Why Nigeria needs more free trade zones to hit a $1trn economy

Nigeria needs more free trade zones to grow its slowing economy in order to attain its ambitious $1 trillion GDP by 2026, according to Biodun Dabiri, chairman Lekki Free Trade Zone.

Dabiri who spoke at a fellows lunch organised by Nigerian Institution of Estate Surveyors & Valuers (NIESV) in Lagos, Thursday, said the nation’s economy has potential to grow quicker than expected provided that the government can invest more in free trade zones.

A free trade zone (FTZ) is a designated area within a country where goods can be imported, manufactured, processed, and re-exported without being subject to customs duties or taxes.

Read also: Data expose gaps in Nigeria’s $1trn GDP target

These zones are often established to promote trade, attract foreign investment, boost exports, and create jobs. They typically have simplified customs procedures and regulatory frameworks to encourage economic activities.

Dabiri, a renowned banker and financial expert revealed that Asian countries are witnessing rapid economic growth as a result of their governments’ efforts to create a hub that would drive economic activities and promote exports.

While United Arab Emirate (UAE) owns the Dubai Multi Commodities Centre (DMCC), the largest and most significant free trade zone globally, hosting over 21,000 registered businesses, in terms of scale by land area, China’s Hainan Free Trade Port, established as part of China’s broader free trade zone network, is considered the largest FTZ.

“If you look at the global economy scale, countries like UAE, Singapore, China and South Korea; all those four today have grown their economies through the concept of free trade zones,” Dabiri said, adding that outputs from free trade zones account for some 40 percent of China’s near $20 trillion GDP.

He emphasized that Nigeria could boost its net exports, leading to an increased export-to-GDP ratio which currently stood at a staggering 10.7 percent through the Lekki free zone.

With more exports, the country’s chronic dollar shortage would be almost solved; more employment and diversification of the economy would also be achieved.

“The government is talking about a $1 trillion economy, the prospects are there with the free trade zones,” Dabiri said.

“Forex, employment, transfer of technology and diversification of the economy can all be derived from a free zone,” he stated.

The LFZ chair said despite Nigeria’s uncertain business landscape, foreign investors remain “bullish” on prospects of the trade zone, urging the government to tap fully into building more free zones to drive in investments and grow the economy.

Read also: $44bn likely annual yield: Maritime industry experts plot strategies to boost GDP

Dabiri disclosed that the vision of Lekki Free Zone was conceived by the administration of Bola Tinubu while he was the governor of Lagos State.

This was at a time when many Lagosians were wondering the purpose of the vision. “This was because at that time, nobody expected that any state could deliver on such an expensive and expansive project like LFZ”.

While stating that the project was met with four challenges of technical, financial, political and environmental, the prospect it holds keeps the work going for which $262.97 has been paid in total equity investment.

Speaking about the essence of the event, Gbenga Ismail, the chairman of NIESV, Lagos branch, said the lunch was a platform for “advocacy, network and influence”, urging members to use the medium to foster lasting collaboration.

In his remarks, Victor Alonge, president of NIESV, said the lecture about the primacy of the LFZ is a call to action for all members of the association, emphasizing the need for estate valuers to key into the project.

He charged members of the association to ensure strict professionalism, stressing the influence estate surveyors and valuers exert in boosting the country’s economy.

“Our profession is key to improving the socio-economic landscape of our country. We must continue to equip ourselves with all that is needed to be at the best in our profession,” Alonge said.