Multi-Facility Economic Zones in Zambia: An Assessment of the Local Manufacturing Industry Readiness

Abstract

China’s use of Special Economic Zones (SEZs) to spur its remarkable economic development was seen as the way to go, particularly for developing economies. Zambia, like most African countries, has established these zones with the help of the Chinese. In Zambia, the zones are called Multi-Facility Economic Zones (MFEZs), and are to operate as platforms for industrial development and creating value chains in addition to the muchneeded jobs that they would create. Based on the Chinese experience and lessons, MFEZs are designed to be integrated into the domestic economy, as they are in China. It is envisaged that this approach would, through foreign direct investment (FDI), enhance the transfer to local industries the much-needed knowledge and technology, a prerequisite for modern industrialisation. If the MFEZs attract a critical mass of FDI, stimulate high value-added manufacturing activities, and generate productivity spillover, their impact on industrial development in Zambia would be dependent on the domestic linkages created and the technology transfer achieved, both of which are a function of the local manufacturing absorptive capacity. This paper reports on the results of a survey undertaken to assess whether the Zambian manufacturing firms had the capacity or "technological readiness" to adopt any spillover and/or absorb any technology transfer that takes place. The variables considered in this assessment were types of technologies and methods of production, manufacturing systems, and human resources development. The study established that there were low levels of advanced technologies, weaker innovative capacity and lower human capital (skills) threshold in local firms. To address these short-comings, recommendations in form of a two-pronged paradigm, involving the local manufacturing industry on one hand and Government on the other hand have been made.