When Special Economic Zones (SEZs) are discussed, attention often narrows to what happens inside the fence: how many factories are built, which incentives are granted, and what exports are produced. Yet the true measure of success for an SEZ is not confined to its boundaries. Its real value lies in its ability to expand the national economic pie, creating jobs, boosting fiscal revenues, and transforming industries far beyond the enclave.
Too many African SEZs, however, have become enclaves with limited impact. They attract investment through generous tax holidays and record early export growth, only for momentum to fade once incentives expire or global demand shifts. Governments are then left with ongoing infrastructure and maintenance costs but little to show for them. Recent analysis confirms that many SEZs in Africa have “failed to meet industrialization, foreign direct investment (FDI) attraction, and job creation targets.”¹ Globally, the story is mixed as well. By 2019, there were nearly 5,400 zones worldwide, up from around 4,000 just five years earlier, yet UNCTAD found that proliferation had far outpaced performance.²
The challenge, then, is not whether SEZs can attract investors—they can—but whether they can deliver transformational development. Successful zones do so by expanding value addition, embedding domestic supply chains, and structuring partnerships that align incentives without overburdening public finances. The experiences of Gabon’s Special Economic Zone at Nkok (GSEZ) and Ghana’s Tema-based Platinum Industrial Area (PIA) provide clear lessons on what really moves the needle.
Turning Raw Materials into Value-Added Exports
One pathway to enlarging fiscal and developmental benefits is shifting from simple commodity exports to value-added processing. Gabon’s GSEZ, operated by ARISE IIP, illustrates this potential.
For decades, Gabon exported raw logs, capturing only a fraction of the value embedded in its forests. In 2010, the government banned raw log exports, a policy shock that could have backfired without complementary reforms. Instead, the launch of GSEZ turned that ban into an industrialization catalyst through three key factors.
1. The raw log export ban sent a clear regulatory signal designed to force processing to happen locally rather than abroad. That signal mattered because it created a national objective around which investors and development partners could plan. Importantly, Gabon’s government maintained consistency in this policy over the decade, reinforcing credibility and predictability for investors.
2. The GSEZ partnership developed serviced industrial plots, reliable energy, logistics links, and access to the port of Owendo—reducing operational friction for processors.
3. ARISE mobilized private capital by bringing in Indian, Chinese, and European firms willing to invest in sawmills, veneer, and plywood factories.
The results speak for themselves. Within a decade, Gabon became Africa’s largest exporter of veneer, accounting for over 60% of processed wood exports from the continent by 2021, and creating more than 10,000 jobs.³ Export revenues diversified beyond raw timber royalties, and Gabon inserted itself into global furniture and construction supply chains.
This case proves that when policy alignment, infrastructure, and investment converge, industrial upgrading becomes more than a slogan, it becomes an export reality.⁴
Building Domestic Supply Chains
SEZs that integrate local producers into their supply chains create multipliers both upstream and downstream. Farmers, processors, transporters, logistics providers, and SMEs all benefit when a zone acts as a hub rather than an enclave.
In Ghana, the Platinum Industrial Area (PIA) illustrates this dynamic. Early anchor tenants in textiles and light manufacturing provided steady demand for inputs such as cotton, packaging materials, and local services, reducing market uncertainty upstream. At the same time, their export orientation opened logistics and trade finance channels downstream, which smaller firms could piggyback on.
A cluster quickly formed. SMEs began supplying packaging, catering, transport, and maintenance services. The interlinkages amplified employment. Within two years of operation, the PIA ecosystem employed over 7,000 workers directly and indirectly, while Ghana’s non-traditional exports saw a measurable boost in textiles and apparel.⁵
This is industrial policy in practice: SEZs are not just about attracting factories, but about fostering multiplier effects that cascade across the economy, expanding the fiscal base and creating a self-reinforcing value web where each new node reduces costs and risks for the others.
Aligning Incentives through Innovative Partnership Structures
Much has been made of the “PPP equity model” in SEZs, where governments and private developers share ownership. But in practice, forcing a cash-strapped government to provide cash equity is often a non-starter.
