SEZs key to localisation in Africa
This text was sponsored by Africa Finance Company
AFC is working with companions in Africa to construct new and productive worth chains from the continent’s wealthy useful resource base, which is proving to be a game-changer for taking part nations within the industrial parks programme.
Including worth to Africa’s uncooked supplies is a part of AFC’s technique to scale back emissions from delivery by way of Africa’s exports to different areas. In lots of instances, the remodeled merchandise are shipped again to Africa as completed items.
The organisation has outlined its method on this regard in its white paper launched in 2022, Roadmap to Africa’s COP: A Pragmatic Path to Web Zero, through which it means that step one to lowering wasteful delivery is to construct round native economies for commodities and minerals.
“Africa is the world’s largest retailer of minerals and commodities – all the things from copper and iron ore to cotton, cocoa and low. Most of those commodities and minerals are shipped midway all over the world to Asia for manufacturing and processing, earlier than being transported but once more to the patron market.
“It is a key motive why delivery is the only largest carbon dioxide emitter, after China, the US, India, Russia and Japan at 3.1% of worldwide greenhouse fuel emissions – about equal to all African nations mixed.” The worth addition technique has been given new impetus by the disruption of provide chains from the Covid-19 pandemic lockdowns and international commerce tensions.
A spot for particular financial zones
Funding in particular financial zones and industrial hubs with targeted interventions is regarded by multilateral and different finance establishments as a method to dramatically enhance current worth chains and logistics and create new alternatives for value-added merchandise.
It’s also proving to be an efficient method to develop new worth chains and export functionality in international locations which have lengthy been import dependent regardless of their wealth of agricultural and different assets.
The success of such ventures depends on many components, key amongst them the political will to again transformation with appropriate coverage frameworks, in accordance with audio system on the current Africa Funding Discussion board. These urged African governments to be daring in taking the steps in direction of constructing worth for his or her pure assets. It is a key step however there are different components required in constructing profitable industrial parks.
These components embrace lowering forms by setting up efficient one-stop outlets and different businesses; constructing related abilities; and offering infrastructure to draw firms into the zones – notably dependable vitality provide.
AFC has proved the efficacy of this mannequin in its funding in industrial parks alongside industrial improvement firm ARISE Built-in Industrial Platforms (IIP) in numerous African international locations.
The mannequin is to construct built-in ecosystems and industrial platforms that develop an end-to-end worth chain round a specific pure useful resource.
Testing the mannequin
AFC examined the mannequin with its investments within the Gabon Particular Financial Zone, Glo-Djigbé Industrial Zone (GDIZ) in Benin and in Togo with the Adétikopé Industrial Platform (PIA).
The journey began in 2016, when AFC invested $140m for a 21% stake within the Gabon SEZ, now rebranded as ARISE – a diversified portfolio of ports and logistics, built-in industrial platforms, infrastructure and airports companies. GSEZ commenced as a three way partnership between AFC, Olam and the Republic of Gabon.
The Gabon SEZ is residence to a profitable wood-based export business that has remodeled wooden from the nation’s huge forests into furnishings. The undertaking has enabled the constructing of a provide chain that joins sustainable forestry with furnishings manufacturing and spin-off and assist actions in a 37-hectare manufacturing cluster, which offers shared infrastructure comparable to energy and water. Gabon is now the second-biggest exporter of sawn wooden in Africa and the tenth globally. It’s also the third largest veneer exporter globally and the biggest in Africa. In brief, it’s now a number one participant in furnishings manufacturing and export in Africa.
After efficiently testing the mannequin within the central African nation, in 2020, AFC invested an extra $150m of convertible debt in ARISE IIP for growth into Benin and Togo, following execution of binding concession agreements with the respective governments.
It additionally plans to have interaction within the growth of the Gabon undertaking and deliberate developments in Chad and Côte d’Ivoire, which might be primarily devoted to processing native agricultural merchandise. The success of the initiative is highlighted by the 2 case research we current right here, from Gabon and Benin.