The Director General of the Nigerian Export Processing Zones Authority, Professor Adesoji Adesugba, in this interview with AMARACHI ORJIUDE, talks about the challenges of running a free trade zone
It is it has been a little over a year since you assumed the role of CEO of NEPZA; how would you describe the trip so far?
It seems that I have been prepared for this period throughout my career as a civil servant – from my days in the Nigerian Customs service where I gained my first leadership experience in supervising new recruits in the Office of Public Enterprises and to the Nigerian Investment Promotion Commission. .
It is an honor and a privilege to be called to serve in NEPZA. As one of the leading parastatals contributing to Nigeria’s economic development, my appointment as Managing Director / Managing Director is an opportunity to use my experience and expertise to support His Excellency’s industrialization program, President Muhammadu Buhari, who declared the use of special economic zones a political tool to drive Nigeria’s industrialization agenda.
Free zones are major instruments for diversifying the economy and creating jobs. Can you tell us about your strategic plans and the transformation you plan to achieve in NEPZA under your leadership?
With the support of the dedicated and knowledgeable management team of NEPZA, we are focused on strengthening Nigeria’s competitive advantage, expanding the scope of the industry to create jobs and promote exports. to facilitate economic growth.
We aim to improve the investment climate in Nigeria by providing world-class incentives and infrastructure that will attract local and foreign direct investment. We also want to improve the perception of authority through strategic and routine communication which is a key priority for NEPZA and several strategies have been put in place since my takeover.
These have helped provide a better understanding of our mandate and have improved relationships with our stakeholders to enable us to work jointly for the success of the Free Trade Area / Special Economic Zone industry in Nigeria. Another key priority is to increase the number of functional and optimal SEZs and our strategic plan over the next three years will focus on the revitalization of the existing areas under the responsibility of NEPZA.
We have 42 registered areas and only 22 are functional. We are therefore seeking to change this narrative. Our plans also include creating SEZ models of global best practice by establishing world-class technically ‘plug and play’ zones and providing an enabling environment for business in the thematic areas of mining, technology and construction. ‘Agriculture.
Discussions are currently underway with stakeholders and potential investors for the creation of a medical and pharmaceutical SEZ as part of post COVID-19 interventions. As the first medical SEZ in Nigeria, it will provide world-class healthcare comparable to the standards Nigerians seek abroad.
This will help reduce the high level of medical tourism from Nigeria and also serve the African market.
You took part in the first inspection tour of the free zones of Kano, Lagos and Calabar. What are the prospects and challenges of the free trade area scheme in Nigeria?
The landscape of free zones or special economic zones in Nigeria remains one of the most attractive to investors and has attracted more than $ 16 billion in foreign investment and 270 billion naira to date. Over 15,000 direct jobs and 30,000 indirect jobs have been created.
Despite this, the challenges still affect optimal operations in the zones, posing a risk to current investors and could discourage future investments. Poor infrastructure such as access roads, electricity and water is a common challenge in all areas and it is envisaged to engage in PPP agreements to address these challenges.
Another major challenge is the lack of understanding of the concept of “free” with respect to free zone operations by some government agencies whose services affect NEPZA operations in the area of taxes, levies and charges.
Examples are the Nigerian Customs Service, Federal Internal Tax Service, and Nigeria Standards Organization. These have negatively affected the activities of many operators and businesses in the area and NEPZA is currently working with the Presidential Enabling Business Environment Council to engage with relevant agencies in order to reach common ground.
How can NEPZA intensify its efforts to fulfill its mandate in order to accelerate the industrialization of the country?
The management of NEPZA is focused on rebranding and improving the perception of authority in order to achieve its mandate. We will intensify our stakeholder engagement and strategic communications efforts aimed at working together for the mutual benefit of investors and government.
The federal government finally agreed to be part of the African Continental Free Trade Area. How to implement this agreement to give leverage to companies operating in Nigeria’s free zones?
Article 23 of ACFTA recognizes the essential role of SEZs in African countries in order to accelerate development. Rules of origin remain a major concern regarding the implementation of the AfCFTA based on the debate on how to deal with goods produced from special economic zones / free zones.
The Special Economic Zone regime provides fiscal incentives and liberal benefits that would normally reduce the cost of production, thus distorting the end market price of these products compared to goods produced in the non-SEZ zone – customs zone.
It would then be detrimental to Africa as a whole to exclude products produced in SEZs from the benefit of preferential treatment under the AfCFTA, as this action would undermine industrial development and socio-economic growth.
Nigeria is considered a lower middle-income economy with a GDP per capita of around $ 2,000, with industry contributing around 24% of gross domestic product, of which manufacturing captures around 9%. Exports to Nigeria were $ 47 billion in 2017 compared to South Africa with an export value of $ 108 billion in the same period.
It is therefore relevant to consider the adoption of a flexible origin root for Nigeria and in particular for products produced in SEZs in order to increase industrial capacity and stimulate exports.
China and the United Arab Emirates have largely succeeded with the free trade area model. Are there any partnerships with either of these nations or a show jumping strategy for NEPZA to run from the free trade zone model of these countries?
The Nigerian government has since 1992 considered the importance of the free trade area for the economic development and industrialization of the country. It is on this basis that the NEPZA was created to ensure the midwife of the program.
The scheme is a comprehensive concept that allows for the creation of a separate business ecosystem where operators and businesses within these enclaves are exempt from paying taxes, duties and levies.
The nature of the system therefore obliges the countries which implement it to exchange notes on a regular basis and to fertilize ideas. This, Nigeria has done very well not only with China and the United Arab Emirates, but also with Kenya, Ethiopia and many other countries. Nigeria, through NEPZA, will continue to work with these countries to re-equip zonal operations for maximum benefit to our people.
What accomplishments have you made since becoming CEO of this agency?
The successes that I prefer to credit my wonderful team, which includes management staff, my advisors and support staff, have been truly modest.
The task is undoubtedly a daunting one and therefore we may not have very deep success stories to tell, but we have surely taken some practical steps to bring the sector to life through my inspection tours. from areas of Kano, Lagos, Ogun and Calabar.
These visits were critical tests to assess the health of the device and we are using field experiences to reposition areas for optimal performance.
Some of what I see as our forays into a holistic approach to improving the functioning of the sector are enhanced engagement with area operators; better communication on NEPZA activities and plans; initiated discussions on potential partnership for power supply to Kano and Calabar areas.
We also obtained approval in principle for the development of two new Special Economic Zones in Lagos and Kwara States. We have obtained approval for the start of feasibility studies in Gombe and Funtua States, Katsina State, as well as discussions with key stakeholders on the establishment of the first medical and pharmaceutical SEZ in Nigeria.
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