedback and to interpret it appropriately before pushing the limits.

Of these “12 golden rules,” there is one that brings the institutional challenge to the fore. Who are the actors who should set up and manage the SEZ? How to ensure coordination of the zone without generating rent-seeking on the part of those in charge? What place should be given to the private sector? And how should the actors interact within the SEZ?

APP – What would you propose to add to these proposals? A more proactive participation of Europe?

Patrick PLANE – In several countries, China has promoted SEZs as a vehicle for cooperation with Africa. As is often the case with development and institutions, experience to date has not revealed any absolute truths. The results are indeed mixed, including for Ethiopia, a country where these zones are nonetheless giving rise to rather positive reflections.

Could the European Union be inspired and do better in the implementation of this type of partnership action? Until now, the EU has only indirectly dealt with the private sector and its productive investments. It has remained largely focused on issues of financing economic and social infrastructure (ESI), to use Hirschman’s expression.  But times are changing. President Juncker’s previous Commission has made commitments to become more involved in private productive projects.

The External Investment Plan (EIP) is one of the vehicles designed to contribute to this result. It deploys guarantee and “blending” instruments, making it possible to combine a European grant with a “loan” financed by one of the approved development agencies or financial institutions in the same project.

The relevance of channelling grants to the creation of Special Economic Zones is questionable. Active participation in this tool could constitute a line of cooperation with Africa, a support for European companies in areas offering a sufficiently competitive local production context to boost trade between the two shores of the Mediterranean.

Europe is becoming aware of the dangers that would result from the continued deindustrialization of Africa. The figures speak for themselves. In 2015, more than 60 million people left their home environments in search of a better life, either because they were fleeing conflicts and wars or because local economic opportunities were limited.

About 40 percent of all displaced people worldwide came from North Africa and the Middle East, and 30 percent from sub-Saharan Africa. By 2050, Africa will have a population of 2.5 billion. It will therefore have doubled its 2016 level! 

SEZs are not an “all-risk insurance policy”, but they are a means of operationalizing cooperation, of solving in a given place and in a short time what cannot be solved, in an emergency, at any point in a national territory. They are also a lever to relaunch the G20’s “Pact with Africa”, which has so far only attracted a volume of private investment that is far below expectations.

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