Reorienting Global Value Chains under AfCFTA: The Role of SEZs and Emerging Technologies in Boosting Value-Added Trade and Firm Upgrading

Abstract

This study examines how Special Economic Zones (SEZs) and cutting-edge technologies can reposition Africa in global value chains (GVCs) under the African Continental Free Trade Area (AfCFTA) (Mondaq, 2023). Africa’s intra-continental trade remains low (≈15% of total exports), and its GVC participation (≈5%) and export value-added (≈14%) are far below other regions. SEZs - over 200 currently active in Africa - offer a policy vehicle to boost manufacturing and export diversification. We develop a conceptual framework combining Global Value Chain theory, Institutional theory, and Innovation Diffusion theory to analyze firm upgrading, trade composition, and technology adoption in SEZs. Drawing on a mixed-methods approach (trade data analysis, policy document review, and case studies of Rwanda (Kigali Innovation City), Nigeria, Kenya, and Ethiopia), we find that well-designed SEZs can enable capability upgrading (especially via skill development and local linkages), modestly shift exports toward higher-value manufactures, and attract investment if backed by strong institutions. However, many SEZs remain “enclaves” with limited spillovers. Emerging technologies (blockchain, AI, IoT, 5G, additive manufacturing) show promise for enhancing SEZ operations by improving supply-chain transparency, productivity, and efficiency, but their adoption is hampered by infrastructure gaps, high costs, and skills shortages. We conclude with tiered policy recommendations (zone-level, national, and AfCFTA-level) to foster tech-enabled SEZs that promote value addition and regional integration, and outline areas for future research and long-run trends (e.g. digital GVC platforms and green value chains).