Based on a study by the World Bank on four Chinese-invested SEZs in Africa<sup>9</sup> , these zones have several similarities: (i) all four zones are within relatively close proximity to the economic capital of the three countries (Lagos, Addis Ababa, Port Louis) and key existing or planned infrastructural assets (in Nigeria: APAPA Port, Lagos airport, Lekki Port; in Ethiopia: on the main highway towards Port of Djibouti; and in Mauritius: near the Free Port); (ii) all the zones are proposed as mixed-use zones; (iii) the first phase of planned development are approximately 100 ha for all the zones except Ogun-Guangdong, which is relatively bigger in terms of planned area; and (iv) the ownership of the zone projects is dominated by consortiums of 3-6 Chinese business partners. However, there are differences for example in terms of the estimated size of initial investments; provision of fiscal incentives to developers and companies investing in the zones (Nigeria is by far the more generous); and host government equity participation (Nigerian state governments have equity stakes) (World Bank 2010).

It is too early at this stage to draw definitive conclusions on the performance of these overseas Chinese zone projects. Overall the implementation of Chinese SEZs in SSA has been slow compared with other regions. The process has been delayed in some cases due to difficulties over access to land, regulatory barriers, and resettlement issues by the host government, restructuring of the Chinese investments during the global financial crisis, and coordination issues, etc. MOFCOM has highlighted four key challenges faced by these overseas Chinese zones, including those in Africa, as follows (World Bank 2010):

- **_Improving the management capability of the zone developers_** : the current Chinese investors are largely industrial, engineering or trading enterprises and lack specific experience in developing and managing industrial development zones;

- **_Difficulties in coordination with host government counterparts_** : the practical problems involving laws, policies, government services and work efficiency require effective communication, which is difficult due to the unequal status of the Chinese developers and local governments during the negotiations as well as communication problems;

- **_The lack of external infrastructure_** : many zones have to develop their own infrastructure, which increases the development costs and construction difficulties; and

- **_Financing difficulties faced by the developers_ :** the zone developers are facing financing difficulties due to the high capital requirements for infrastructure development and the high cost of finance in the host countries.

Despite these challenges, several zones have made some good progress and began to show positive impact on the host countries. Such initial impact is manifested in the following areas:

- 1) **_Investments and employment._** In the Zambia Chambishi zone, 36 firms had signed contract and 26 were operational, with a total investment of $322 million actual and over $1 billion committed by July 2013. It employed 7,973 Zambian workers and 1,372 Chinese, including the mine workforce (Brautigam and Tang 2013).  The Lekki Free Trade Zone in Nigeria had attracted $76 million investment ($700 million commitment) by July 2013. 30 firms had signed lease agreements and 6 were operational, including Imad Oil and Gas FZE; China Railway Construction Corporation; and YFK Pharmaceutical FZE, among others. Among the 30 investors who signed contracts, 60% were Nigerians, 20% were Chinese, and 20% were from other countries including UK, India and Ukraine (Brautigam and Tang 2013; Gabriel 2012). The Ogun-Guangdong Free Trade Zone had attracted 34

> 9 The study was led by Ganesh Rasagam, with the support of Chinese government (in particular the Ministry of Commerce and Ministry of Finance). The zones studied include: (i) in Nigeria, the Lekki Free Trade Zone in Lagos State and the Ogun-Guangdong Free Trade Zone in Ogun State, (ii) in Ethiopia, the Eastern Industrial Park in Dukem (Addis Ababa), and (iii) in Mauritius, the JinFei Economic and Trade Cooperation Zone in Riche Terre.

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