Mr Gbenga Kuye is the managing director, Nigeria Export Processing Zones Authority (NEPZA). In this interview with KINGSLEY ALU, he discusses how the export processing zones are being repositioned to drive the economic diversification agenda of the federal government, the achievements, operational challenges and lots more.
Looking at the goals in establishing export processing zones in the country, how would you rate them so far?
The introduction of Nigeria Export Processing Zone scheme in Nigeria was informed by its successful implementation by other countries like Malaysia, Singapore, China and Indonesia, generally referred to as “Asian Tigers”. These countries are not as endowed as Nigeria in terms of natural resources but they utilise the EPZ scheme to turn around their economy for good.
Government’s wisdom in introducing EPZ was to diversify the economy and reduce the country’s over-dependence on oil which suddenly became the mainstay of the economy since the era of oil boom. Experience has also shown that EPZ has proved to be a potent force in creating mass employment, skill acquisition and technology transfer as well as attracting local and foreign direct investment because of its business-friendly environment.
To a considerable extent, we could say that we have made some modest achievements in view of our challenges and peculiar circumstances. In countries where the scheme has been very successful, government either subsidize or completely fund the provision of critical infrastructure and make access to long time invertible funds less cumbersome and at reduced interest rate.
Focusing on non-oil products is the way forward in Nigeria’s quest for socio-economic development. Why, in your view, has this remained a dream?
I am glad you said that it has been the view of experts over the years. They are correct, but a view or theory cannot translate into reality unless deliberate action is taken to match actions with words. Experience has shown that no nation can make any meaningful economic progress by being content in exporting its raw material at ridiculously low price and turn around to import finished product from such raw materials at exorbitant cost. This amounts to exporting wealth and importing poverty.
Our country is blessed with abundant human and natural resources; the only way we can effectively diversify our economy is to develop our manufacturing sector by providing the requisite infrastructure and right incentives. This will encourage investment and processing of raw materials into finished goods both for local consumption and for export. This will also help to create jobs for our teeming unemployed youths, conserve scarce foreign exchange, among other benefits.
The recent plummeting of oil prices in the international market has dawned on us that there is no postponing the evil day. We have no choice but to diversify our economy by focusing on the non-oil products as a panacea for sustainable socio-economic development. It is in realisation of the need to diversify our economy that the Nigerian Industrial Revolution Plan was launched in February 2014 to stimulate the manufacturing sector and encourage value addition.
Is NEPZA doing anything to boost Nigeria’s economic diversification?
Of course, NEPZA is doing everything possible to boost Nigeria’s economic diversification because that is the reason NEPZA was established in the first place. NEPZA presently has 35 licenced zones of which 12 are operational, 17 are under various stages of development and 6 are dormant. Zones are centres of excellence where manufacturing, logistics and services are carried out. You need to visit our zone in Calabar, Lekki Free Zone and Lagos Free Trade Zone in Lagos etc. for a better appreciation of NEPZA’s efforts in boosting Nigeria’s economic diversification.
Rather than solely putting the task of economic diversification on government and its agencies, are there roles for the Organised Private Sector in pursuit of economic diversification?
The primary engine for growth and development of any economy is the organised private sector, while government is required to provide the enabling environment. This could be in the form of appropriate intervention viz, legal framework, policies and programmes that will support investment, provision of physical infrastructure like power and road network, security and a stable polity, etc. Moreover, since we operate a mixed economy, the government is required to intervene in the provision of social amenities or services, where it is proven that if left entirely for the organised private sector, the cost will be too heavy for the average consumer to bear. On the 1st of December, 2014, the former President honoured and celebrated top 100 Business Stars in Nigeria at a dinner he had with them at Aso Rock in Abuja. There was no government institution among these 100 business stars. The purpose of this gesture was to assure the organised private sector of government support and to appreciate and encourage them for their contributions in the nation’s economic development.
The Federal Ministry of Industry, Trade and Investment (FMITI) recently announced its intention to focus on the One State, One Product initiative. Do you see any role for NEPZA in pursuit of this?
Actually, the initiative of the Federal Ministry of Industry, Trade and Investment to focus on one state, one product was anchored on Nigeria Industrial Revolution Plan, which provides that every state of the federation should be encouraged to produce at least one product in which they have comparative advantage. Chapter 8 of the NIRP actually states that this initiative is to be driven by Nigeria Industrial Development and Zones Authority (NIDZA) (NEPZA in transition) through the establishment of Industrial Cities, Industrial Clusters and Parks across the country. NEPZA is presently being repositioned to assume the role of the Agency of the Federal Government to drive the nation’s industrialisation.
