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Continuation of the Weekly Review: WHAT FREE ZONES HAVE TO OFFER IN THE ACTUALISATION OF AFRICA CONTINENTAL FREE TRADE AGREEMENT (AfCFTA) by Chris Okwy Ndibe

1.    The answer to AfCFTA is
industrialization and massive production – Free Zones, world over, are planned
industrial heaven; creating a conducive environment for services, export
manufacturing and creating smart cities. Enterprises in a Free Trade Zone which
are mostly private sector enjoy certain percentage of enabling conditions
towards stability and sustained economic growth that will build capital,
attract foreign investment and overcome African current need for external
assistance.
2.    Product specific Zone will develop on
a country comparative advantage there by standing a better trade balancing in
the intra- African trade initiative.
Free Zones thrive with industries in
which they possess comparative advantages by taking a cluster – approach.
Industrial comparative advantages include industries in which the Free Zone regime
has specialized and / or built up production capacity. Linking the local
specialized suppliers and vendors of a particular industry with zone-based
companies operating in the same industry will create strong and cost-effective
local supply relationships, contributing to the overall effectiveness of the
Companies. In addition, Many modern generation models of Free Zone have relaxed
stringent export-performance requirements set out by the World Trade
Organization on subsidizing exports, leading to a better integration of Free
Zones into the world supply chain.
3.    Zones encourage backward linkages,
transfer of technology and high attraction of FDI into host country which are
all rudiments of capacity development of a host country.
Simplified and streamlined
administrative pattern in the zone, as well as privileged and expedited customs
procedures, reducing the bureaucratic burden and paperwork (e.g. document
requirements for importing and exporting) has enabled the business in a Free
Zone grow faster with its spill over to host country.
4.    Free Zone development and growth in
any country advances its human capital which is also contained in the single
market development agenda. The “modern generation” models of Free Zones
recognise the current trend towards competitive platforms for logistics and
global value chain which led to the exemption from duties and taxes being
extended from not just on imported inputs but to all merchandise entering a
Free Zone.
5.    Intra – African trade will assist the
growth of Free Zones in Africa as less resource are spent in logistic and
inputs and the linkages of the Free Zones in terms of using the Semi – finished
item as raw materials for each other’s final production.
6.    Assuming storage in Free Zones is
allowed for unlimited periods to avoid pressure to move goods and pressure on
infrastructure offers zone-based companies considerable flexibility in delivery
dates, encourages them to search for the best market opportunities or store
goods in excess of the host country’s import quotas.
In order to apply for the lowest
possible duty or freight rate, goods may be processed or manipulated to change
the final product’s shape and weight. This reduces the cost of production which
affects prizing that enables market penetration.
7.    Today, the world is talking of “Free
Zone of the Future Programme” (FZFP) – A global initiative for local
prosperity. This seeks to empower Free Zones and assist them to build and
contribute to a sustainable and prosperous future. One that supports the local
economies and community while simultaneously benefiting from the global market
dynamics.
All that is required here (FZF
Programme) is increase in knowledge,
Networking (B2B, Market place of
ideas, Services and products), Supports
(innovation, finances, Future ready zone, etc.).
This is why the collaboration a
continental nexus like yours is imperative. The zones in Africa may not achieve
it without your support.
8.    The effective running of Free Zone
Scheme with sound policy to promote private sector development and
participation in trade with the CFTA reducing the barriers to sales and
movement will take countries to achieving more markets, which will in turn lay
foundation for robust economic growth in the continent. So to jump start the
CFTA initiative, the ministers of Trade have to give consideration to the
benefit derivable from operation of Free Trade Zones in host countries and in
the continent at large.
9.     The Free Zone Ecosystem cannot be overlooked,
reflecting on the (1-8) above stated linkages.
The world of Free Zones has to do
with best practices in insurance, Talent management, logistics, software and
application, Real Estate, Multilateral organization collaboration, marketing
services, Government funding, services and, ICT etc. etc.
There is no gain saying that, Free
Zones have been a part of economic activity worldwide in recent decades. The
role of Free Zones in facilitating Global Supply Chain (GSCs) has been on top
of every researcher’s mind for some time now. The nexus between Free Zones and
GSCs is an area of interesting study.
Full access to and utilization of
stored goods at any time, and indemnity to investors are all factors that aid
trade growth.
10.  A good collaboration with the Trade and Industry
Department of African Union Commission will be providing thought – leadership
and support to free zones scheme especially in trade facilitation, knowing the
huge potential that are therein. Government, public and private interest
companies, with international organizations’ interest must be harnessed for
better and excellent result.
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