From Delos to NEPZA: The story of free trade zones

Tempo de leitura: 10 minutos

From available records, the world’s First Free Trade Zone (FFTZ) dates back to 166 BC, when Greece made the island of Delos a Free Port.

The succeeding Roman Empire followed up with its Civitas Libera or Free Cities which were exempted from paying the annual tribute the reigning emperor, and allowed to mint their own coins and make their own laws.

In the 12th Century, the Hanseatic League (a confederation of trading cities chartered and loosely governed by the Holy Roman Empire) revived the FTZ innovation, with the establishment of trading colonies in Northern Europe, among these Hamburg.  However, the closest innovation to the modern FTZ was the Steelyard in London, the UK, in the sense that it was a classic country within a country: separate, walled city, independent warehouses on the river as well as its own weighing house, Church, counting houses (banks) and residential quarters.


According to available records, the modern era of Free Zones appeared with European colonial outposts, formed as “quasi-sovereign sub-governments with unique trading privileges,” among them Macau (1557),Hong Kong (1842) and China, having over 80 Free ports or Port Treaties. The world has now about 4000 Special Economic Zones (SEZs).


Although many people trace the advent of modern FTZs to the US with its launching of its Foreign Trade Zone (FTZ) program in 1934, the consensus is that the credit for the modern SEZ movement goes to Ireland, which set up the Shannon FTZ in 1959. The Irish innovation was so successful that other nations soon followed: Kandla FTZ in India (1960); Kaohsiung Export Processing Zone (KEXP) in Taiwan (1967); and an explosion of FTZS in China. In fact, China had moved from 0 special jurisdictions in 1980 to at least 300 today. For Nigeria, the dawn of FTZs came in 1992, with the enactment of Nigeria Export Processing Zones Act 63.


From 1992 till April 2017, NEPZA had 34 FTZs spread across the country – two of the Federal Government-owned i.e. the Calabar Free Trade Zone (CFTZ) and the Kano Free Trade Zone (KFTZ). And under Jime’s one-year stewardship, the number of FTZs has climbed to 37.

So, with 37 FTZS and well over 300 licensed Free Zone Enterprises (FZEs), NEPZA has attracted about $80billion into the national economy; and contributed to over 60 percent of the entire Foreign Direct Investment that Nigeria attracts.

Some of the licensed FTZs include: the Nigeria International Commerce City also known as Eko-Atlantic ($38bn), with targeted job-creation put at one million; Centenary City ($18bn), with envisaged job opportunities at 70, 000; Ogidigben Industrial Park in Delta State ($15bn), estimated to create 800, 000 jobs; LADOL i.e. Lagos Deep Sea Logistic Base ($3.5bn), jobs targeted, 150, 000;   Maritime Economic Badagry City ($2.8bn), targeting 250, 000 jobs; Nasco Town Free Zone ($2,086bn), estimated to provide 15,000 direct jobs0; and the Badagry Creek Integrated Industrial Park ($1.3bn), target of 23, 000 jobs.

Still others include: General Electric (GE) of the US ($1bn), hoping to employ 1000 people; Tomaro Industrial Park in Lagos ($450m); Quits Aviation Services Free Zone ($215m), and is estimated to provide jobs in their thousands; Ogogoro Industrial Park ($160m), estimated to employ 30, 000; and NAHCO FTZ ($22m), which plans to employ over 5000 upon completion.


Upon assumption of office on 19th April, 2017, the MD met some daunting challenges on ground, to wit:  Low staff morale, delayed promotions, inter-agency rivalry, poor investor-confidence, a dysfunctional governance structure, etc. Although his governmental experience was more on the legislative side, he knew he had to add value; and that, urgently. In other words, he had to hit the ground running.


Immediately upon assumption of office, Jime undertook a cross-country tour of all the FTZS in the country in order to get first-hand information on NEPZA operations from both investors and staff. And one of the recurrent themes in the mouths of staff was poor staff welfare. A welfarist at heart, Jime’s understanding of labour relations is that if you do not motivate a worker properly then you only waste your time in expecting that he’s going to be performing at the optimum capacity. As he tells people: “If there is welfare in the house, there would be no warfare.”

So, what he did was to look within the limit of what was available in the office of the managing director and move quickly with the best advice from his management team.

So, within a short time, NEPZA staff began to feel the impact of a staff-friendly leadership and one year after, the consensus is that NEPZA has turned the bend as far as staff welfare is concerned.


An integral part of staff-welfare is promotions as at when due. As at April 2017 when Jime took over at NEPZA, some people, who had been due for promotion, were stagnated, in some cases, for more than three years. What he did was to ensure that whoever was due for promotion was promoted. One year after, even the arrears that necessarily go with promotions have been cleared. As he told a distinguished audience lately: “We are not owing a single staff arrears arising from promotions or accumulated allowances, some going back to six years!”


The next critical challenge was cementing the tenuous, and sometimes acrimonious relationship that exists between the Authority and sister-agencies of government like the Nigerian Customs Service (NCS), the Nigeria Ports Authority (NPA), Federal Airports Authority of Nigeria (FAAN) and the Nigeria Immigrations Service (NIS). It may not be public knowledge, but the successful operation of a Free Trade Zone depends on the synergy between it and other agencies of government operating therein, especially Customs. And the life-blood of NEPZA is Free Zones which she licenses and regulates.

