Perceptions of local firms to invest in special economic zones in Zambia: the case of Lusaka South Multi-facility economic zone.

Special Economic Zones (SEZs) after their success in Asia specifically China have been replicated worldwide to achieve the benefits realised by countries that successfully implemented them. The benefits realised from these zones range from technology spillovers, employment and attraction of foreign direct investment among others. In Zambia, the zones have been designed to encourage local and foreign investment including small and medium enterprises. However, the rate of uptake of land in the Lusaka South Multi-Facility Economic Zone remains low years after the zone was established despite the numerous incentives by the Government to encourage local firms to establish in the zone. The focus of this study was to investigate the perceptions of local firms to invest in the Lusaka South Multi-Facility Economic Zone. Purposive sampling was used to select respondents from relevant key institutions while convenience sampling was used for firms outside the zone. The data was obtained from all 24 companies currently operating in the economic zone and 39 firms operating outside the zone. The data was analysed using thematic analysis and descriptive statistics using percentages. The study revealed that the majority of firms were not willing to invest in the zone due to its location, limited water supply, inclination of the zone to favour foreign investors, inadequate capital to set up and lack of public transport servicing the area. Secondly, it was established that there is no interaction between firms in the zone due to their different line of businesseses while 7.1% of firms operating outside the zone indicated that they had interaction with those within the zone. The study concludes that the firms in the zone perceive it positively while the firms outside perceive it negatively. Therefore, the study recommends addressing the existing challenges experienced in the zone and introducing clear policies that will be used in the operationalisation of SEZs.

Key concepts: Perceptions of firms, Agglomeration of firms, Static and Dynamic benefits, Special Economic Zones (SEZs)