Paper short abstract:

As Chinese Special Economic Zones in Africa delay in delivering development, the African host countries are bearing the cost, while the Chinese developers remain largely unaffected. How?

Paper long abstract:

Although Africa is acquainted with investment inflow from one-off Chinese firms, Chinese Special Economic Zones in Africa (CSEZAs) introduce a twist to this phenomenon. Negotiated as bilateral cooperation zones, CSEZAs benefit from fiscal packages more preferential than what African countries offer to singular foreign immigrant ventures. Ranging from expensive offsite infrastructural provisions funded through public money, land-lease of strategically located plots at low rent for a minimum of 79 years (with the right to pledge the landrights to foreign banks), passports to investors, and allowing the importation of construction materials from China, this new format of organised Chinese immigrant investment impinges upon the development of the host African communities rather than contribute to it. While the host African governments have done their part, the Chinese SEZs developers have failed to deliver the backward linkages (creation of local jobs, transfer of technology, skills and knowledge). The strategies adopted by the Chinese SEZ developers are distinct: (i) use of special purpose vehicles allowing an isolation of financial risks and also camouflaging of ownership identity, hence accountability (ii) local incorporation of SEZ as a company instead of a project, and (iii) creation of adjacent business activities as subsidiary to the SEZ company--though operating outside the SEZ--thereby benefitting from both, preferences allocated to the SEZ and access to the domestic market. In light of fieldwork carried out in Mauritius, this paper investigates the exportation of Chinese businesses into Africa under the guise of diplomatic mutual development ventures.

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