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Zoning in on Investment
Special economic zones form a key part of Senegal's industrialization strategy
By Aly Diouf and Guo Kai  ·2018-02-09
The Diamniadio Industrial Park will assist Senegal's structural transformation
During his state visit to Senegal in May 2017, Chinese Vice President Li Yuanchao included a stop at the Diamniadio Industrial Park in his busy itinerary.

Li praised the "remarkable work done on the design, construction and development of regulatory policies" by Senegal in this special economic zone (SEZ). He called on Chinese companies to take advantage of this investment opportunity, while encouraging the Senegalese Government to improve their strategy to attract even more businesses. Observers believe that this visit had strong symbolic meaning for Senegal, especially in light of the high hopes pinned on this industrial park. Indeed, in SEZs such as Diamniadio, the country sees a key that will unlock the door to industrialization.

A game changer

China has been involved from the very beginning in turning these hopes into reality. The first phase of the Diamniadio Industrial Park was carried out by the China Geology Overseas Construction Group (CGCOC). The group was clearly inspired by the Chinese model of development, which, since the opening of China's first SEZ in south China's Shenzhen in 1980, has seen rapid economic growth for nearly 40 years.

"Currently, four hangars have been set aside [at Diamniadio]. The CGCOC has also invested in a PVC pipe plant in the park. Over the next three years, the plant's total investment will reach $5.5 million," said Wu Jiaxuan, CGCOC Marketing and Operations Director in Senegal. Three other hangars are occupied by two Chinese companies - one packaging company, and the other real estate company - and a Tunisian company, he added. Moreover, Chinese companies participating in the Third Investing in Africa F​orum, which took place on September 25-27, 2017 in Dakar, visited the park on a fact-finding mission.

"The development of the Diamniadio Industrial Park, which covers an area of 25 hectares, will take place in two stages," said Amadou Ba, Senegalese Minister of Economy, Finance and Planning. In the first stage, an area of 13 hectares has been developed, with investments of about $46 million. According to Ba, the park will increase the volume of foreign direct investment and create 15,000 direct and 8,000 indirect jobs.

In the second stage, Ba said, an ecosystem of services will be put in place, with high-performance incentives that will significantly improve the business environment. "This mechanism will be administered by the National Agency for the Promotion of Investments and Major Works and developed by the Atlantic Business Infrastructure Co. (SIAA), operating under a public-private partnership," he said. He added that in this second phase, SIAA will invest $110.4 million.

Ten SEZs in total

Senegal is committed to establishing a number of SEZs focused on the development of agrobusiness, information and communication technologies, tourism, medical services, manufacturing and service industries. The government has made SEZs a pillar of its strategy to achieve the structural transformation of the economy, which is the number one objective of its Emerging Senegal Plan (PSE), a national strategy to accelerate the country's progress toward emerging market status.

One of the biggest constraints is the lack of labor, investment and other production facilities, said Khoudia Mbaye, Minister for Promotion of Investment, Partnership and Development of State Teleservices.

"This is why the government has been planning the implementation of policies related to the creation of SEZs for three years. They are universally recognized as a standard-bearer of emerging nations," said Mbaye.

Senegal plans to implement a total of 10 SEZs across the country, taking the form of agro-hubs, industrial hubs and a regional mining hub. Their development has been entrusted to the Agency for the Development and Promotion of Industrial Sites (ADPIS). The need for SEZs arose from a need to rebalance the country's industrial sites that are overly concentrated in the capital Dakar, much to the detriment of other regions, said ADPIS Managing Director Momath Ba.

In the bigger picture, this SEZ is part of a massive ambitious project to build the Diamniadio Lake City (DLC). About 30 km from Dakar, the proposed multibillion-dollar city by project developers Semer Group is expected to ease pressure on Senegal's overcrowded capital. Carrying a reported 10-year-time frame, DLC will, apart from the SEZ, comprise modern office, residential and leisure facilities.

Another objective of the SEZ is to reorganize the production system by redirecting it toward emerging sectors and improving managerial capacities needed to promote competitive industries.

"In addition to readily available production facilities, these areas can offer much potential if the productivity of capital and labor can be increased, and cross-sectoral relationships can help achieve the objectives included in the PSE, namely, to raise growth to 8 percent, increase GDP per capita 1.5-fold and create 600,000 jobs," said Mbaye.

"One of the main objectives of the government is to make Senegal a preferred destination for private investment, leading to the creation of both wealth and jobs," said Senegalese government spokesperson Seydou Gueye.

Global competitiveness hub

Senegal made its first attempts at implementing SEZs in 1976, with the Society for the Development and Promotion of Industrial Zones and the Dakar Industrial Estate Co., but the latter was dissolved in 2004. The SEZ's Aliou Mara said, "Lessons were learned from past failures and laws on organizational arrangements were adopted, as well as the establishment of a regulatory body and a joint public-private committee - this is in addition to the improving business environment."

Several measures were taken following a study on SEZs carried out in March 2017 by the Senegalese Government. Aristide Tino Adediran, President of the Union of Industrial Enterprises in Dakar, said Senegal has the potential for successful economic integration on a global scale. However, he insists that for SEZs to be successful, "we need to change our attitude and mindset; we need to improve governance and we need our leaders and our state to show their willingness to help the private sector."

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