Institutional Best Practices for Special Economic Zones: An Application to Tanzania

Special Economic Zones (SEZs) are increasingly a policy tool of choice for governments seeking to attract foreign investment, promote export-oriented growth, and generate employment. Recent estimates indicate that there currently are more than 2,300 SEZs established in 120 countries. SEZs are spatially delimited areas, which offer a combination of high-quality infrastructure, expedited customs and administrative procedures, and a range of fiscal and non-fiscal incentives to overcome barriers that hinder investment in the wider economy.

This note provides analysis concerning the institutional framework under which the zones program is developed and administered in Tanzania. It examines various institutional and administrative structures for managing an SEZ program, focusing on the alternative approaches taken in different SEZ programs around the world and highlighting both good practices and those that have been less successful, and drawing lessons for Tanzania, which will also be of relevance for other countries in Africa. The note is structured around four key principles for designing an effective institutional framework for SEZs: 1) clarity in roles and responsibility; 2) autonomy and inclusivity; 3) authority and coordination; and 4) resources and capacity. The note concludes with a review of the existing institutional gaps in Tanzania’s zones program and measures to address them.