Retour aux Perspectives

The ARISE Special Economic Zone Model

The Covid-19 pandemic and the global trade tensions prior to that have caused global companies to reassess the prevailing supply chain structure and risks inherent in centralizing manufacturing production in any single country. Faced with supply chain delays, raw material shortages and increased costs, companies are in search of more choices within their overall supply chain structure, including diversifying their manufacturing locations.

This presents opportunities for Africa to develop local manufacturing capacity, which would also help to drive progress towards sustainable development goals by creating jobs and reducing the continent’s trade-related carbon footprint[1]. Therefore, Africa must position itself as an alternative manufacturing center, driving import substitution through agro-processing and domestic value addition of primary commodities.

Building Africa’s manufacturing capacity requires innovation. One such model for industrialization pursued by the Africa Finance Corporation focuses on building integrated ecosystems and industrial platforms that seek to develop end-to-end the value chain around a particular country’s natural resource.

The Africa Finance Corporation’s (AFC) model for industrializing Africa has been tried and tested through the establishment of a US$1bn wood-based export industry in Gabon (ARISE Integrated Industrial Platform) which is co-owned by AFC and Olam International. The special economic zone on which the ARISE IIP is constructed achieves the following:

A supply chain joining sustainable forestry with furniture manufacturing and spin-off activities in a 37-hectare furniture manufacturing cluster.

An end-to-end logistical hub for manufacturers, with power, water, and other critical shared infrastructure

Provision of transport logistics (through the upgrade of the trans-Gabonais rail network and construction of a general cargo port for export) for moving the timber from the forest to the economic zone, as well as the finished product from the zone to the port.

Given its success in diversifying Gabon’s economy, the Gabon model is now being extended to other West African countries, initially to Benin and Togo, and thereafter Cote d’Ivoire and others seeking to leverage individual countries’ unique resource advantage as the basis for the roll-out of their respective ecosystems.

[1]Africa largely outsources the processing of its raw materials, exporting products with low value addition and importing mainly processed products, a trading structure that entails significant costs, not least from the carbon footprint incurred in the round-trip shipping, and because much of the processing done external to the region is powered by coal plants.

History

2020

AFC invested US$150 million convertible debt to ARISE IIP for expansion into two additional countries, Benin and Togo, following execution of binding concession agreements with the respective governments, with plans for further developments in Cote d’Ivoire, Chad and Gabon.
AFC’ss participation has catalysed equity and debt financing from Meridiam, Stoa, Bollore and AP Moller Capital (APMC), AfreximBank, BGFI Bank, GuarantCo, African Development Bank (AfDB) and Emerging Africa Infrastructure Fund.

2016

AFC invested US$140 million investment for a 21% stake in Gabon Special Economic Zone (GSEZ), now rebranded as ARISE, a diversified portfolio of ports & logistics, integrated industrial platforms, infrastructure, and airports businesses. GSEZ commenced as a JV between AFC, Olam and the Republic of Gabon.
The platform was recently reorganized into 3 verticals: Ports & Logistics: ARISE Ports & Logistics, Integrated Industrial Platform: ARISE IIP and Airports & Infra: ARISE Infra

Value Creation and Development Impact

As a group, ARISE has diversified the Gabonese economy from dependence on crude oil exports, created jobs (over 30k), increased foreign currency earnings and raised economic output, and is expected to do the same for Benin, Togo & Cote d’Ivoire.

The Gabon special economic zone (NKOK SEZ) where ARISE IIP is situated has achieved significant development impact, including:

Contributing US$842million to Gabon’s GDP.
Creating 8,200 direct and 26,000 indirect jobs.
Attracting 107 industrial, commercial, and residential investors that have collectively invested US$1.7bn (11% of 2020 GDP) into the non-oil economy.
Generating US$1bn of wood product exports in 2019 compared to US$350 million in 2010 (3x increase), equivalent to 10% of GDP.
Making Gabon the second-highest exporter of sawn wood in Africa and the tenth globally; the third largest veneer exporter globally and the largest in Africa and a leading player in furniture manufacturing and export in Africa.
Increasing the value of Gabon’s wood exports from US$150/cbm for logs to US$4,000/cbm for furniture.

Benin SEZ is expected to generate US$2bn in additional GDP, US$3bn in exports and impact 600k farmers, whereas Togo SEZ is expected to generate US$0.75bn in additional GDP, US$1bn in additional exports and impact over 200 farmers.

[1]Africa largely outsources the processing of its raw materials, exporting products with low value addition and importing mainly processed products, a trading structure that entails significant costs, not least from the carbon footprint incurred in the round-trip shipping, and because much of the processing done external to the region is powered by coal plants.