15 May 2011

Tanzania: Call for Removal of Investment Barriers

THE second African Free Zones Association (AFZA) 2011 convention ended in Dar es Salaam over the weekend with potential investors urged to turn what is perceived as business impediments on the continent into investment opportunities.

Erratic supply of water, electricity, inadequate funding and poor infrastructure in terms of serviced land, factory buildings, roads, ports and railways were the critical hurdles frustrating investments in Africa's free trade zones that dominated deliberations of the three-day conference.

But, according to AFZA Secretary General Chris Ndibe, poor roads, lack of factory buildings and inadequate water and power supplies are in themselves opportunities for investments.

Mr Ndibe challenged potential investors to explore opportunities in infrastructure development through the public private partnership; a system he said has worked in some countries.

At the end of the conference, the delegates were convinced that the free zones were the viable strategy for promotion of international trade and regional development.

They said that many African countries have widely accepted free zones as credible means of attracting new foreign direct investments into specific locations.

But experts warned that free zones were not a panacea to African development problems, arguing that the zones were bound to fail unless respective host countries introduced effective policies and legislative measures to free up economic development within the zones.

An international trade expert with the World Bank, Mr Thomas Farole, cited Korea, Malaysia, China, Costa Rica and Mauritius for high profile zone successes but reminded of existing failures too.

"We have to understand the performance and factors that contribute to sustainable success," he told the conference.

He said free zones have huge potential of addressing key problems of unemployment and favourable investment climate in the African continent, but noted that African zones were yet to deliver on their potential due to limited investment.

Mr Farole said most African countries were not well positioned to be global export platforms for labour-intensive assembly, challenging them to consider re-orienting to better exploit comparative advantage and regional markets.

"This will mean re-focusing on zones as spatial industrial strategy - promoting clusters and value chains," he argued, noting that African countries have to improve strategic planning and have in place a transparent, robust legal and regulatory framework to attract and retain investors.

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