The real innovation lies not in insisting on cash equity, but in designing contributions that governments can realistically make—chiefly, in-kind assets that are both valuable and affordable. Land, site preparation, planning approvals, regulatory guarantees (e.g., streamlined permitting and customs facilitation), and priority access to enabling utilities are all examples of in-kind contributions that materially lower the private partner’s cost and improve project bankability.
In Gabon, the GSEZ is structured as a joint venture where the state provides land, infrastructure access, and regulatory authority, while ARISE contributes capital, operational expertise, and global market networks. Similarly, in Togo, financing for PIA involved regional banks and DFIs, while the state contributed land and regulatory concessions. In both cases, host governments took minority equity stakes (25–30%) in the zone operating companies alongside ARISE.
This model is pragmatic and powerful because it changes the incentive game. For governments, returns are tied to zone performance. Dividends provide fiscal benefit without draining the treasury through subsidies. Co-ownership also locks in political commitment over the long term. For private investors, government participation ensures stability and smoother navigation of regulatory and bureaucratic hurdles. Policy continuity is less fragile when the state is financially invested.
In Gabon, this alignment unlocked more than $1 billion in private industrial investment while expanding fiscal revenues. In Ghana, it provided buy-in from the state without bloating sovereign debt. This isn’t just a financing tweak, it’s a governance innovation that addresses one of Africa’s biggest risks to industrial policy: sudden reversals and fragile continuity.⁴⁵
Beyond Tax Holidays: What Really Matters
Tax incentives can attract attention, but they rarely sustain investor commitment. What actually makes firms invest and reinvest in SEZs is the operating environment:
Reliable and affordable infrastructure (power, water, logistics).
Efficient transport links that reduce supply chain frictions.
A skilled local workforce that can absorb technical processes.
Predictable and transparent regulations that lower the cost of doing business.
These are the factors that drive competitiveness and long-term investor engagement.
But from the state’s perspective, what truly matters is not just whether investors come, but whether their presence transforms the economy. Successful zones generate:
Net fiscal contribution – more tax revenues and fees than the value of incentives foregone.
Quality jobs and skills transfer – moving beyond low-skill labor into capacity building and technical upgrading.
Diversification of industries – reducing reliance on a single commodity and broadening the productive base.
Ecosystem development – integrating domestic SMEs, suppliers, and ancillary services into the value chain.
This dual lens is crucial. SEZs are sustainable when they align what matters for investors (a competitive operating environment) with what matters for governments (structural transformation)⁶⁷.
The Bigger Picture
Africa’s SEZ story is entering a more mature phase. The continent doesn’t need more “white elephant” parks built on tax waivers and ribbon cuttings. It needs zones that integrate into global value chains, anchor domestic supply webs, and create durable fiscal and social benefits.
SEZs can be engines of national transformation, but only when policy is more than rhetoric: when regulations are consistent and enforced, when land and logistics are ready, when private capital commits to processing (not merely assembly), and when partnership structures let the state share upside without bearing unsustainable upfront costs.
The Gabonese and Ghanaian experiences show this is possible. When a policy signal (the log ban), serviced sites and ports, credible anchor investors, and pragmatic in-kind government contributions meet entrepreneurial capital, enclaves turn into value chains. If replicated with discipline, such models could turn SEZs from short-term fiscal giveaways into long-term engines of transformation. The question for the next decade is whether this disciplined, integration-focused model can be scaled beyond single success stories to become Africa’s new industrial standard.**⁷
By Arnold A. KAMANKE
Footnotes / Sources
1. UNCTAD (2019). World Investment Report 2019: Special Economic Zones.
2. UNCTAD (2019). World Investment Report 2019: Special Economic Zones – Statistical Annex.
3. African Development Bank (2020). Industrialization and SEZ Performance in Africa.
4. ARISE IIP (2021). Gabon Special Economic Zone Annual Report.
5. Ghana Investment Promotion Centre (GIPC) (2022). PIA Performance Review.
6. World Bank & IFC (2019). Global SEZ Performance and Lessons Learned.
7. World Bank & IFC (2020). Special Economic Zones in Africa: Lessons from Performance and Policy Gaps.