Industrialisation: Special economic zones offer fresh vista

Tempo de leitura: 8 minutos

The Federal Government appears unrelenting in its push for rapid, inclusive and sustainable industrialisation, job creation and diversified export earnings. Undeterred by the barrage of import ban on Nigeria’s agro-allied products by some importing countries over the failure to meet international quality standards, government has, this time, turned to the use of export-oriented Special Economic Zones (SEZs).

SEZs operate against the background of highly efficient infrastructural facilities, less bureaucracy and streamlined one-stop-shop operational procedures. This is partly because of the bespoke incentives and enabling environment offered to businesses that operate in such zones. They are identified as investors’ haven capable of attracting the much-need Foreign Direct Investments (FDIs), generating employment, and boosting trade and industrialisation.

Consequently, governments the world over are increasingly identifying such zones as veritable tool to diversify their economies and fast track industrialisation. Besides, the concept bodes well for local and foreign investors looking for jurisdictions where they would save cost and maximise returns on investment. Already, local manufacturers and would-be investors in the SEZs have been assured of up-to-date infrastructure to help overcome their infrastructure disadvantages.

The Ministry of Industry, Trade and Investment, Dr. Okechukwu Enelamah, explained that the aim of the SEZs was to promote the cluster effects gained by locating similar manufacturing businesses together, as well as the need to improve the utilisation of Nigeria’s factor endowments and comparative advantages.

Others are the need to create local models of global best practice in the provision of hard and soft infrastructure and an enabling business environment. “If you study other countries that industrialised rapidly, you will find out that one of the things they did right was to have these SEZs and industrial parks that are world class, which means that all the infrastructures are there and all the requirements are in place,” Enelamah said.

The minister, who spoke at the end of a weekly Federal Executive Council (FEC) meeting in Abuja, recently, said plans have been concluded to set up SEZs across the six geo-political zones of the country. He gave details of the project location: “We are going to do one in Lagos State Lekki Free Trade Zone Area, one in Katsina in Funtua Cotton Cluster Zone Area and another one in Abia in Enyimba City.

“We are also going to develop to world class standard in the existing two zones that the government has in Calabar and Kano. And in addition, the FEC also approved pre-development work to start and develop Green Field Special Economic Zone in Akwa-Ibom, in Benue and in Ebonyi, Edo, Gombe, Kwara and Sokoto State with a further roll out to other locations in phase two.”

To demonstrate government’s commitment to the project, President Muhammadu Buhari recently announced the establishment of the Nigeria SEZ Investment Company Limited. The company was charged with driving the expansion of the initiative and ensuring the participation of public private partnerships involving the Federal and State Governments, as well as local and foreign private investors in the project.

The occasion was the signing of the $30 billion agreement between the Nigeria SEZ Investment Company Limited and strategic investment partners in Abuja, recently. The investment partners include the Africa Export and Import Bank (AFREXIM Bank), Africa Finance Corporation (AFC), Bank of Industry (BoI), Nigerian Sovereign Investment Authority (NSIA) and the African Development Bank (AfDB).

The agreement, which may have set the stage for Nigeria’s emergence as an industrialised nation, was signed by AFREXIM Bank President Professor Benedict Oramah, BoI Managing Director Mr. Olukayode Pitan and NSIA Managing Director, Uche Orji. The plan was to leverage on the agreement to drive Nigeria’s industrialisation and boost export earnings from made-in-Nigeria products.

The FEC, The Nation learnt, had earlier approved the implementation of “Projects Made-in-Nigeria Exports”, otherwise known as “Project-MINE initiative,” which, according to Buhari, will generate $30 billion and create 1.5million jobs by 2025. It will also use the SEZs to achieve the objective of boosting the share of manufacturing in Gross Domestic Product (GDP) to 20 per cent.

MINE is a presidential special priority intervention programme implemented by the Ministry of Industry, Trade and Investment, but under Buhari’s direct supervision. MINE was aimed at developing world class export-oriented SEZs across the six geo-political zones of the country.

This, according to him, will spur industrialisation by offering advanced infrastructure and facilities to local and foreign investors at competitive costs. He added that Project MINE was conceived to position Nigeria as the pre-eminent manufacturing hub in Sub-Saharan Africa and a major exporter of made-in-Nigeria products to the West African sub-region, the entire Africa and the World.

