The Federal Government’s proposed Special Economic zones have attracted significant interests from investors who are said to be eager to take advantage of its potential and incentives, as government prepares to commence implementation.
Chiedu Osakwe, Special Adviser on Trade, to Minister of Industry Trade and Investment, Okechukwu Enelamah, told BusinessDay that government has made significant progress in discussions with interested investors.
”On the efforts of the Federal Government, we are already advanced in the first stage, working closely with a consultant. We are also concluding the first stage, which is the conduct of the feasibility studies for the Special Economic zones. The results of these studies should be turned in, give or take within 30 days,” Osakwe said.
Authorities confirm that apart from the N46bn in the 2017 Appropriation Act for the zones, other financial partners such as Afrexim Bank and Exim Bank of China, have committed $1bn to the project, with the Federal Government also confirming advanced discussions with other upbeat investors.
An economic zone is a specially designated enclave, having special fiscal incentives regimes to enhance competitiveness and particularly delineate and administratively considered to be outside of the Customs territory of the host country.
According to the World Bank, there are more than 3,000 projects taking place in SEZs in 135 countries worldwide, creating more than 68 million direct jobs, a success story which Nigeria, unfortunately is not among.
Nigeria, poorly rated on the ease of doing business rankings, has faced difficulties in attracting the much-needed investments, due particularly to poor infrastructure and low confidence has proposed to set up six SEZs in each of the geopolitical zones.
Minister Enelamah said the whole idea behind the Special Economic Zones is to help overcome the infrastructure disadvantages faced by local manufacturers and promote the cluster effects gained by locating similar manufacturing businesses together. Government hopes the special zones could help rev up trade, investment and industrialisation of the Nigerian economy in a defined cluster.
“After the unveiling of the feasibility studies, the minister would lead the Federal Government to commence the implementation phase, which entails construction of facilities and working more closely with the investors who had expressed investment interest, which is expected to trigger a gravitational pull of foreign direct investment into the economy,” he said.
The Federal Government has commenced a tour of the proposed sites for the Special Economic Zones.
Nigeria’s import-dependent economy slipped into recession I the first quarter of 2016, though it is expected to see a mild growth rebound this year.
But the Federal Government has unfolded a strategy, part of which is to make Trade and Investment a key component of reeling the economy out of recession, while taking advantage of its influence in the 350 million polpulation ECOWAS market, to mainstream into regional and global value chains.
”Once we perfect the strategies for the special economic zones, we would be able to pull through good industries, global supply chains, and you will begin to see a dynamic effect of the economic growth on the Nigerian economy,” Osakwe, who has also been appointed the Chief Negotiator, Nigerian Office For Trade Negotiations, said.
Acting President Yemi Osinbajo’s signing of three Executive Orders, is geared towards significantly changing some of the ways government business and operations are conducted in the country forthwith.
The government explained that these commitments are at the heart of its effort in ensuring ease of doing business concerns are addressed, while ensuring it rides on these orders to attract a pull of investment to the economic base of Africa’s largest Economy.
Some industry watchers have expressed optimism on the planned Special Economic Zones.
Tony Ejinkonye, President, Abuja Chamber of Commerce and Industry, particularly said the zones hold the potential of driving influx of Foreign Direct Investments, and even ease the present high unemployment levels and poverty.
“The Special Economic Zones have the capacity to attract the much-desired influx of foreign direct investment, accompanied by a host of other benefits, like an increase in employment of citizens, which would in turn reduce poverty and increase income per capita, due to increased productivity, increase in real output, increase in non-oil export and finally nation-wide economic development,” he told BusinessDay.
According to him, “International experience has shown that successful SEZs have compelling business cases, enabling legal/regulatory frameworks, effective management arrangements and enjoy strong political support at all levels of government. Also, there must be integration with the local economy and an ownership, control and accountability framework.”
Ejinkonye, however, suggested that the Federal Government could adopt the Chinese model of the Special Economic zones, which he said, is outstanding and notable for attracting foreign direct investments, promoting export-oriented industrialisation, and catalyzing market-wide reforms.
“With the establishment of four SEZs in the south-eastern coastal region of the country in the 1980s, the nation now boasts hundred zones of various kinds and they have become one of the key drivers of China’s rapid economic development. Chinese SEZs accounted for more than 22% of GDP and 50% of FDI in 2007,” he notes further.