FTZ listing plan wields opportunities albeit premature- Analysts

The federal government’s plan to list Free Trades Zones (FTZs) and zones’ enterprises on the Nigeria capital market, is laced with opportunities and potentials that will aid the country’s economic growth however it may be a premature step now, according to analysts.

In February, the Nigeria Export Processing Zones Authority (NEPZA) announced that plans are underway for the Federal Government to begin listing Free Trades Zones (FTZs) and zones’ enterprises on the Nigeria Capital Market to drive increased prosperity and circulate wealth in the country.

Speaking to BusinessDay on the significance and impact of this proposed action, Tajudeen Ibrahim, Director, Research and Strategy, Chapel Hill Denham said if FTZs are listed it allows for transparency to let the public know what they are doing, their corporate governance structure, the Board of Directors, their financial performance, shareholder’s structure, among other things.

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“It will also drive increased efficiency in the management of FTZs because they will be accountable to the public and will be questioned by the public, analysts, exchange traders, on how they can drive the business to a more profitable level,” he said.

Ibrahim said that listing FTZs will give them an opportunity to raise capital to implement expansion plans which will have a ripple effect on the economy in terms of job creation, higher investments, enhanced trade activities, etc.

“It will allow Nigerians and other investors to be a part owner of the listed FTZs and whatever accrues to them in terms of income or cash flow will belong to the shareholders,” he said.

Similarly, Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE) said the proposed plan will help to drive more investments in the FTZs especially with the availability of physical land to invest in facilities, infrastructures and other necessities.

“Existing investments can also expand and this will help grow the country’s revenue and drive necessary economic growth and development,” he said.

However, Johnson Chukwu, founder, Cowry Asset Management Limited said listing FTZs now is premature because they are largely owned by the government and needs to be privatized to make them commercially viable.

“When you list a corporate entity on the exchange, you expect the company to pay dividends but with the current structure, none of them is commercially viable so listing them now will be premature,” he said.

Chukwu added that they need to be an operating entity with strong earnings and can also be sold to private entities or institute a private placement on them to make them commercially viable.

According to the Nigerian Exchange (NGX), some minimum admission requirements include market capitalization not less than N50 million at the time of listing (based on the issue price and issued share capital), at least 10 percent public hold on each class of equity securities, no less than 21 public shareholders for equity shares, etc.

Reports from NEPZA state that Nigeria has 46 free trade zones with 500 functional enterprises providing 150,000 direct jobs and estimated 250,000 indirect jobs. It is also generating revenues for the government with total investment within its controlled zones standing at $26 billion.