For decades, the economic history of Africa has been characterized by a repetitive scenario: exporting raw materials, importing finished products, leading to a constant imbalance in the trade balance.
In collaboration with public authorities, Afreximbank and its industrialization partner Arise IIP are contributing to the development of industrial zones that promote the flow of value-added products that transform Africa’s contribution to international trade. The development of these industrial zones is based on the availability of raw materials and the significant technological advancements that the African continent can leverage to accelerate its industrial transformation and create a different economic experience.
One of the most compelling examples is the Glo-Djibe Industrial Zone (GDIZ) located just 45 kilometers from Cotonou, Benin. This industrial zone, spanning 1,640 hectares, is the result of a bold partnership between Afreximbank, its partner Arise IIP, and the Government of Benin, marking a departure from the traditional approach to developing projects of this nature through a public-private partnership approach.
Indeed, this project development mechanism has allowed the Government of Benin to create an integrated ecosystem where government policy, private capital, and industrial expertise converge, rather than just offering land at negotiated prices and detrimental tax breaks for public finances. The economic impact of this public-private partnership for Benin can be seen through increased export revenues from high-value products, increased state tax revenues, and the creation of jobs (over 12,000 jobs have been created to date, with a potential increase to 60,000 by 2030).
Our appreciation of the difference between the public-private partnership model and others, beyond the scale of projects it enables, lies in the approach to risk allocation:
– Traditional industrial development often sees governments bearing infrastructure costs while private enterprises reap the benefits.
– The public-private partnership model reverses this trend, creating common interests in long-term success.
– Companies in sectors such as textile manufacturing and cashew processing are not just tenants; they are partners in developing industrial capabilities that promote local employment and export competitiveness.
Afreximbank’s industrialization program, in partnership with ARISE IIP, extends to other projects across the continent following the success of the pioneer project in the Nkok Industrial Park in Gabon. In this industrial park, wood processing operations demonstrate how abundant raw materials can translate into value-added exports.
The expansion method of this program at a continental scale, favoring industrial development in the form of an integrated investment portfolio rather than individual projects, has so far resulted in a cumulative outstanding amount of Two Billion US Dollars (USD 2 billion).
The fragmentation of African markets and infrastructure gaps have been obstacles to industrialization, making it less competitive and profitable compared to Asian industries that, in addition to economies of scale, have leveraged adequate infrastructure (logistics networks, energy resources, skilled labor) for their development.
Furthermore, the public-private partnership model addresses the skills deficit that has hindered African manufacturing. Training centers developed on the outskirts of industrial zones provide training covering both general and specific skills tailored to the needs of companies located in the industrial zone. This creates a feedback loop where industrial growth generates the human capital necessary for further expansion.
The initial results suggest that this model provides adequate solutions to the constraints that have impacted African industrialization:
– Companies have access to reliable infrastructure and skilled labor without having to bear all development costs.
– Governments achieve industrial diversification without assuming all financial risks.
– Local communities benefit from job opportunities that did not exist before.
This special economic zone model fundamentally changes the discourse on development by offering what was lacking in previous strategies: aligned incentives that transform all parties into actors in long-term industrial success rather than short-term gain extractors.
The strength of this partnership approach lies in its ability to demonstrate sustainable and large-scale industrial development, sufficient to attract larger private capital that typically avoids conventional risks in emerging markets. Data from countries like Gabon, Benin, Togo, Chad, and Rwanda where industrial zones are operational indicate that the model deserves serious attention from investors seeking opportunities beyond conventional strategies in emerging markets.
