SUCCESS STORY OF FREE TRADE ZONES IN AFRICA: FOCUS ON MAURITIUS.
Several African countries were pioneers in using
Free Zones as economic development tools. Liberia and Senegal, for example
established Export Processing Zones in the early 1970s. In 1981, Mauritius
started a single factory-based EPZ program whose prominence and success led to
a wave of zone development throughout the continent in the late 1980s in East,
Southern and West Africa. Uganda is currently on the same model in their
exploration of the scheme.
Free Zones as economic development tools. Liberia and Senegal, for example
established Export Processing Zones in the early 1970s. In 1981, Mauritius
started a single factory-based EPZ program whose prominence and success led to
a wave of zone development throughout the continent in the late 1980s in East,
Southern and West Africa. Uganda is currently on the same model in their
exploration of the scheme.
Mauritius has become the model of a successful EPZ
programme in Africa; it provides important lessons for other EPZs. Its
importance in the economy is indicated by the growing share of EPZ’s export in
total exports which rose from 25% in 1978 to over 65% by 1998. Over the years
there has been a continuous increase in the share of value added by EPZs in
total manufacturing which by 1999 reached over 50% of 13% of total Gross Domestic Product (GDP). One of
the most important economic benefits of the EPZ programme has been the
diversification of the Mauritian economy.
programme in Africa; it provides important lessons for other EPZs. Its
importance in the economy is indicated by the growing share of EPZ’s export in
total exports which rose from 25% in 1978 to over 65% by 1998. Over the years
there has been a continuous increase in the share of value added by EPZs in
total manufacturing which by 1999 reached over 50% of 13% of total Gross Domestic Product (GDP). One of
the most important economic benefits of the EPZ programme has been the
diversification of the Mauritian economy.
In the mid-1960s, exports from
Mauritius consisted solely on agricultural goods, primarily sugarcane,
accounting for about 70% of all exports. By 1990 and as a result of EPZs,
Mauritius exports a variety of manufactures with sugar’s share having fallen to
29.6% of total exports, while EPZ exports rose from 31% to 64% during the same
period. This increase in the export of manufactured goods has played a critical
role in reducing the nation’s vulnerability to price fluctuations associated
with primary commodity exports. An analysis by country of destination shows that
66% of the exports were to countries of European Union spurred by the
favourable conditions offered by the Lome convention.
Mauritius consisted solely on agricultural goods, primarily sugarcane,
accounting for about 70% of all exports. By 1990 and as a result of EPZs,
Mauritius exports a variety of manufactures with sugar’s share having fallen to
29.6% of total exports, while EPZ exports rose from 31% to 64% during the same
period. This increase in the export of manufactured goods has played a critical
role in reducing the nation’s vulnerability to price fluctuations associated
with primary commodity exports. An analysis by country of destination shows that
66% of the exports were to countries of European Union spurred by the
favourable conditions offered by the Lome convention.
An examination of the factors behind the success of
Mauritius suggest that the following played a key role:
Mauritius suggest that the following played a key role:
- The desire to use Mauritius’s membership
of the Lome Conventions to get preferential access to the EU market;
- Cultural ties play a critical role in
attracting investors from Hong Kong for a safe haven to invest their capital
following the British-Chinese agreement to revert Hong Kong to China in 1997;
- Quota-free access to US markets during
the early stages.
- The existence of a flexible and
supportive government, in conjunction with political and social stability.
Mauritius is an outstanding example of success in
the African region. It managed to utilize a favourable incentive package,
consequential on duty free access to the European Community under the Lome
Convention.
the African region. It managed to utilize a favourable incentive package,
consequential on duty free access to the European Community under the Lome
Convention.