Africa advised to use economic zones to attract Chinese investment

ELDORET, Kenya - Africa can attract more Chinese investment by rolling out more Special Economic Zones (SEZs), a Chinese investor has suggested.

Zhu Layi, president of the Guangdong New South Group, told Xinhua in Kenya that the economic zones offer a lot of tax and infrastructural incentives that are very appealing to Chinese investors seeking to set up business in Africa.

"SEZs are a very good model to push for Chinese industries to establish manufacturing plants in African countries," Zhu said.

Kenya on Friday launched a SEZ project, a joint venture between Kenyan-based company Africa Economic Zone and Guangdong New South. It is expected to attract about $2 billion of foreign investments for Kenya.

Kenyan experts have said the SEZs are expected to aid in doubling the current manufacturing sector jobs to approximately 1 million, adding year-on-year $2-3 billion to Kenya's GDP in the next decade.

Zhu noted that SEZs are ideal as they tackle the numerous hurdles that enterprises face while operating in Africa.

"They improve the business environment in the manufacturing sector and hence are likely to become magnets for Chinese investors seeking opportunities in Africa," he said.

Moreover, Zhu said Africa can fully exploit SEZ to attract Chinese firms that are seeking to relocate overseas due to rising labor costs at home.

"In addition, SEZs can help to spur transfer of Chinese industrial technology into Africa," the company president said.

The rapid industrialization witnessed in China over the past 30 years has been partly attributed to the effective use of SEZs.

"China has used SEZs to catalyze the growth of industries and achieve global manufacturing competitiveness," Zhu said.

Guangdong New South Group currently operates SEZs in Nigeria and plans to establish new facilities in Kenya in collaboration with local partners.

Special Economic Zones (SEZs) are designated areas where businesses enjoy tax benefits and other favorable policies.

By creating an SEZ, Kenya has hoped to increase its export volume, diversify the range of exports currently dominated by agriculture produce, expand job creation and facilitate tech transfers.