Abidjan, May 2025 – Africa now hosts about 230 special economic zones (SEZs) across 42 countries, a dramatic increase from just 20 in 1990. Yet despite this expansion, many zones remain underutilized. A new African Development Bank (AfDB) report, published in partnership with the African Union (AU) and UNIDO, highlights the need for stronger local linkages, higher environmental and social standards, and better regional coordination to unlock their full industrial potential.
SEZs are designated areas offering favorable rules for investment and industrial activity, including tax incentives, simplified customs procedures, and flexible regulations. When managed effectively, they can help countries overcome weak infrastructure and complex regulations, providing a more attractive environment for investors and facilitating technology transfer.
However, results remain modest. A survey by UNCTAD found that over 40% of African SEZs operate at less than a quarter of their capacity, while only 15% run at full capacity. Challenges include overly optimistic demand forecasts, shortages of local skills, limited private-sector interest, and governance issues.
The AfDB report urges governments to integrate SEZs into broader industrial strategies. Instead of remaining low-cost export enclaves, zones should serve as catalysts for local SME integration, technology absorption, and participation in regional and global value chains. Stronger connections with suppliers, service providers, and entrepreneurs are essential to long-term viability.
The report also calls for a shift away from models based on cheap labor and weak standards. With sustainability requirements increasingly shaping global trade, policies must emphasize environmental management, labor protection, and social inclusion. Embedding these standards into SEZ governance can attract higher-value investment and strengthen contributions to inclusive development.
Regional cooperation is another priority. Fragmented national approaches have limited the effectiveness of SEZs. The report points to ASEAN’s network of more than 1,600 zones as a model, where regional specialization reduced competition and expanded market access. Aligning SEZ strategies with the African Continental Free Trade Area (AfCFTA) could transform zones into engines of continental integration.
Africa’s SEZs represent a historic opportunity. With stronger policies, regional coordination, and sustainable practices, they can evolve from underperforming enclaves into powerful tools for industrialization and economic transformation.
