Thursday, 12 September 2019 11:34

The Future Looks Good For The Free Zone Innovation In Nigeria Featured

 

The keynote address by the Managing Director (Ag) of Nigeria Export Processing Zones Authority (NEPZA) at the one-day capacity building programme organised by the Commerce & Industry Correspondents Association of Nigeria (CICAN) on 10th may, 2019 at Freshland hotel, Abacha road, Nasarawa State.

 

ABOUT NEPZA
NEPZA was established in 1992 following the enactment of the Nigeria Export Processing Zones Act 63, of 1992, with the strategic mandate of promoting and facilitating local and international investments into Nigeria’s licenced Free Trade Zones/Special Economic Zones.

In clear terms, therefore, the Free Zone scheme was envisioned on diversifying the nation’s economy away from oil, fast-tracking her industrialization, stimulating export-oriented business enterprises and manufacturing, strengthening strategic national economic policies, streamlining administrative approval processes as well as providing a one-stop-shop service for businesses both within and outside Nigeria.

Other strategic goals of the Free Zones concept are the promotion of the Nigerian Content Policy in the Oil & Gas sector, attracting Foreign Direct Investment (FDI), generating employment, increasing Foreign Exchange Earnings, enhancing technology transfer, promoting skills acquisition/upgrading as well as creating backward linkages.

And after 25 years of existence, the Federal Government is reviewing the Authority’s mandate, and repositioning it to become an “Industrial Development Agency” which would move Nigeria to the next level via the rapid Industrialization of the Nigerian economy by facilitating the development, promotion, operation, regulation and marketing of Industrial Clusters, Industrial Cities, Industrial Parks and Free Zones across the country. This is anchored on the recently launched Nigeria Industrial Revolution Plan (NIRP) policy document.

40 FREE ZONES ALREADY LICENCED

In line with this noble mandate, NEPZA, boasting of core values like Professionalism, Integrity, Innovation, Equal Opportunity and Team Spirit, has so far licenced 40 Free Zones/Industrial Parks spread across the country, but with just two of them being Federal Government-owned Zones i.e. the Calabar FZ and the Kano FZ. Of the 40 FZs, while 14 are at the moment operational, the rest are still under various stages of development.

OVER $20BN  FRESH FDI ATTRACTED INTO THE ECONOMY

From 1992 till April 2017, NEPZA had 34 FZs spread across the country, and between then and now, the number of has risen to 40.

So, with 40 FZs/Industrial Parks and well over 400 licensed Free Zone Enterprises (FZEs), NEPZA has attracted over $20billion fresh Foreign Direct Investment (FDI) into the national economy since inception; and contributed a major percentage of the FDI that Nigeria attracts.

Some of the licenced FZs include: the Nigeria International Commerce City also known as Eko-Atlantic ($38bn), with targeted job-creation put at one million; the Nigeria Centenary City ($18bn), with envisaged job opportunities at 70, 000; Ogidigben Industrial Park in Delta State (N15bn), estimated to create one hundred thousand jobs; Maritime Economic Badagry City ($2.8bn), targeting 250, 000 jobs; Nasco Town Free Zone ($2.1bn), estimated to provide 15,000 direct jobs); the Badagry Creek Integrated Industrial Park ($1.3bn), target of 23, 000 jobs.

NEPZA & LOCAL CONTENT DEVELOPMENT

To give credence to the Local Content Development Policy as enshrined in the Nigerian Oil and Gas Industry Content Development Act (NOGICD) of 2010, President MuhammaduBuhari on February 5, 2018, signed Executive Order 005, aimed at improving local content in public procurement with science, engineering and technology components.

The presidential order proclamation entitled, ‘‘Presidential Executive order 005” also directed MDAs to engage indigenous professionals in the planning, design and execution of national security projects. It makes a case for foreign professionals only “where it is certified by the appropriate authority that such expertise is not available in Nigeria.’’

Even before the presidential order, NEPZA, as the chief driver of the nation’s industrialization programme, has been in the forefront of local content development in Nigeria.

THE $3.3BN EGINA FPSO:

And nowhere is this local content development more evident than in the just-completed modular fabrication work on the EginaDeepwater Oil Field, the $3.3 billion and 330-metre-long Floating Production Storage and Offloading (FPSO) unit, with a capacity for 200, 000 barrels of oil per day, currently berthed at the newly built, 500-metre FPSO Integration Quayside at the SHI-MCI Yard, LADOL Free Trade Zone, Lagos. It was built for Total Upstream Nig. Ltd (TUPNI) in collaboration with Samsung Heavy Industries (SHI), Busan, South Korea.

The FPSO had berthed in LADOL on January 24, 2018, and was fitted and integrated with six modules fabricated in Nigeria – the fabrications were undertaken by Nigerian companies, Nigerian contractors and Nigerian suppliers. It is important to point out that the Project was completed and delivered to Total Nig. Ltd. in August, 2018.

