Special Economic Zones in the Democratic Republic of the Congo: Current Situation, Challenges, and Prospects (Revue Française d'Economie et de Gestion)

Summary

• The DRC special economic zone regime rests mainly on Law No. 14/022 of 7 July 2014, with the Maluku pilot zone as the main operational experience.p.2
• Varun Beverages (beverages) has an announced investment of $129 million and 5,000 projected direct jobs in the Maluku zone.p.9
• Saphir Ceramics (tiles) has an announced investment of $115.9 million and 6,140 projected direct jobs.p.9
• Refriango has an announced investment of $68 million and 434 projected direct jobs, while TK (wood processing) has $5.7 million and 40 jobs.p.9
• Rodriguez-Pose et al. analyse 71 African special economic zones and find that their capacity to attract firms and create jobs remains limited in many cases.p.8
• Wang, using 321 Chinese municipalities, finds that special economic zones increased foreign direct investment and produced agglomeration effects, with heterogeneous results across zones.p.5
• The Shannon free zone in Ireland was created in 1959 around Shannon international airport to attract international investment.p.8

Key insights

1. The study concludes that law is a necessary but not sufficient condition for special economic zone performance.p.12
2. Tax incentives alone are not enough: a tax-exempt firm can remain uncompetitive if electricity is costly, roads are poor or customs delays are long.p.12
3. Announced investment is not the same as realised investment, and projected jobs are not the same as jobs actually created.p.9
4. Available data do not yet show a major macroeconomic effect of the zones on the national economy; implementation is observable but structural impact needs longer evaluation.p.13
5. Infrastructure such as energy, water, roads, telecoms, warehouses, security and customs facilities is treated as a central explanatory variable.p.13
6. Land security affects project cost, duration, investor security and community relations, so it should be part of zone performance evaluation.p.13
7. A zone should be assessed not only by the number of foreign investors but also by local purchases, subcontracting, national jobs, training and effects on SMEs, to avoid an enclave economy.p.14
8. The author recommends an independent annual evaluation publishing announced and realised investment, projected and actual jobs, exports and cost of tax exemptions.p.16
9. Public data on Congolese zone companies remain limited and partly reflect projections rather than audited results.p.19