Counting the gains of Free Trade Zones concessioning

The African Continental Free Trade Area (AfCFTA) has given leverage to all countries in the continent to diverse their business catchments.

Many countries have done this through strengthening their Free Trade Zones (FTZs) and for now, free trade zones are springing up everywhere in Africa.

Stakeholders say that Nigeria must be concerned about competition from Egypt, South Africa, Kenya, Benin Republic, Ghana and Togo, where huge investments have been committed to free trade zones development.

Undoubtedly, the recent decision of the Nigeria Export Processing Zones Authority (NEPZA) to concession the Calabar and Kano FTZs remains government’s best economic approach to accelerate Nigeria’s industrialisation agenda.

The primary purpose of a free trade zone is to remove from a seaport, airport, or border those hindrances to trade caused by high tariffs and complex customs regulations.

Among the advantages of the system are the quicker turnaround of ships and planes through the reduction in formalities of customs examinations and also the ability to fabricate, refinish, and store goods freely.

A road show was recently held in Lagos on the planned concession of the two public export processing zones.

Prof. Adesoji Adesugba, Managing Director of NEPZA, said the planned handshake with the would-be concessionaires would positively impact on the operation of the 30-year-old public facilities for global competition.

“The two zones are highly viable because of many reasons, including their vital locations, easy access to raw materials, seaports, airports, outside infrastructure, labour and more importantly the boisterous nature of the two commercial cities.

“The Authority is, therefore, available to support and assist the new owners, to speedily surmount challenges that may come with taking up the management of this kind of business.

“I want to assure the private sector and particularly, companies that are set to file their bids, to count themselves lucky because of the great requisite return on investment the facilities will be offering,” he said.

Adesugba added that the scheme offered complete tax holiday from all federal, state and local government taxes, rates, customs duties and levies.

He said the duty-free on import of capital goods, consumer goods, machinery, equipment and furniture were guaranteed, adding that the scheme also permitted 100 per cent foreign ownership of investments.

The NEPZA chief executive said duty on exports into the customs territory was calculated on the value of originally imported component raw materials and not on the value of finished goods.

He added that the scheme provided opportunity to export items on Nigeria’s import prohibition list, provided that it could be proven that at least 35 per cent value had been added to promote local content.

“The scheme offers permission to sell 100 per cent of manufactured, assembled or imported goods into the domestic market and it guarantees 100 per cent repatriation of capital and profit.

“It was imperative for the private sector to now leverage on these incentives as the scheme allows them to ride on the AfCFTA framework to freely access the continent’s huge market,” he said.

Otunba Adeniyi Adebayo, Minister of Industry, Trade and Investment, said the unrelenting efforts of the National Council on Privatisation had made the process leading to the concession of the two zones seamless so far.

The minister said that the decision to privatise them was hinged on the Federal Government’s preparedness to produce world-class free zones that the country could use to solve some of its economic challenges.

“Government’s stance to allow for a transparent process that would bring up virile concessionaires, with the right capacity, expertise and finance to convert the zones to national economic asset, capable of generating employment for the teeming youth and Foreign Direct Investment (FDI) is topmost.”

Mr Alex Okoh, Director-General, Bureau of Public Enterprises (BPE), said the concession model to be used would be that of “build, rehabilitate, operate and handover,” over a period.

He added that the Lagos road-show was part of the process leading to the final concession of the two facilities by December.

Before the road show, Adesugba had reiterated the commitment of NEPZA to live up to its mandate by providing wider business corridor for investors to access the country’s free trade zones.

He spoke when the staff union members of the authority staged a peaceful demonstration to support his efforts in transforming NEPZA.

Adesugba, who emphasised on the need to explore the benefits provided by the free trade zones to grow Nigeria’s economy, said it was critical in view of the need to revolutionise the economy.

He said that revival and optimum utilisation of the free trade zones would lead the economic revolution needed in the country.

According to him, free trade zones have revolutionised economies all over the world, and we must give it the needed support.

“The free zones in Lagos axis; you should go to Kano and you will see the infrastructure within the city and the free zone is going to metamorphose into something else shortly.

“We are going to revamp Calabar, all the dead factories that are there and we are going to push in new investments and new capital into Calabar.

“The new zones that are coming up are the only thing that will galvanise Nigeria in such a way that we have not seen before in terms of employment, technology transfer and inflow of capital,” he said.

He said that exploring the free trade zones would also position Nigeria better for the benefits provided by African continental free trade regime.

“It is important to understand that Nigeria is going to have serious competition.

“Free zones are opening up in Benin, Togo, Ghana and there is a huge one being built in Egypt all targeted at African markets and Nigeria owes a substantial part of that market.

“And if we don’t brace up, our unemployment will deepen.

“So, we need to take advantage of what is happening now,” he said.

Even the Business Facilitation Bill, approved by the Federal Executive Council was designed to boost the economy.

Dr Jumoke Oduwole, the Special Adviser to the President on Ease of Doing Business, said the approval was in line with the Federal Government‘s commitment to improving the business environment in Nigeria through legislative interventions.

She said the omnibus bill was aimed at amending specific laws relating to ease of doing business and embodying such amendments into single legislation to act as a catalyst for legislative reform of the Nigerian business climate.

Oduwole said the provisions of NEPZA Act and CAMA were reconciled to recognise the exemption of free trade zone companies licensed by NEPZA from company registration.

“With the amendment of the Export (Prohibition) Act, the Minister of Finance, Budget and National Planning will now have clear cut powers to recommend goods that should be restricted from being exported.

“This will encourage flexibility in terms of prohibited products and prohibition scope, allowing them to align with economic realities at any given time,” she said.

With over about 42 active zones and about 500 companies in the zones, concessioning will ultimately boost NEPZA’s attainment of its mandate spelt out in NEPZA Act 63 of 1992.

With sustained proactive programmes like the concessioning, the cumulative investment in 30 years, put at about $20 billion, according to the Minister of Industry, Trade and Investment, Otunba Adeniyi Adebayo, only 25, 000 jobs generated against the scheme’s projected capacity for 300, 000 direct jobs would be surpassed. 


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