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NEPZA’s N100b four-year budgets and Kano FTZ’s economic potential

By Anthony Otaru, Abuja.
11 June 2019   |   4:17 am
Several factors were responsible for the adoption of free trade zones scheme in Nigeria, among which are the diversification of the revenue...

Kano Free Trade Zone

Several factors were responsible for the adoption of free trade zones scheme in Nigeria, among which are the diversification of the revenue base of the economy, employment generation and facilitation of exports through local production.

The quest was made possible by the establishment of the Nigeria Export Processing Zones Authority (NEPZA) Act 63 of 1992 by the Federal Government.

Saddled with the licensing, monitoring and regulation of the free zones scheme across the country, NEPZA’s enabling Act also conferred on it the power to approve and grant all licenses and permits to the exclusion of all other agencies efforts, enforce rules and compliance. In effect, the Act is an omnibus, which permits the authority and its board the power to define the policy directions and provide one-stop-shop business transactions without bureaucracy.

Among all the zones across the country, the Kano Free Trade Zone (KFTZ), which is the second owned by the Federal Government was subsequently established in 1998 and located on a 262 hectares of land at the Panisau Area of Ungozo Local Government Area of the Metropolis.

Its areas of specialization include warehousing, services, logistics and manufacturing, riding on the objectives of enabling interested persons to set up industries and businesses within the zone and to provide an internationally competitive duty-free environment for export production at low costs.

The Assistant General Manager of the KFTZ, Abdullah Sharu Beri, said that the zone has 19 warehouses and 33 fully registered companies, out of which 13 has been established and in full operations.

Some of the companies in operation at the zone are those of Marshall Biscuits FZE, producers of Buttermint, which began operations in January 2016. Also, Afrique Ventures FZE, a producers of sacks, began operations in October 2017; Nurture All Foods FZE, producers of Soy-Kunu, started operations on November 11, 2015; and Coral Integrated FZE, which is into recycling and crushing of materials, with its operations dating back to 2014.

The Guardian investigation showed that although the three trade zones of Lagos, Calabar and Kano were established basically as special economic entities aimed at attracting foreign direct investments and serve as industrial hubs for the country, many of them still suffer from basic infrastructure deficiencies that plagued the rest of the country.

The Kano economic industrial cluster, which specialises in leather production, faces high indirect costs due to the absence of quick and reliable transportation facilities to deliver its products from the hinterland to finished leather goods producers in other parts of the country or ports for exports. Similarly, one of the most cited barriers to the growth of the Calabar free trade zone has been the lack of investment in dredging the Calabar port.

The Guardian also learnt that rather than tackle theses challenges, operators of the trade zones have so far relied on the tax incentives to attract investors, but the subsidies implied by these breaks have been very insufficient to overcome a fundamental lack of public goods provision for most industries.

Even where the incentives have been successful, they were not immediately apparent that they were necessary to begin with.

Worried by these developments and on assumption of office, the current government has so far, shown significant attention to the upgrade of infrastructures in the Kano Free Trade zone, as well as others across the country.

Specifically, the Federal government budgeted over N100 billion for NEPZA for the development of critical infrastructure in the public zones in the last four years of President Muhammadu Buhari’s government.

Beri stated that the zone has recorded several achievements after the unscheduled visit of the former NEPZA Managing Director, Emmanuel Jimi to the area.

“The achievements include the allocation of a special intervention fund for the development of infrastructures in the zone, the presence of a joint task force in the area to enhance the activities of the zone, especially that of foreign exchange from exports of products to Germany, South Africa, South Korea.

“There are tremendous improvement in foreign direct investments from China, India and Egypt and the fiscal policy has also remained in consonance with the policies of the free trade zone, even as the Kano State government under its State Pensions Trust Fund is also contributing to the development of the trade zone’’, he said.

Due to the strategic importance of the KFTZ to the country’s economy, Jime, who visited the site as part of his familiarisation tour before leaving office, announced government’s determination to continue to increase the funding, as well as increasing security presence to ensure smooth operations by all approved companies.

It is no gainsaying that a great incentive worthy of note is the duty-free, tax-free import of raw materials and goods destined for re-export.

There is also duty-free importation of capital goods, machinery, equipment and furniture as well as freedom to sell a hundred percent of manufactured, assembled or imported goods into the domestic Markets.

A statement from NEPZA, signed by the Head, Corporate Communications Unit, Simon Imobo-Tswam, quoted Jimi as saying: “The Kano Free Trade Zone must work and take its place as one of the drivers of the nation’s industrialisation process because of its location in Kano, a town renowned for its commercial vibrance, strategically positioned to become the hub of economic activities in Northern Nigeria, Africa and beyond.

“If NEPZA does doesn’t succeed elsewhere, it must succeed here in Kano, I say this to underscore the importance attached to this gigantic economic dream, as the two only public zones in the country, Calabar and Kano constitute the flagships of our FTZ concept.”

Also commending on the progress made at the KFTZ, the immediate-past House of Representatives Committee on Industry, Trade and Investment visited the area and lauded the present management of NEPZA for the massive infrastructural development put in place.

Led by its Acting Chairman, Solomon Bulus, the committee said government was expending huge sums on infrastructure, especially in the area of warehousing, factory buildings and water supply, stressing that things are really looking up for the zone and consequently, a lot of investors are already coming because they have seen that government has given the zone much attention and more money has been injected to promote it.

The immediate-past Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah testified to this fact when he said: “Though from 1992 till date, NEPZA has licensed 40 Free Trade Zones that have attracted over $20 billion Foreign Direct Investment into the economy, only 14 are at present are operational, including the Kano Trade Zone.

“The decision of NEPZA to roll out incentives to the trade zones has given a lifeline to most industries that were already biting the dust in Kano due to harsh economic environment. It has also served as magnet for both local and foreign investors, as the zone, which is situated on 232 hectares of land has only about 32 per cent of the land utilized.”

A student of Bayero University Kano, Deborah Philips, who spoke to The Guardian on phone, summed it up when she said that prospects however remains by the fact that stakeholders, producers, manufacturers and other foreign investors must come out to support these efforts and take advantage of this life changing opportunities that will improve their businesses and take it to the next level.