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Wednesday, 7 July 2010

MFEZs everywhere

There has been a recent surge in MFEZs announcements across the country. This appears consistent with the Government policy of having "MFEZs in all districts".

The government last month announced that it has given a go ahead for the setting up of tax free zones in Nakonde, Mpulungu and Mbala .

Late last month we also learnt that the Government is in the process of creating an MFEZ in Mansa "to encourage local and foreign investment". As part of the package Chief Kasumawela (Ushi, Mansa) has sanctioned 3,600 hectares of land for development of the zone in Chembe area. Among the suggested facilities would include "a trade center, modern high schools, airport, hotels, lodges and light industries".

In the meantime the Lumwana Economic Zone is now up and running. According to Commerce Minister Felix Mutati the Lunwaba MFEZ will at full capacity create about 13,000 jobs and has already attracted an initial foreign investment of US$60 million, among them Hitachi. The Lumwana MD, Adama Wright, was quick to emphasise that  "the complimentary investment that was being attracted into the MFEZ was not meant in any way to provide direct financial benefit to Lumwana Mining Company". No comment!

4 comments:

  1. Special economic zones are also springing up in other African countries. Zambia will be competing for business with them.

    http://www.agoa.info/index.php?view=.&story=news&subtext=1258&term=special%20economic%20zones

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  2. Mr. Capitalist7 July 2010 at 06:15

    The good thing is Zambia has first mover advantages over other African nations. In short, they started developing MFEZ's before other African nations therefore stand to benefit from them. The bad side to this is other African nations can see the mistakes Zambia has made and will therefore solve the problems on their own MFEZ therefore giving them competitive advantages. That is a sticky situation.

    On the other hand, MFEZ is welcome. I think it is a great idea. This will enhance the growth of manufacturing in Zambia and will provide jobs and grow the economy. The other thing I support apart from MFEZ is farming blocks like the Nasanga farming block.

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  3. What I dislike about the MFEZ's is not only that the way they are implemented, they open the way to foreign ownership of Zambia.

    It is also the underlying idea that economic growth does need to be organically related to the economy in which it operates. That economic activity can be imported from far away, instead of being organically related to local people, their aspirations, and their economy.

    For instance, instead of having a local chief set aside 3600 hectares (if that is repeated in every of Zambia's 72 districts, that is 259,200 hectares), why not ordain that every town has it's own market place near the center of town, where people can do business without hindrance. Why not ordain that if there is mining activity, local councils have the right to 5% of turnover. Why not revive the old farm coops, and help them set up silos, find customers, etc. How about having low interest loans for capital goods or SMEs?

    There are a lot of things that can and should be done to grow the economy that do not have anything to do with giving away the country.

    ReplyDelete
  4. In addition to MrK's interesting point and other previous concerns I have expressed (e.g. taxation distortions, lack of quantified additionality and so forth), I would probably add a new concern : DISCRIMINATION.

    I think the taxation thresholds are inherently discriminatory against Zambians based on income. The $500k threshold clearly puts Zambians out of reach - the threshold really needs to be lower for this to be non-discriminatory. It is an anti-Zambian policy.

    The question is can the government reduce it? I doubt it! If they reduced it to $100k no one will be paying any tax! Everyone will fight to be in the zone. And therein lies your problem.

    Anyway, we have touched on this before courtsey of a comment post by MrK - see
    here

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