• Thursday, July 25, 2024
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LADOL’s record removes concerns Free Trade Zones are threatening local content


Concerns that the proliferation of Free Trade Zones may be endangering the application of local content law in Nigeria were put to rest by LADOL’s scorecard indicating regular monitoring by the Local Content Development Monitoring Board (LCDM).

The concern that free trade zones may pose a threat to local content was brought up by Paul Ajisafe, Managing Director of Deflora Energy Services Ltd at the at the panel discussion on strategies for local, regional and international collaboration and effective content delivery at the 2016 edition of the Offshore West Africa conference that held at Eko Hotels & Suites, Lagos from January 26 – 28.

“What I want draw attention to is the issue of free trade zones. There is a proliferation of free trade zones all over the country and they have certain incentives built in. Expatriates can be brought in 100 per cent to this free trade zones and this is in conflict with the Nigerian content law, what is being done to reconcile the Nigerian Content law and the laws establishing the free trade zones?”

Jide Jadesimi, Executive Director of LADOL, who was at the occasion to represent Amy Jadesimi, Managing Director of LADOL, remarked that though the concerns were valid, the free trade zones have rules guiding their operations.

“The free trade zones currently as we speak are assessed to ensure they are performing in accordance with the guidelines. If we take ourselves as an example, we have clear guidelines as to what we have to do to continue our free trade zone status and we work very closely with NEPZA.”

He noted that it is not a free bar as it may seem as there the monitoring wing of NCDMB visits them on site engages the workers to ensure compliance. “They go to the workers and engage them in conversation on their work.”

Corroborating this claim, Paul Zuhumben, representative of Denzil Kentebe, Executive Secretary, Nigerian Content Development and Monitoring Board, (NCDMB) said, “When it comes to projects that are being executed in the industry whether in the free zones or not, right from the tendering process to its conclusion, we look at the manning requirements. We look at the number of expatriates that will be required and the expatriate quota.”

“During the execution of a project, we go in there to ensure that the position you have indicated is for a Nigerian is being occupied by a Nigerian. If they are doing some other activities within the free zone that is not related with the oil and gas industry, then we will be handicapped. But when it comes to projects specifically (in the oil and gas industry) we ensure they obtain expatriate quota before they go the Ministry of Internal Affairs they would have gotten our endorsement.”

According to The Nigerian Export Processing Zones Authority, (NEPZA) the Agency responsible for promoting and facilitating local and international investments into licensed free zones in Nigeria, there are 34 free trade zones spread across Nigeria and there are currently 300 licensed free zone enterprises operating in the various zones across the country.

Lekki Free Trade zone has 96,000,000 acres of investment space, 95 enterprises, and a projected market size of over 170 million reaching not only Nigeria but the West African sub region.

A Chinese consortium China Africa Lekki Investment Ltd (CALIL) owns 60 per cent equity in LFTZ; the Lagos State Government has 20 per cent equity while the rest is held by local private investors under Lekki Worldwide investment Ltd.

The law establishing the free trade zones gives complete holiday from all federal, state and local government taxes, rates, and levies. Duty free importation of capital goods, machinery, components, spares parts, raw materials and consumable items in the zones.

There are also 100 percent foreign ownership of investments, 100% repatriation of capital, profits and dividends, waiver of all imports and export licenses, waiver on all expatriate quotas and a one-stop approvals for permits, operating license,  incorporation papers and rent free land during the first 6 months of construction (for government owned zones).

Countries all over the world use free trade zones to open up new markets encourage investments in emerging markets and remove obstacles to foreign participation.

Ibilola Amao, Managing Director of Lonadek and moderator of the panel discussions noted a critical element in meeting local content expectations. “Local players have to first fill the gaps in terms of technology by partnerships with international companies.  We have too many small companies with too little capacity. We need to see local collaboration to build capacity.”