Latest Post

Continuation of the Weekly Review: WHAT FREE ZONES HAVE TO OFFER IN THE ACTUALISATION OF AFRICA CONTINENTAL FREE TRADE AGREEMENT (AfCFTA) by Chris Okwy Ndibe




1.    The answer to AfCFTA is industrialization and massive production – Free Zones, world over, are planned industrial heaven; creating a conducive environment for services, export manufacturing and creating smart cities. Enterprises in a Free Trade Zone which are mostly private sector enjoy certain percentage of enabling conditions towards stability and sustained economic growth that will build capital, attract foreign investment and overcome African current need for external assistance.

2.    Product specific Zone will develop on a country comparative advantage there by standing a better trade balancing in the intra- African trade initiative.
Free Zones thrive with industries in which they possess comparative advantages by taking a cluster – approach. Industrial comparative advantages include industries in which the Free Zone regime has specialized and / or built up production capacity. Linking the local specialized suppliers and vendors of a particular industry with zone-based companies operating in the same industry will create strong and cost-effective local supply relationships, contributing to the overall effectiveness of the Companies. In addition, Many modern generation models of Free Zone have relaxed stringent export-performance requirements set out by the World Trade Organization on subsidizing exports, leading to a better integration of Free Zones into the world supply chain.

3.    Zones encourage backward linkages, transfer of technology and high attraction of FDI into host country which are all rudiments of capacity development of a host country.
Simplified and streamlined administrative pattern in the zone, as well as privileged and expedited customs procedures, reducing the bureaucratic burden and paperwork (e.g. document requirements for importing and exporting) has enabled the business in a Free Zone grow faster with its spill over to host country.

4.    Free Zone development and growth in any country advances its human capital which is also contained in the single market development agenda. The “modern generation” models of Free Zones recognise the current trend towards competitive platforms for logistics and global value chain which led to the exemption from duties and taxes being extended from not just on imported inputs but to all merchandise entering a Free Zone.

5.    Intra – African trade will assist the growth of Free Zones in Africa as less resource are spent in logistic and inputs and the linkages of the Free Zones in terms of using the Semi – finished item as raw materials for each other’s final production.

6.    Assuming storage in Free Zones is allowed for unlimited periods to avoid pressure to move goods and pressure on infrastructure offers zone-based companies considerable flexibility in delivery dates, encourages them to search for the best market opportunities or store goods in excess of the host country’s import quotas.
In order to apply for the lowest possible duty or freight rate, goods may be processed or manipulated to change the final product’s shape and weight. This reduces the cost of production which affects prizing that enables market penetration.

7.    Today, the world is talking of “Free Zone of the Future Programme” (FZFP) – A global initiative for local prosperity. This seeks to empower Free Zones and assist them to build and contribute to a sustainable and prosperous future. One that supports the local economies and community while simultaneously benefiting from the global market dynamics.
All that is required here (FZF Programme) is increase in knowledge, Networking (B2B, Market place of ideas, Services and products), Supports (innovation, finances, Future ready zone, etc.).
This is why the collaboration a continental nexus like yours is imperative. The zones in Africa may not achieve it without your support.

8.    The effective running of Free Zone Scheme with sound policy to promote private sector development and participation in trade with the CFTA reducing the barriers to sales and movement will take countries to achieving more markets, which will in turn lay foundation for robust economic growth in the continent. So to jump start the CFTA initiative, the ministers of Trade have to give consideration to the benefit derivable from operation of Free Trade Zones in host countries and in the continent at large.

9.     The Free Zone Ecosystem cannot be overlooked, reflecting on the (1-8) above stated linkages.
The world of Free Zones has to do with best practices in insurance, Talent management, logistics, software and application, Real Estate, Multilateral organization collaboration, marketing services, Government funding, services and, ICT etc. etc.
There is no gain saying that, Free Zones have been a part of economic activity worldwide in recent decades. The role of Free Zones in facilitating Global Supply Chain (GSCs) has been on top of every researcher’s mind for some time now. The nexus between Free Zones and GSCs is an area of interesting study.
Full access to and utilization of stored goods at any time, and indemnity to investors are all factors that aid trade growth.

10.  A good collaboration with the Trade and Industry Department of African Union Commission will be providing thought - leadership and support to free zones scheme especially in trade facilitation, knowing the huge potential that are therein. Government, public and private interest companies, with international organizations’ interest must be harnessed for better and excellent result.