Formation of Special Economic Zones gathers pace
Isaac Pinielo | Friday June 19, 2015 15:17
The objective of the Bill is to establish a public enterprise known as the Special Economic Zones Authority (SEZA).
SEZA will be responsible for creating special economic zones that will make Botswana the most preferred location for both domestic and foreign (direct) investment and for providing confidence to investors.
According to the Government Gazette dated June 12, 2015, in the next Parliament session that starts in July, Trade and Industry Minister Vincent Seretse will introduce the SEZs Bill 2015 for debate and ratification by the house.
The debate is expected to bring up, among other things, issues of tax incentives for boosting exports from Botswana for companies operating within the SEZs.
The establishment of SEZs is envisaged to diversify the economic and export base of Botswana into sectors that will continue to grow long after diamonds have run out.
“The purpose and objectives for which a special economic zone may be established are to enhance productivity, competitiveness, economic growth, export promotion and employment creation,” the Bill states.
The location of special economic zones shall target areas that provide comparative advantages for attracting investments. At least eight regions have already been identified as potentially viable for SEZs, and these include Sir Seretse Khama International Airport and Fairgrounds in Gaborone, as well as Lobatse, Selibe Phikwe, Pandamatenga, Palapye, Francistown and Tuli Block.
According to the Bill, SEZs may be established in selected areas, which may be developed into free trade zones, or commercial special economic zones, export processing zones, enterprise zones, free ports, single factory economic zones, specialised zones, and such other zones as may be determined by the authority.
“A person shall not, within a special economic zone, conduct retail trade or any other business activity without the approval of the Authority,” states Section 29 (4) of the Bill.
It is believed that if properly designed, SEZs have the effect of raising Botswana’s investment profile.
They will also increase government revenue and foreign exchange earnings, offer investors a simplified and conducive environment to do business, facilitate the development of infrastructure and facilitate technology transfer and skills upgrade.
However, there has been skepticism within some quarters indicating that SEZs will only benefit high value companies while small micro and medium enterprises (SMMEs) may not get a lot of business from international companies which will be operating within the designated SEZs.
In a research paper, former research fellow at BIDPA, Prof Roman Grynberg said unless Botswana is able to create a sustainable commercial advantage for business, no one would invest in ‘our special economic zones’, and they would simply sit as empty as the factory shells that were built in Selebi-Phikwe in the 1990s.
“Futhermore, the temptation to place such zones in isolated locations in Botswana that have no commercial advantage to business should be avoided at all costs,” he said.
Botswana established the SEZs policy in 2009, which was later adopted by government in 2011.