THE ITUT AND ABANG PLATFORMS

Another example of NEPZA’s contribution to the Local Content Policy is the Itut and Abang platforms which were fabricated by NigerdockPlc in Snake Island Integrated Free Trade Zone (SIIFTZ). The platforms, which are part of a three well-head platform in the Satellite Field Development Project, have the capacity to produce up to about 62,000 Barrels of crude oil and 8,000 barrels of natural gas per day.

A major feat of these twin-fabrication works, put at $360 million, was that 2,333 tons of structural welding was completed on both platforms, with a total of 2.3 million man-hours utilized on the projects with no lost time incident (LTI). Furthermore, the 10,000 Mobil Producing (Nigeria) training man-hours at Nigerdock reflect world class performance.

UNPRECEDENTED CAPITAL INJECTION OF N100BN

Before the advent of the present administration, the highest NEPZA had ever received as capital votes from the Federal Government was N2billion! But the story is different today, with President MuhammaduBuhari allocating about N100billion to the Authority for the development of critical infrastructure in the public Zones i.e. about N50billion in 2017 and about the same figure in 2018.

And because of these unprecedented capital votes, infrastructural  transformation, renewalandupgradinghasstarted in theCalabarFreeTradeZone(CFTZ)aswell  as the KanoFreeTradeZone(KFTZ), whicharethetwo public or Federal Government-ownedFTZS.

 

And, as a result, investor-confidence in the Zones has never been higher. Standardizing our Free Zones by giving them world-class status, especially in the area of infrastructural provision, may be daunting, but with presidential support, NEPZA is proving that where there is a will, there will be headway. NEPZA is, therefore, on the road to achieving greater success.

LOOKING AT THE UAE AND THE CHINESE MODELS (DUBAI & SHENZHEN)

Against the backdrop of the recent hiking of budgetary allocations to NEPZA, it is needful for Nigerians to look in the direction of United Arab Emirates and China; and see what these countries are doing. This is because of how both countries have used the FZ innovation to change their economic landscapes.

Some 30 years ago, Shenzhen was a poor, backward town in China, with a population of about 30, 000 people. Right now, it has over 12 million residents. It has transformed from a fishing community of 30,000 into a sprawling industrial and financial megacity; it is home to the Shenzhen Stock Exchange and one of the busiest financial centres in the world, with a GDP in excess of $354billion in 2018! Today, it is deservedly dubbed by industry experts as “South-China’s technological powerhouse!” (Nigeria’s GDP was $376billion in 2017, and should be over $400billion in this 2019!).

Because of the runaway success of Shenzhen FZ, China is replicating the miracle elsewhere. On April 1, 2018, President Xi Jinping announced the transformation of “a little-known farmland called Xiongan into a glittering technology and innovation hub, complete with new businesses, universities and state-of-the-art transportation.” It covers 2000 square kilometres i.e. more than twice the size of New York!

And what is more, there is a plan to invest a whopping $580 billion into the new FZ over the next 20 years. You may try converting that into Naira!

But if China is far away, let us look at Dubai was a desert, just like much of the Arabian Peninsula. Over 10million tourists troop to Dubai yearly for: leisure, shopping, weddings, investments, conferences etc. In the frenzy, few people realize  that Dubai is a Free Zone, but it is. Next year, Dubai is hosting the whole world in what is dubbed Dubai Expo 2020, beginning October 20, 2020 and ending on April 10, 2021. Already, 192 countries have confirmed participation. You can do the math in terms of capital inflows into the Dubai economy. Dubai’s population is slightly more than three million, with only 15 per cent being native! Its GDP was about $433billion in 2018! Recall that Nigeria’s GDP was just 354billion in 2017!

So, whether it is Dubai or Shenzhen, we are talking of about 30 years ago.  That is 1989! Where was Nigeria in 1989? Where is Nigeria today?

Challenges:

On the challenges facing the Authority, let me quote what I told the Press recently: “Every system has its challenges; and in our case, the most critical is power. And there are others like the dearth of infrastructure, and poor transportation modes.”

Let me add that the poor state of roads as well as the absence of a functional rail system and inland waterways make the transportation of finished goods from the Zones to the ports for exports difficult.

We can add to the above under-funding, which has, in turn, affected the quality of infrastructure in the Zones: water, power, roads etc. There is also a review of the NEPZA Act which is still before the National Assembly.

We can also add to it issues like inter-agency rivalry, a poor appreciation of the FZ innovation by the generality of the people, insecurity etc.

But we are optimists, and looking at the political will shown by President MuhammaduBuhari to take the Scheme to the Next Level by word and deed, we believe there is a New Dawn for Nigeria. If the attention we are receiving is sustained, and possibly even improved upon, Nigeria would take advantage of the FZ scheme to fast-track her industrialization drive.

This is why this event is very important to us, and we are using it to speak to the world: investors, policy-makers, industry experts, MDAs, critical stakeholders etc, etc.

Thank you for your time. And I wish you a great and fruitful outing.

 

ENGR. TERHEMBA NONGO

MANAGING DIRECTOR (AG)

 

 

Last modified on Thursday, 12 September 2019 11:52
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