As Africa positions itself as a global economic powerhouse, special economic zones (SEZs) are emerging as key drivers of industrialisation, urban development, and economic diversification. SEZs are designated geographical areas within a country where businesses and investors can operate with different, often more favourable economic policies and regulations than the rest of the country.
They aim to attract investment and promote economic growth. With their strategic incentives, infrastructure investments, and policy support, SEZs are nurturing a dynamic business environment reshaping Africa’s economic landscape.
According to the African Economic Zones Outlook (Edition 2021), more than 200 SEZs are operational in Africa, while 73 projects have been announced for completion in 47 countries. The land dedicated to SEZs is nearly 150,000 hectares while over USD 2.6 billion has been mobilised in investments dedicated to agro-processing, manufacturing and services.
“Africa’s special economic zones are evolving from industrial hubs; they are quickly becoming blueprints for the continent’s future where innovation, sustainability, and economic growth intersect to create globally competitive and dynamic economies,” observes Adnan Khan, Partner, Anjarwalla & Khanna (ALN firm in Kenya)
According to the Industrial Analytics Platform, there are more than 7,000 SEZs globally, supporting industries that contribute to local and national economies. In Africa, SEZs have gained prominence as a strategy to attract foreign direct investment, create employment, boost exports, and accelerate industrialisation. Today, 47 African countries host more than 200 operational SEZs.
But how are they catalysing change, and what challenges must be addressed to maximise their impact?
SEZs as Catalysts for Industrialisation
One of the most significant contributions of SEZs in Africa is their role in accelerating industrialisation. By offering tax incentives, streamlined regulatory processes, and access to world-class infrastructure, these zones attract foreign direct investment and stimulate domestic manufacturing.
“The success of SEZs in Africa depends on a strategic mix of policy consistency, infrastructure investment, and private sector collaboration. When executed effectively, they become catalysts for job creation, economic diversification, and industrial advancement in several sectors, including manufacturing and energy,” notes Funmilayo Otsemobor, Partner, Aluko & Oyebode (ALN firm in Nigeria)
According to Knight Frank’s Africa Horizons Report (2023/2024), Africa’s manufacturing sector has huge potential for growth and development. The sector continues to see an uptake in investments that will shape the continent into one of the key manufacturing hubs across the world. Countries like Ethiopia, Morocco, and Nigeria have leveraged SEZs to develop their manufacturing sector to drive industrial growth, create employment and boost exports.
For instance, Ethiopia’s Hawassa Industrial Park has positioned itself as a hub for textile and garment manufacturing, attracting major global brands and generating thousands of jobs. Similarly, Morocco’s Tangier Free Zone has become a key player in automotive manufacturing, housing multinational corporations like Renault and driving exports to Europe and beyond.
The Intersection of SEZs and Urban Development
SEZs are shaping Africa’s urban landscape paving the way for development of smart cities. By integrating industrial parks with residential, commercial, and social infrastructure, SEZs are giving rise to modern, well-planned cities. Tatu City and the Two Rivers International Finance & Innovation Centre SEZ in Kenya and Kigali Innovation City in Rwanda are key examples of how SEZs have become key engines for advancing economic growth.
According to the United Nations Conference on Trade and Development (UNCTAD), the role of cities and urban areas as hubs for creativity and innovation could underpin the success of SEZs in the vicinity. This is because creative systems, technological innovation and the development of knowledge mechanisms, have primarily occurred in cities. However, SEZs can encourage the development of nearby urban areas. Well-planned SEZs attract talent, spur local entrepreneurship, and reduce urban congestion by decentralising economic hubs from traditional city centres.
Therefore, it is imperative for relevant authorities and developers to focus on urban integration to ensure that SEZs are inclusive and do not exacerbate economic disparities. Prioritising affordable housing, efficient transport systems, and environmental sustainability within SEZs planning will be a catalyst to create long-term value for residents, businesses and investors.
Economic Diversification: Beyond Traditional Industries
Africa’s economic landscape has long been dominated by resource extraction, but SEZs present a unique opportunity to enhance economic diversification and sustainability. Beyond manufacturing, SEZs are now fostering growth in technology, finance, logistics, and green energy.
Countries like South Africa and Kenya are establishing technology and innovation hubs within SEZs to promote digital entrepreneurship and attract global tech giants. In Nigeria, the Lekki Free Trade Zone is evolving into a major industrial and logistics hub, supporting oil and gas, consumer goods and fintech industries.
Meanwhile, the emergence of Green SEZs is aligning with Africa’s sustainability goals. Renewable energy-powered industrial zones, such as the Ouarzazate Solar Power Complex in Morocco, highlight how SEZs can support the transition to a circular economy and drive climate-friendly investments.
The Future of SEZs in Africa
To fully unlock the potential of SEZs, African nations should adopt a cohesive strategy that enhances regional integration, particularly under the African Continental Free Trade Area (AfCFTA). Key organisations such as the Africa Economic Zones Organization are crucial to promoting and harmonising sustainable economic models and practices for development of SEZs across the continent.
“By aligning SEZs with the African Continental Free Trade Area, Africa has the opportunity to create seamless economic corridors that will boost intra-African trade, attract global investment, and redefine the continent’s role in the global economy,” emphasises, Mushtaq Namdarkhan, Partner, BLC Robert & Associates (ALN firm in Mauritius)
Some African countries are pioneering new ways to design and promote their SEZs. Egypt, for example, established the Suez Canal Economic Zone in 2015 with the aim of attracting foreign investment to the country. It is now focusing on becoming a global hub for green hydrogen production, combining its geographical advantage near the world’s most significant shipping corridor with abundant solar energy.
Africa’s economic transformation journey will be defined by its approach to adopting inclusive strategies and SEZs stand at the forefront of a new economic era—one defined by inclusive growth, urban modernisation, and industrial growth. With the right policies and strategic investments, SEZs can pave the way for Africa’s economic renaissance, unlocking unprecedented opportunities to integrate economies.
Sources
