August 3, 2021

How not to reform Nigeria’s free zones

How not to reform Nigeria’s free zones

By Abdullahi Ibrahim

ONGOING controversy within the Nigeria special economic zones is an uncharitable dis[1]traction occasioned by failure of those in authority to place national interest above selfish agenda of a few. Reading all the news and after inter[1]actions with local and international stakeholders, it is crystal clear the ministerial committee converted itself into a tool for an hatchet job to dismantle and destroy the thriving Nigerian Free zones worth over $30 billion.

Nigeria has always had plans to reform its free zones despite the status quo being considered one of the best in Africa. Yet, striving for perfection is a great aspiration. And in the free zone sector, two contending trends manifest for the past two decades. The first is the agitation for a single free zone authority for Nigeria under the Nigeria Export Processing Zones Authority, NEPZA.

This is in tandem with international best practice and this position has been upheld and projected by successive Federal Government reports and white papers. There is the second trend, the push by a group to get the son to supplant the father by having an Onne oil and gas free zone to take over the responsibility of NEPZA which presently manages about 45 zones in the country.

The crux of the matter prior to now is about legality and best practice. Onne zone( OGFZA) is by law restricted to its locality and mandate but a private cabal has been pushing without legal backing to illegally expand its coverage . Relying on induced government reports and without amendment to its enabling legislation, Onne zone , a public-private partnership body, has historically embarked on territory grabbing, changing its name outside its act and even issuing orders that has resulted in ongoing litigations.

Stakeholders had resisted the push by Onne zone all along and a bill is actually pending within the legislature to ensure a single free zone authority for Nigeria under NEPZA. That was the genesis of ongoing assault on private sector investment in Nigerian Free Trade Zones at a time Nigeria is struggling to expand dwindling foreign direct investment. It all started last year when the private cabal relaunched its drive to subvert the free zones deploying the Minister of Trade and Investment as a willing tool.

Apparently, the Minister appears not to be acting alone; it seems the group has the backing of the board and managing director of NEPZA itself. A ministerial report has unilaterally without consultation unashamedly recommended that Onne Zone takes over NEPZA mandate against the laws, interests of investors in the zone , the drive to reduce cost of governance, Nigeria’s readiness for AFCFTA regime and international best practice. The report though a draft has elicited strong reactions from various quarters.

There are even reports that the Trade Minister backed out in a backlash. A business group in Kano called Arewa Business Forum was the first to raise alarm over alleged plots to destroy Kano Free Trade Zone and other upcoming zones in the Northern part of the country by some forces within the Federal Ministry of Industry Trade and Investment.

In a statement issued in Kano and signed by its Secretary, Babayako Abdulahi, the forum alleged that there is a plot to stop the ongoing upgrade of the Kano Free Trade Zone while a directive has reportedly been issued to stop issuance of licences for the proposed new free zones in Katsina, Jigawa, Kebbi, Kwara and Taraba states.

The forum alleged that a cabal within the Federal Ministry of Trade has engineered plots to weaken efforts of the North to industrialise in her areas of strengths by transferring the free zone agency from Abuja to the South-South in addition to reviewing all ongoing activities in Northern free zones. The statement titled: ‘A Plot Against the North’ reads as follows: ‘’ We have discovered a ground plot to hide under current national crisis to deprive the north of her rights especially in the area of domestic industrialisation within the agricultural value chains.

From late last year to date, the Arewa region has embraced the concept of free zones to address issues of job creation within the North. Suddenly from nowhere, we heard that a South-South group is plotting to stop these advances by the North. We first did not take it serious until it was revealed that the Federal Ministry of Trade is putting together a report to hand over control of free zone to a South-South body based in Cross River State.

The national body based in Abuja which has supported the North in its drive for domestic industrialisation is proposed for scrapping while the South-South body is to take over the national assignment. In pursuance of that agenda, the Ministry stopped issuance of free zone licences, especially the more than five that Northern state governments and private sector people have applied for.

Till now, the ministry has not allowed the issuance of the said licences. This is a serious plot to decapitate the North at a time her leaders are struggling to attend to issue of job creation to tame insecurity”. Soon after the Arewa statement, investors in the free zones also responded, threatening to commence divestment from the zones and calling on the board of NEPZA to summon a stakeholders’ meeting.

In a statement on behalf of the investors signed by Yusufu Abdullahi, Director, Snake Island Integrated Free Zone Lagos, the proposed reform was described as “a ploy to destroy multi million naira private investment in the free zones”, calling on NEPZA “to call a meeting of stakeholders and investors on the subject”. The staff union took the matter to another level when it petitioned President Muhammadu Buhari, accusing the Minister of Trade and Investment, the Board Chairman and Managing Director of free zone Authority of desperate attempt to destabilise the free trade zones.

The minister may have realised the extent and implications of the report when news surfaced that he has rejected the recommendation of the committee on the proposed transfer of NEPZA mandate to OG FZA. According to the news reports, the Trade Minister reportedly rejected the committee report over emerging reports linking former Vice President Atiku Abubakar to the reform proposals as well as alleged bribery allegations rocking the committee.

According to news reports, NEP ZA MD, Prof Adesoji Adesugba stated that: “It is important for us to realise that NEPZA was set up by an Act of the National Assembly. The reformation of NEPZA is definitely not within the competence of NEP ZA’s management. However, NEPZA is aware that there had been discussions on the remodeling of government and government agencies for efficiency from the time of the Steve Oransaye’s Panel recommendations.

“These discussions as far as we are aware are still ongoing and no decisions have been made nor the enabling laws to effect such changes enacted. With respect to the said report of the committee from the Ministry of Industry Trade and Investment, such report has not been officially communicated to NEPZA and at the right moment, the position of NEPZA will be conveyed by its board to the authorities,” the Managing Director, Prof Adesoji Adesugba said. But how should the free zone sector be reformed.

Here, certain basic national interest must be considered germane. First, Onne zone is a PPP body which by law is restricted to Onne oil and gas zone. Two, investors’ deals in the free zones were made under NEPZA and cannot be transferred to a body not legally empowered. Three, investor’s confidence in Nigeria is shaking by that anti-business unilateral decision despite ongoing litigation on the subject.

*Ibrahim, a business man, wrote from Kano via: [email protected]