Dr. Olufemi Ogunyemi, Managing Director of the Nigeria Export Processing Zones Authority (NEPZA), has announced plans to revive 20 inactive free trade zones across the country.
According to channelstv.com, Ogunyemi who spoke on Channels Television’s News Night, emphasized the agency’s commitment to strengthening Nigeria’s trade zones to boost investment and economic growth.
Enjoy the excerpts:
I’m looking at the name of the authorities, an export processing zone, so it’s not just a free trade zone?
If export processing zone, in my opinion, is a misnomer, it was the title given way back in 1992 when the focus was an enclave specifically to promote and process export, but over the past 30 years, the concept has changed many countries by law changed their titles to free trade zone. But even then, that became old-fashioned because they’re not free, they pay for these licenses, they pay tariffs, they pay duties when they export in the Customs territory. So, it’s a misnomer to call them free trade zones, the correct title is special economic zones because they are now diverse beyond just exports, they are now diverse in other fields and their focus is not just on exports, so the term around the world now is to use the special economic zone.
So, what’s the special benefit?
Good, the word free has its attachment, so it’s not completely free. The idea is to attract investors into Nigeria, if you’re an investor abroad and you have some money you want to come and invest it in Nigeria, in Customs territory, but we create these zones to try and attract traders so that you can come in, we can provide infrastructure for you, we can help create a one-stop shop whereby all government agencies will come through NEPZA to interact with you.
We give you duty waivers so that your initial capital can be focused on developing your business. The waivers, the duties you will pay if you start exporting into Nigeria and then we give some tax incentives as well. That is what attracts the FDI (foreign direct investments) and Nigeria needs to be competitive in this area because if we’re not, our neighbours will get all the FDI.
You mentioned Calabar, you mentioned Kano as the starting point. How are we doing now?
Calabar and Kano are doing very well.
How many zones do we have right now?
Right now, we have about 55, maybe 56 zones. Again, that can be misleading because since I took up this appointment, about 20 or so zones are not operational and that can skew the figure. For instance, in Dubai, they have a total of about 44 zones I think, and in Kenya probably about 33 zones.
Having said that, in Dubai, one zone has about 5,000 enterprises companies under it, I think one of our zones, the highest number of companies under is like 85, so it’s misleading when you say you have 56 zones and a big chunk of them are not working for various reasons which we’re going to be addressing this year.
Which ones are working? Where do we seem to be getting it right?
Our most successful zones are in the Lagos axis, and I put it down to the foresight of President Bola Ahmed Tinubu. When he was governor of Lagos State, a huge stretch of land area along the coastline had been marked to be a free trade zone. Over the years, this area has been demarcated into certain zones, I’ll tell you what they are: Lekki Free Trade Zone which is jointly owned, 40% owned by the Lagos State government, 60% owned by the Chinese government; Lagos Free Trade Zone, the title can be a misnomer, Lagos Free Trade Zone is not owned by Lagos State, it’s owned by Singaporean family, the Tolaram Group who have just spent $70 million to purchase Guinness from Diageo.
Then there’s Dangote Refinery as well in that axis and there’s a diverse zone called Alaro City getting closer to Epe. Those are very successful free trade zones on that axis. Coming westwards, you get to Ogun Guangdong which is 20% Ogun State government and then the Chinese government. As you go around the country, we do have other zones as well. We have in Delta State and you have the Sugar Factory, the Bundu Free Trade Zone which deals in sugar on the Midwest side. We have an agro-processing Zone Sabore in Adamawa State and we are establishing other zones that are in state various stages of development all over the country.
It appears the states have large roles in this.
Yes, the states in their drive to create employment to industrialize the state, especially in this current mode where there’s a drive towards agriculture, a lot of them are expressing significant interest. The governor of Kwara State, if I can mention some names, has invited NEPZA to Ilorin for the launch of a concept of a smart city, this is a global concept. So, some of the state governors are interested in smart cities but most importantly, they are also interested in agro-processing zones. When you say they are interested, they want to take advantage of the tax incentives, the duty waivers, and free trade zones. To make it easy for them to succeed, we do not permit any union activity for 10 years so that they can thrive. These are part of the advantages that attract them. Agro-processing zones don’t want to just export ginger or sesame or cassava, they want to add value to it, and they have found that it can create employment, can have a lot of benefits being in a free trade zone so there’s been a lot of inquiries from state governments regarding free trade zones.
At the end of the day, the exports, processing zones, all these invitations, having a place where people can come in, are trying to raise revenue. How well are these zones doing in that department?
Now there are a lot of tariffs. NEPZA has just reviewed its tariffs, I’m going to make them public and send them to the zones. For the past 10 years we have not reviewed our tariffs, so it’s long overdue. We charge for many things. Let me just take a simple thing like you apply to get a free trade zone, your application comes in, I have to send a team from NEPZA to look at your land and assess the feasibility of your plan, that’s going to cost money.
Now let’s say the free trade zone is operational. For instance, the Lekki Deep Sea Port is an enterprise under a free trade zone, so it’s an enterprise under the Lagos Free Trade Zone. When containers come in, there are going to be charges, Customs are there, they have to inspect it so there are fees, these are among the many fees.
There’s a long list of tariffs which is part of why I say it’s not free, all these operators, the zone operators, there’s a zone management company, all of them have to pay, that’s where the money comes from. The IGR (internally generated revenue) that is generated that we pay to the government coffers.
How much are we realising from the free trade zones?
Well, one of the successful free trade zones that I mentioned earlier declared 40 billion naira last year. I hate quoting figures because they’re never accurate, but we remitted probably about 8 or 9 billion naira to the federal government from NEPZA directly, in the first six months of last year.
Now, we bring in a lot of revenue to the government that is not captured directly. Even the Customs figures that are been displayed, the one I said 40 billion in the first instance, a percentage of it has come from these free trade zones, same with NAFDAC, they are there, they generate revenue as well and in a smaller way, even the Immigration Service generates revenue.