The project and its ambitious targets particularly the aspect that seeks to boost the manufacturing sector’s contribution to GDP by 20 per cent resonate with real sector operators particularly manufacturers. Many of them are dissatisfied with the sector’s current 9.5 per cent contribution to the GDP, compared with South Africa’s 15 per cent, for instance.

Consequently, manufacturers under their umbrella association, Manufacturers Association of Nigeria (MAN), set for themselves a target to substantially improve the sector’s contribution to GDP this year. MAN President Mr. Mansur Ahmed said as part of efforts to change the sector’s narrative, MAN will establish well-structured and mutually beneficial linkages between big companies and smaller ones.

Ahmed, who spoke during the recent MAN annual media luncheon in Lagos, also said under his watch, MAN will expand the scope of strategic corporate partnerships not just in the country, but in Africa at large. He added that the association will also promote policy consistency in a manner that gains already made are not pulled back while ensuring the revival of sectors that are currently struggling.

 Although, Project MINE is said to have secured early commitments from domestic and foreign investors in textile and garments, as well as agro-processing segments of the manufacturing sector, government appears to be leaving nothing to chance to ensure that the initiative becomes the toast of investors.

For instance, Buhari dangled the proverbial carrot to investors via an open invitation to experienced SEZ developers and operators who he said were needed to partner with the government to upgrade the Free Trade Zones in Calabar and Kano, and to offer first-class standards of infrastructure and facilities.

While government awaits the completion of the process of bringing in these investors, the FEC was said to have moved a notch higher when it approved the award of contracts in excess of N19.45 billion for the needed investment in Calabar and Kano Free Trade Zones. It was the highest amount of capital investment ever in the history of these zones. And work in those zones is currently ongoing.

The President also said the Federal Government had allocated funds to upgrade the capabilities of management and the systems in the Nigeria Export Processing Zones Authority, (NEPZA) to strengthen it as a regulator of the SEZ. This was in addition to the allocation of substantial resources to the provision of “outside the fence” infrastructure to ensure that the SEZs are connected to global, regional and domestic markets.

“We are reviewing our incentive framework to ensure competitiveness relative to the other countries with whom we are in the race to attract export-oriented global manufacturing investment. We will extend the early successes we have achieved in Ease of Doing Business to the areas critical to globally competitive export-oriented manufacturing operations,’’ Buhari said.

The Managing Director/CEO of Oil and Gas Free Zone Authority (OGFZA), Mr. Umana Okon Umana, admitted that the administration’s Ease of Doing Business initiative created a better enabling environment for businesses to make more contributions to the national economy through the Oil and Gas Free Zones (OGFZs).

While noting that much of the significant contributions of the OGFZs to the national economy were the result of deliberate policy reforms under the Buhari-led administration, he said the Ease of Doing Business initiative restored confidence among foreign investors in Nigeria as an investment destination.

The OGFZA boss, who made these known in his presentation at an oil & gas forum held in Lagos, recently, titled “Oil & Gas Product Manufacturing: Understanding the Importance of Oil and Gas Free Zones,” said the special operating environment put in place in the free zones was meant to incentivise the use of the zones as manufacturing hub for economic diversification.

He listed some of the bespoke incentives offered to businesses that operate in the free zones to include exemption from all forms of taxation, including federal, state and local government taxes; exemption from expatriate quota policy applicable in the customs territory.

Other incentives include exemption from customs duty on imports for value-added production; express processing of entry visas; the most expeditious clearance of cargoes; express processing of entry paperwork through the one-stop-shop policy and a host of other incentives.

According to Umana, these led to significant cost savings and improvements in timelines for operations. The changes in the operating environment in the free zones have also seen commitments in new investments valued at more than $8 billion in the coming years.

The consensus of operators and industry stakeholders is that when the new SEZs in the six geo-political zones of the country fully come on stream and some of these mouth-watering incentives are extended to businesses that will be operating in those zones, Nigeria may well be on its way to achieving her dream of becoming sub-Saharan Africa’s manufacturing hub.

The realisation of such manufacturing hub status, it is widely believed, will naturally come with it other deliverables envisaged by the Project MINE initiative. These include boosting manufacturing’s share of GDP to 20 per cent, hitting the projected $30 billion in annual export earnings and creating 1.5 million jobs by 2025.

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