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Nigeria Free Trade Zones’ law is backward, delays business boom – AFZA boss

Chris Ndibe, Executive Secretary of Africa Free Zones Association (AFZA), an international non-profit organization established in Cape Town, South Africa in October, 2004 with the secretariat of the Association in Nigeria in this interview with Favour Nnabugwu said the country can indeed attain a successful free trade zone far and above other countries in the continent that have success stories to tell about the free trade zones.

He however said that it will be possible only if Nigeria government can revisit the free trade zone law and put other infrastructures in place to attract the much needed boom in that area and many more.

Excerpts

What do we have to learn from the Asian tigers and other successful economies that have made the best of the concept?

When we talk about learning from Asia, I will first tell you that an economic environment is very complicated; therefore, there is no universal model to a problem. So it is with Free Zone scheme. There are no unique rules for the management of Free Trade Zones, and so I suggest that the regulations and basic law have to be revised according to the economic environment.

No two zones are the same but you have to manage according it to its development, economic and social environment. Going back to your question, we can observe the basic things that are common to the success of zones which is working for the Asians.

The concept must be considered as part of the national economic strategy, otherwise we may not achieve strong linkages with local industry. This is because zones initiative determines their destiny from the start with the policy framework; incentive packages and other provisions.

That is why I said earlier that our basic laws have to be revisited to make incentive competitive and reduce the control on zone’s law.  Nigeria Export Processing Zones Authority, the Free Zones Authority in the country is being underfunded and therefore poorly managed as to take us to the Promise Land where the Asian tigers are.

I doubt if the Authorities can on their own bring in a consultant from anywhere to work with them for a period and pay the consulting firm or consultant which points to a weak administrative body of government.

With the level of interference on our zones, administration by other government agencies whose responsibilities are allied to the development of Free zones, a single body is imperative. By this, you have Free Zone customs, immigration etc under one body as it is in Dubai.

This will make for good training and retraining of allied agency officers, thereby reducing the frustration of training a custom officer on Free Zone matter and after some months he or she is transferred. Such officer must be with Free Zone for not less than 10 years.

NEPZA can work with Small and Medium Enterprises Development Agency of Nigeria, SMEDAN, under a special guideline to nurture SMEs into being an export processing zone or factory. Kenya is effectively practicing this incubation strategy, including other African countries.

Nigeria should encourage private rather than public development of zones. This will shore up our chances of success. A state government can obtain a Free Zone licence and agree with a private developer to develop and manage under a well structured agreement.

The law review should incorporate a PPP framework for zone development outlining rights, responsibilities, and obligations of all parties with respect to all aspects of zone development, financing, regulation and promotion.

As a matter of fact, if we do what we are supposed to do and the right attention given, our Free Zone will take us to where the Asian Tigers are, thereby contributing to the realization of Vision 20:2020.

How would you describe the Nigeria free trade zone law in its present state?

The Nigeria Free Trade Zone law in its present state can be described as archaic and it requires visitation and review. The Free Zone law is delaying the business community who are dynamic beings. We should be dynamic as well in the review of the Free Zone laws.

What we are using was enacted in 1992 and 21 years later, you think it can still serve and attract the dynamic FDIs? We are shooting ourselves on the foot by leaving the law which still states that an investor can only sell 25 per cent in the country in the internet world.

The individual would have read and made up his mind without us knowing so as to tell him that he can actually sell 100 per cent and a host of other trash that need to expunged and modern tenets infused into it. If you check, there is no single policy of government that can mop up joblessness from the streets of the country like Free Zone policy.

You will agree with me that we are joking by not giving attention to FZ law. A factory I visited in Mombasa, Kenya recently had 2,700 employees. Calabar Free Trade Zone has the capacity of hosting about 100 of such factories. You extrapolate and tell me if we will not go importing workers into Calabar.

We have 26 FZs approved by the federal government at different levels of development to date. While you are doing your extrapolation, remember withthe backward linkages for some factories in place,  some farmers can budget because of the amount of raw materials they supply.

What laws are required to promote the scheme in Africa?

You are asking of what laws that are required to promote the scheme in Africa. We need law of connectivity and accessibility within the continent which should be pioneered by African Union. We need a law empowering an association or council that should be assisting in Free Zone policy framework and the concept of extra-territoriality.

The concept of extra-territoriality states that FZ should be treated outside the domestic customs territory but should be eligible for national certificate of origin and participates in trade and market access agreement.  We also need a law on labour regime which will consist of ILO standards and collective bargaining. Moreover, the transparency of foreign worker employment regime  will discourage excessive dependence on foreign workers at the expense of local ones.

Many entrepreneurs in African continent are still not aware of Free Trade Zones in spite of its seeming success. What are the benefits to their businesses?

I quite agreed that many African entrepreneurs are still not aware of the enormous potentials of Free Trade Zones for reasons bothering on our level of promoting our zones in this continent. Many African countries, including Nigeria, that have established free zones are not giving it the publicity it required.

In the feasibility report of zones development, promotion is always given priority but because of the cost involved, most countries are always not meeting up. Promotion which is made up of advertising, Public Relations and personal selling are expensive world over and normally classified under capital budget if you must make impact.

But most African countries classify promotion under over head which waters down the consideration and allocation. At the end of it, money is spent but the effect is not achieved because of the low level of the promotion executed in a year.

I have been assisting some African Countries of recent in their plan for promotion that will give the desired effect but the problem is always fund. A project of International complexion requires good funding to go to CNN and other media.


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.