Critical assessment of the legislative framework for private and public-private models of special economic zones in Zambia

Abstract

The focus of this study is to critically analyse the legislative framework for private and public private zonemodels in Zambia. The analysisis against the background of Zambia’scommitment to promote private sector development and the initiative to use the investmentpolicy tool of special economic zones (SEZs). The analysis is based on the salient provisions of Zambia’s Development Agency Act and Public Private Partnerships Act which regulate SEZs and public private partnerships respectively.. The main question sought to be addressed is the efficacy of the legislative framework for private and public private model zones, taking into account accommodation of private sector participation and nature of the investment and business environment. In addressing this question this study will analyse the salient provisions of the aforementioned laws showing how private sector actors are accommodated in the development and operation of the zones.The provisions under the aforementioned laws are to an extent analysed in conjunction with some of Zambia’s international trade and investment obligations such as the World Trade organisation Trade Related Investment Measures. An examination of how the incentives in SEZs are used is also provided as well as some lessons from Ghana, Mauritius and identified international best practices The main findings of the study include the following:  In so far as admission of investors to develop and operate SEZs is concerned the legislative framework does not generally discriminate between local and foreign investors and that admission through PPPs accommodates various kinds of well-known PPPs, even allowing prospective investors to kick start projects through submission of unsolicited proposals;  The need for Zambia’s SEZ policy to continuously evolve and diversify by undergoing relevant changes and improvements so that it remains relevant and adapts to the evolving nature of market availability and needs of SEZs whilst leveraging on Zambia’s comparative advantages;  The interplay between SEZs and Zambia’s international obligations present challenges and opportunities and thus revealing cause for the better appreciation of opportunities and complexities of SEZ policies and consequence of Zambia’s membership in more than one regional arrangement

Need to periodically review the incentive structure so that Zambia does not inadvertently loss revenue through incentives that do not necessarily prove useful to investors or yield the intended benefits for the country. Based on the foregoing findings, among others,this study concludes that factors relating to the establishment of SEZs in Zambia incorporate private sector participation through the lifecycle of SEZs, that is to say from the time the investment is sought to be made to when it is becomes operationalmaking significant stride towards achieving openness to private sector participation through private and public private zone models. Against the foregoing findings and conclusion this study recommends,interalia, forcontinuous and timely observation and assessment of the shifts in use of SEZ policies vis-à-vis changes in the macroeconomic conditions in whichthe SEZ policy is to be implemented and investor market availability. The rationale of the recommendation is so that any necessary review of the Zambian SEZ policy and pursuit of enhanced private sector development is done from an informed position.