As
Nigeria struggles to reshape its economy, investors were reminded at the close
of 2017 of the immense potential offered by the Free Trade Zones. With the licensing of three new FTZs, accompanied
by net Foreign Direct Investment inflow of $2.75 billion, attention should be
focussed afresh on these specialised trade areas as part of the overall
strategy to restructure the economy for job creation, export diversification
and industrialisation.
Managing
Director of the Nigeria Export Processing Zones Authority, Emmanuel Jime, announced the berthing of Nasco Town FTZ, Quit
Aviation Services and Tomato FTZ. These three, he said, had drawn in $2.75
billion and would create 50,000 direct jobs combined.
These
add to about 31 FTZs already licensed in the country with less than half fully
active. The NEPZA lists 21 on its website that are inactive with active ones in
Adamawa, Akwa Ibom, Cross River, Jigawa, Kano, Lagos and Ogun states. Earlier
in May 2017, Jime had enthused that the Calabar FTZ attracted 11,000 direct and
indirect jobs since its inception; facilitated technology transfer and FDI.
Viewed
against the background that Calabar FTZ was mooted over three decades ago, the
immense human and material potential of Nigeria and our continued reliance on
oil and gas exports for 80 per cent of export earnings, it is obvious that the
country has not taken full advantage of the opportunities offered by FTZs. This
failure becomes stark when it is noted that China kick-started its rapid
industrialisation and global export dominance with its own special economic zones.
The trade zones have featured in the emergence of Asian and South American
economies.
Export
processing zones or free trade zones are a special strategy that developing
nations are adopting to transform their economies by integrating themselves into
the global supply chain. According to the United Nations Conference on Trade
and Development, countries in Asia, Africa and Latin America are adopting the
tool of FTZs to boost and diversity exports and attract foreign investment.
Typically,
these are select areas within the country ring-fenced from the rest with
incentives such as tax holidays, low or zero import and export tariffs,
restrictions on labour unionism and absence of red tape for permits, land and
licences. They also leverage natural resources, cheap labour and advantageous
infrastructure like airports and seaports. Hong Kong, Gibraltar and Singapore
were some of the first FTZs, using their ports as customs-free hubs.
Tagged
FTZs, Special Economic Zones or EPZs, beginning from the 1930s and gaining
momentum from the 1970s, developing nations have increasingly opted for them to
transit to the industrial age. A report said that by 2006, 130 countries had
established 3,500 EPZs within their borders, employing about 66 million
workers. The respected Economist newspaper of London currently puts the number
of EPZs at 4,300.
As
usual, Nigeria is a late starter, lacking in visionary leadership and the
strong political will to see policies through. The concept of EPZs/FTZs has
been accepted and codified into law and enabling institutions here. The Nigeria
EPZ Act and the Oil and Gas Export Free Zone Act establish NEPZA and OGFTA,
while regulations from both and the Central Bank of Nigeria guide operations at
the zones. The problem has been full implementation.
President Muhammadu Buhari needs to accord priority
to and integrate FTZs into economic transformation plans. As latecomers,
Nigeria should learn from the successes of others and avoid their pitfalls.
Take
China, for instance, four areas in its Guangdong and Fujian provinces were the
first SEZs, beginning in 1980 to open up the closed state-controlled economy
and drive its industrialisation. Dubbed a “miracle” by the World Bank, Shenzhen
SEZ had by 1992, attracted $4 billion investments, representing 14 per cent of
the country’s total FDI, despite initial setbacks. Newer areas dubbed, Economic
and Technological Development Zones, have since been built and catapulted the
country as the third highest recipient of FDI.
Singapore
has nine where incentives such as friendly rules, tax holidays, financial
stability and excellent infrastructure enabled its ranking as the eighth
largest recipient of FDI in 2013.
Nearer
home, Kenya’s EPZ Authority is actualising its target of export-led growth and
integrating itself into the global supply chain by licensing 40 FTZs that have
already provided 40,000 jobs and contributed 10.7 per cent of its total
exports. Unlike Nigeria that has failed to take full advantage, 70 per cent of
those exports are to the United States under its Africa Growth Opportunity Act.
Again,
we remind the federal and state governments that the world is leaving us
behind: Buhari and his economic team should accord priority to the FTZs without
further delay. What made the difference in the success stories were the
political will, policy consistency and giving free rein to the private sector.
The
FTZs are purely economic activities, not political patronage subject to
“federal character” or ethnic balancing. Costa Rica detached its FTZs from
mainstream politics and today has over 150 indigenous firms exporting goods to
the OECD countries.
To
succeed, Nigeria must provide the necessary infrastructure: China and Singapore
are models. The World Bank attributes the success of Morocco’s Tangier FTZ, and
the 24 in the United Arab Emirates to dogged commitment by their governments to
providing world class infrastructure.
Many
years later, our own government has not delivered on the promised
infrastructure at the Calabar EPZ. But by 2008, Egypt’s FTZs employed 136,000
persons and accounted for 20.3 per cent of exports and 9.5 per cent of FDI.
Jordan’s seven FTZs have attracted more than 300 companies.
Government
should partner foreign investors to provide reliable power – without which
production is uncompetitive – at the FTZs, streamline the rules and muster the
will to pursue this economic tool with uncommon vigour. (Punch)
Have you heard this? Many Nigerian exporters have been
defrauded of huge amount of money in the process of exporting commodities to
foreign countries. Do you know why? They were not trained on export operations,
management, documentations and the best methods of payment in export trade.
This is terrible!!! Nigerians cannot continue to lose money to foreigners in
the course of export business. Exporters, why don’t you get a practical manual
that teaches the stages of export trade from processing and packaging of commodities
to receipt of payment by the foreign buyers. It teaches export operations,
export management, export documentations and methods of payment in export
trade? It is a contemporary step-by-step guide to export trade. It tells all
the contemporary dynamics in export trade. To get it, click on the link below:
Hmmm!!! Folks, have you ever
imagined how the financial status of your firm will be when more than 20,000
CEOs and other key decision makers of blue-chip corporations pay for your
products and services or even give you very juicy deals. The link below will
tell you more: http://www.tectono-business.com/2015/07/tectono-business-review-in-conjunction_21.html
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