Africa urged to use economic zones to attract Chinese investment

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Africa should roll out more Special Economic Zones (SEZs) to attract Chinese investment, a Chinese investor has suggested.

Zhu Layi, president of the Guangdong New South Group, told Xinhua in Kenya that the economic zones offer a lot of tax and infrastructural incentives that are very appealing to Chinese investors seeking to set up businesses in Africa.

"SEZs are a very good model to push for Chinese industries to establish manufacturing plants in African countries," Zhu said.

Zhu Layi, president of the Guangdong New South Group. /Meizhou Daily Photo

Kenya on Friday launched a SEZ project, a joint venture between Kenyan-based company Africa Economic Zone and Guangdong New South. It is expected to attract about two billion US dollars of foreign investments upon its completion.

Kenyan experts have said the SEZs are expected to aid in doubling the current manufacturing sector jobs to approximately one million, adding year-on-year two-three billion US dollars to Kenya's GDP in the next decade.

Zhu noted that SEZs are ideal as they tackle the numerous hurdles that enterprises face while operating in Africa.

"They improve the business environment in the manufacturing sector and hence are likely to become magnets for Chinese investors seeking opportunities in Africa," he said.

An auctioneer records lot information during a tea auction at the East African Tea Trade Association (EATTA) auction room in Mombasa, Kenya, on May 30, 2017. /VCG Photo

Moreover, Zhu said Africa can fully exploit SEZs to attract Chinese firms that are seeking to relocate overseas due to rising labor costs at home.

"In addition, SEZs can help to spur transfer of Chinese industrial technology into Africa," Zhu added.

The rapid industrialization witnessed in China over the past 30 years has been partly attributed to the effective use of SEZs.

"China has used SEZs to catalyze the growth of industries and achieve global manufacturing competitiveness," Zhu said.

Guangdong New South Group currently operates SEZs in Nigeria and plans to establish new facilities in Kenya in collaboration with local partners.

SEZs are designated areas where businesses enjoy tax benefits and other favorable policies.

By creating SEZs, Kenya hopes to increase its export volume, diversify the range of exports currently dominated by agriculture produce, expand job creation, and facilitate tech transfers.

(Source: Xinhua)