Medicine, agric, textile get free trade zones

...Medicine, agric, textile get free trade zones

The Nigeria Export Processing Zones Authority (NEPZA) says three new special economic zones will begin operations before the end of 2022, in a bid to deepen local production, improve government revenue, and close deficit in specific areas of the Nigerian economy.

The approved zones set for launch this year are the Medical Free Trade Zone (FTZ) Lekki, Lagos State; Agro-Allied/Medical FTZ Ilorin, Kwara State, and Integrated Cotton/Textiles FTZ Funtua, Katsina State.

Martins Odeh, head of communication, NEPZA, notes that these new zones will not operate like the typical FTZ. According to Odeh, FTZs in Nigeria operated as enclosed areas where goods may be imported, stored, manufactured, and exported and are not covered by fiscal and monetary policies. He says these zones basically attract foreign investments and drive exports.

But, he says the model is being tweaked to allow for local investment to boost local capacity, and goods produced in the zones can be sold within the country, saying

enterprises working in the zones will be bound by the fiscal and monetary policies of Nigeria so as to improve government revenue.

He notes that government did not benefit much from the old pattern, noting, “A new model of free trade zones have evolved, such that anybody including local investors can still operate in the zones and make their products available to the Nigerian market at a cost of export, which is similar to how you would have exported to Ghana or to America from that spot,” he tells BusinessDay in an exclusive interview.

“Before in free trade zones, you produce and export straight, the only benefit Nigeria was having was that foreign investment was coming in, employment was being generated and little revenue came in. But there wasn’t the presence of those things that they produce in our local market, which we know and call customs areas. “You need to pay the same amount of money you will pay in exporting your goods, that is what the new model offers now. They’ll have to pay customs levies when bringing goods into Nigeria from trade zones,” he states.

The Medical FTZ would be Nigeria’s first Medical Special Economic Zone. The managing director also says that the zone would provide world-class healthcare services and reduce medical tourism for Nigerians, disclosing plans to establish more medical zones in collaboration with International Finance Corporation (IFC) in the near future.

The Funtua FTZ will also be dedicated to the production of cotton and fabrics for local consumption and exportation.

According to Adesoji Adesugba, managing director/CEO, NEPZA, the zone will leverage on the cotton belt of the North West to commence active production of varieties of fabrics in commercial quantities and will create at least 70,000 jobs for Nigerians when it becomes fully operational.

But, economy experts note that these zones have the potential to provide the much needed diversification the Nigerian economy craves, but express concern over implementation following the fate of other free zones that had been in existence for decades.

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Checks by BusinessDay show that of the 43 private and two public FTZs in Nigeria, which is worth over $20 billion of investment, 19 are inactive, while the rest have performed below expectation.

Paul Alaje, an Abuja-based economist, applauds the establishment of the medical-free zone, especially at a time when the COVID-19 pandemic has exposed the weakness of the health sector.

According to Alaje, the zone if properly implemented will reduce medical terrorism and the billions of naira lost to foreign exchange, saying the zone will attract more investment into Nigeria and create more jobs for citizens

Alaje, however, expresses concern that the zones may end up like several others due to a lack of political will and advises that there must be regular monitoring and appraisal of these zones and their contribution to the economy to keep operators on their toes to perform better.

Ebehi Iyoha, an economic analyst, also alludes to the fact that the contributions of these zones to Foreign Direct Investment (FDI) and industrialisation have been minimal due to poor implementation.

Iyoha notes that the lack of reliable data on the performance of economic zones has been a lingering hurdle, which has caused governance operators to work in the dark.

“Until Nigeria takes data collection seriously, we won’t know what we don’t know. For now, we can only scrutinise individual zones to elicit information on how to deal with economic zones,” she stresses.

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