Special Economic Zones in the OIC Region:

Learning from Experience

Investment arrangements are often undertaken on a Memorandum of Understanding (MOU)

basis and as such there is a lack of transparency and clarity of roles and responsibilities between

government departments and regulators when investors come to engaging with public bodies.

This can lead to confusion and lack of transparency with regard to the regulatory, legal and

operational environment and lead to perceptions of increased investment risk.

The lack of an effective legal, regulatory and institutional framework can also hinder the ease of

doing business within SSA SEZs. The costs of business are typically higher within these countries

than in other regions in terms of registration, licensing, taxation, trade, logistics, customs

clearance, foreign exchange and service delivery.

Box 19 - Legal and Regulatory Framework in Nigerian SEZs

There have also been challenges in the design of the institutional frameworks for regulating

SEZs, with experiences of conflicts between public and private operators within certain OIC

Member Countries such as Bangladesh.

Box 20 - Conflicts between Public and Private Operators - Bangladesh

4.5.1.3

Key Challenge 3: Zone Management and Institutional Knowledge

Given a lack of institutional capacity within some OIC Member Countries, there have been

significant challenges in facilitating effective zone management practices particularly with

regards to fostering an efficient business environment including the provision of a ‘one-stop-

Zeng, D (2015) Global Experiences with Special Economic Zones: Focus on China and Africa.

World Bank (2012) An Overview of Six Economic Zones in Nigeria: Challenges and Opportunities.

A key example of this is within Nigeria where the NEPZA legal framework for Free Zone

implementation does not apply to the current free zone operations. This means that at

present, the legal act does not allow products which are made or processed within Nigeria’s

free zones to be imported to the domestic market. Whilst new regulations introduced by

NEPZA and the Nigerian Ministry of Trade and Investment allow for the import of products

that meet a minimum of 35% value addition and payment of customs duties the Customs

Administration does not currently acknowledge these regulations. This has detracted from

potential investment within Nigeria’s SEZs.

In Bangladesh the same authority, the Bangladesh Export Processing Zone Authority (BEZA)

is responsible for delivering zone development, management and regulation as set out

within the institutional and legal framework. Despite passing a law allowing for the

provision of private zones however, the first privately developed zone project languished for

8 years awaiting for approval for its operating license.