Already NEPZA has started working on the concept of Industrial zones and efforts are on-going to identify 32 industrial cities across the country for the establishment of Industrial zones. Every zone will focus on products they have comparative advantage. Some stakeholders have argued that, owing to the numerous challenges of Nigeria’s operating environment, a lot more is necessary by way of incentives to encourage producers and exporters. There is also the “Project Made in Nigeria for Export” initiative which NEPZA is championing in collaboration with Professor Lin – a renowned professor who formulated a pragmatic economic theory called New Structural Economics (NSE), which is centered on how emerging countries can fast track their development using two sprung approach, i.e. focusing on a country’s competitive advantage and using Special Economic Zones or Industrial parks.
When you mentioned the Export Expansion Grant as an example of Incentives to boost export to investors, it is argued that it is not enough. How would you react to this?
It is important to make this distinction clear. There is a great difference between the operating environments under industrial zones licensed and regulated by NEPZA and the operating environment in the customs territory. Export Expansion Grant is an incentive enjoyed by operators in the customs territory. Government is mindful of the challenges operators in the customs territory face with regards to infrastructure deficit that is why government has decided to set up industrial zones and parks where world class infrastructure will be provided to be accessed by all investors located in the zone.
In addition, government provides other zones incentives like; tax holidays, import and export duty waivers, one stop-shop approval, etc, to reduce the cost of doing business. Small, medium and large scale investors are therefore encouraged to take advantage of these numerous incentives provided by government to locate in our present and up-coming industrial zones across the country.
What is in the offing from NEPZA or what are on-going initiatives to boost the effectiveness of the processing zones?
As stated earlier, NEPZA is transiting from a Free Zone Authority to Nigeria Special Economic Zones Authority to be responsible for the nation’s industrial development with focus on industrial cities, parks and clusters across the country. We have within the past three years licensed the following industrial zones viz: Gas Revolution Industrial Park, Delta State, with a total investment value of US$15billion. An Indian- based fertilizer plant is kick starting the project by investing the sum of US$500million. Other gas related projects such as a petrochemical plant, methanol and gas processing facilities will be set up as well. This is also in line with the Gas Revolution Initiative launched by Mr President in 2011. Abuja Centenary City, Abuja was granted license in August, 2014 as a Business and Tourism destination. A reputable Dubai based property developer has started to develop the project. Total cost of the project is put at US$18billion.
Ogogoro Industrial Park, Lagos State also got approved in April, 2014 to carry out oil and gas related activities. The project is worth US$160million. Nigeria International Commerce City also in Lagos State was approved in September, 2014 with total investment worth of US$38billion, to set up a financial services centre, technology/ shared service centre, a corporate district as well as light manufacturing, trading and hospitality services.
Another Oil and Gas Industrial Park namely – Badagry Creek Industrial Park secured its license in October, 2014 to establish deep offshore logistics project valued at the sum of US$1.3billion. Dangote Group of Companies licensed in 2014 at the Lekki Free Trade Zone to invest the sum of US$9 billion to establish a refinery, a petrochemical and a fertilizer plant. Production of finished products such as PMS, AGO and DPK is expected to commence by 1st quarter, 2019, NAHCO Free trade Zone at Ikeja, Lagos State was licensed in February, 2014 to provide airport logistics services. Investment is valued at US$25.5 million. We also licensed Enugu Industrial Park with an investment of US$550million and Maritime Africa Economic City Free Zone in Lagos with an investment value of US$12.7 billion.
Presently, what will you say are your operational challenges?
Our major challenges are inadequate funding, NIDZA Bill awaiting passage at the National Assembly, insecurity in some parts of the country and more particularly, inadequate power supply.
Is partnership a useful tool to NEPZA in the pursuit of its mandate?
NEPZA’s act which is the law for industrial zones operation is very flexible. Investment in our zones can either be public or private partnership, some of our zones are promoted by state governments, while a good number of others are promoted through public/private partnerships.
How does NEPZA fit into government’s vision 2020 agenda?
What is vision 2020 all about? It is about industrialisation, it is about placing Nigeria in the world map as one of the most industrialised nations in the globe. NEPZA’s mandate under NIRP is about industrialisation, economic and revenue diversification. The concept of industrial zones which NEPZA is promoting is meant to accelerate economic development by attracting local and foreign direct investments, promote export, increase employment opportunities and facilitate the transfer of technology and the promotion of balanced industrial development across the country. So there is no question as to how NEPZA fits into vision 2020 because NEPZA is synonymous with industrialisation.
How supportive is the Federal Ministry of Industry, Trade and Investment, your supervising ministry?
It is a very important part of our success story so far.They have been very supportive in terms of investment drive, facilitating presidential approvals of industrial zones, mediating in conflict between NEPZA and other government agencies and giving the agency fair representation at the federal executive council meetings. May I seize this opportunity to thank the honorable minister and the ministry for their invaluable support?