The effectiveness of export processing zones : the case of Zambia

Gondwe, Kasonde Lwao (2012-12)

Thesis (MDF)--Stellenbosch University, 2012.


Export processing zones (EPZs) are policy instruments that are aimed at achieving the goal of economic development through boosting the manufacturing industry in a bid to increase and promote export. This is achieved by setting up or designating various areas or warehouses as free zones in which an environment that is friendly to manufacturing for exports, is established. Incentives such as tax exemptions for the import of required raw materials are given in these zones. EPZs are also known by other names but the most commonly used are free trade zones, industrial free zones, maquiladoras, export free zones, duty-free export processing zones, free zones and privileged zones, to mention a few. Similar to many other developing countries in sub-Saharan Africa (SSA), Zambia has a bias towards export orientation as a tool of economic development. This culminated in the formulation of EPZ legislation in 2001. The EPZ act was similar to EPZ legislation in various other countries and provided for the development of an industrial park in which manufacturing for export purposes would take place for both the public and the private sector. After awarding a few companies EPZ status, the government abandoned the act and embarked on more research, resulting in the development of the multi-facility economic zone (MFEZ) in 2007. Recognition of the role of non-traditional exports (NTEs) in increasing export earnings has been important in the justification for EPZ’s development in the country. There has been a drive to attract investment into this sector by means of export-promoting policies. However, and notwithstanding the fact that numerous cost benefit studies have been undertaken to determine actual benefits of zone erection, Zambia has not yet undertaken a comprehensive synopsis of the country’s specific policies which would need to be established in order for the zone to be successful.

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