Something had to be done, and Jime did it: the Comptroller-General of the NCS, Col. Hameed Ibrahim Ali (retd), had paid a courtesy visit to NEPZA on November 2, 2015. Jime returned the courtesy on August 22, 2017, almost two years after!   He followed up with courtesy visits to all the Customs formations operating in all the Free Zones; he also paid working-visits to other sister-agencies like FAAN, the NPA and the like.

Although NEPZA (and, by extension, the Free Zones), now has a seamless working relationship with the Customs in such a way that the zones are beginning to declare more profits, plans are advanced to hold an Inter-Agency Round-Table that will bring together all the industry stakeholders for a thorough inter-face on the Free Zone innovation.


Another thorny issue was surmounting the challenge of poor investor-confidence in the Zones. It was imperative, if not urgent, to get investors to have confidence in NEPZA’s Free Zones by way of a basket of incentives or a regime of tax holidays.

Within a week of coming into office, the NEPZA CEO took a familiarization-tour of the Free Trade Zones, and discovered that although NEPZA had 34 FTZs, only about 12 or so were actively operating. And the chief reason for this was the dearth of infrastructure in the Zones.

A Free Trade Zone essentially is actually a platform that is created so that companies can take advantage of the prevailing incentives that are offered by NEPZA in order to enable them function therein profitably.

And one of the things that a FTZ is meant to provide, the world over, is a deliberately-incentivized environment wherein businesses can be run at less cost. And doing business at less cost means having world-class infrastructure in place: regular power supply, water, good roads, security of men, materials and investment in addition to a basket of incentives. If these infrastructural facilities do not obtain in a Free Trade Zone, then, it is not a Free Trade Zone. As Hon.  Jime said lately: “Capital is discriminatory, so it doesn’t go where it’s not wanted or welcome. You need to look beautiful to attract it. And this is why we intend to make our Zones world-class in terms of infrastructure.”


To drive his vision of turning NEPZA around and to take NEPZA in the direction of that vision, the MD realized that he had to rejig the administrative and governance structure of the Authority he met on ground. Some management staff had been in a place for close to 10 years without any movement. Of course, he effected massive transfers and reorganizations within the system. And today, the Authority is better for it.

Jime speaks on this: “We have placed everybody appropriately, and we are better off in terms of competence, capacity, ability, value-adding, efficiency, productivity and organizational targets.” He adds: “In transferring, promoting or placing people appropriately, I didn’t look at faces or sentiments – I only looked at records and capacity.  And that is what I am still doing.”

Elsewhere, where the concept has been clearly understood, it is changing the economic landscape in leaps and bounds. For instance, do you know that the whole of Dubai, in the United Arab Emirates, is a Free Trade Zone? Do you understand that Shenzhen, in China, which started just over 30years ago, with a population of less than 50, 000 people, right now has over 12 million residents? The reason for this is because the moment the government decided to give Shenzhen the cover of a Free Trade Zone, the incentives that were available, ensured that it took off, and it has now moved from less than 50, 000 people to over 12 million. And because of the runaway success of Shenzhen SEZ, the Chinese government is replicating the miracle in Xiongan, with plans to inject a whopping $580billion into the new SEZ in the next 20 years. This is how it is done.

Most of us want to go to Dubai or Shenzhen on holidays, but nobody likes to ask the question: How did these cities get to where they are? So, the issue of investor-confidence is the one thing that is seriously riveting our attention.


From Mr. President’s policy pronouncement and actions, it is evident that he is determined to leave Nigeria better than he met her. And one way he is doing this is via the Free Zones concept; with eyes on economic diversification, industrial growth, job-creation, local content development, technology transfer and acquisition etc. So President Muhammadu Buhari is not just concerned with kick-starting Nigeria’s long delayed industrial march, but interested in squarely putting her on the industrial map of the world.

Prior to Emmanuel Jime’s appointment, Buhari had travelled to China in April 2016 and visited the FTZs in China, and returned with the zeal to boost Nigeria’s Trade Zones too. In the 2017 budget, therefore, Mr. President directed, for the first time in the history of NEPZA, for a massive capital injection of N50billion into NEPZA for the development of world-class infrastructure in the nation’s FTZs as well as for the creation of six new industrial parks in each Geo-Political Zone. Before now, the highest amount of money given to NEPZA was about N2billion.

Work on infrastructural development, renewal and upgrading has started and the Calabar Free Trade Zone (CFTZ) as well as Kano Free Trade Zone (KFTZ), which are the two, publicly-owned FTZS, have already started seeing massive capital interventions towards the into the development of infrastructure.

It is gratifying that in this 2018 too, from the budget estimates, the same amount of money has been provided for the Authority.

With these ambitious plans to reposition the Free Zones to meet world-class standards, the hope is that, all things being equal, when we are done with our work in the Free Zones in Calabar and Kano by the end of 2018, investors in the CFTZ and would have no issue as far as power supply is concerned.

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