The Nigeria Export Processing Zones Authority (NEPZA) has commenced the mainstreaming of off-shore banking activities into the Free Zone’s management system due to the enormous advantages it has on investors and the nation at large. An offshore bank is one which is located outside the country of residence of the depositor. It is typically located in low or zero tax jurisdictions (free zones) that provide financial and legal advantages. Some of the advantages are:
Providing economically stable jurisdictions
Offering banking services that may not be available from domestic banks
Serving as a link to other structures such as offshore company, among others
To this end, the Authority and Central Bank of Nigeria has held series of meetings to review the draft guidelines regulation for offshore banking in the Nigeria’s Free Zones. The meetings basically focused on the sharing of responsibilities between the two institutions, from the licensing of the offshore banks to its revocation.
As part of ongoing efforts to actualize the smooth take-off of off-shore banking, a Retreat was organized by NEPZA and CBN which was held in Calabar, Cross River State from 15th -17th May, 2013. The Retreat was attended by various bodies including the Nigeria Customs Service, Nigeria Police Force, and Nigeria Immigration Service. The objective of the Retreat was to understand free zone operations, forge collaboration with relevant agencies as well as finalize the draft guidelines for Nigeria’s Free Zones. Specific issues that were deliberated upon include:
Procedure for financial institutions to operate in the free zones
Need to come up with a sequence in the license of banks
The use of form “M” which should not be mandatory for all categories of import and non commercial purchases
The use of dual currency
Need for CBN to notify NEPZA in other to have access into the free zones
Capital adequacy range amount of US$5 million and US$10 million was determined for single subsidiary and more than one subsidiary respectively.
Exemption of Foreign Exchange (NXP) form, Free Zone Foreign Exchange (FZNXP) form should suffice subject to CBN’s management approval
Other aspects that were not contained in the draft guideline were incorporated such as: capital importation and repatriation, free Zone enterprises investing within the customs territory and sales of foreign exchange generated in the Free Zones to banks located in the customs territory. The Retreat concluded to fast track the approval process of the draft guidelines in view of its importance in driving banking activities and stimulating business development in the free zones.
NEPZA Records Modest Achievements to National Economy
The Nigeria Export Processing Zones Authority has recorded modest achievements in the year 2012 in terms of Foreign Direct Investment inflow and job creation.
Speaking at the 6th National Council on Industry, Trade and Investment, the Managing Director, Mr Gbenga Kuye stated that the Authority has licensed a total of 25 Free Zones to date and out of these, 12 are operational and open for business while the rest are at various stages of development. He disclosed that the Free Zone Scheme has generated 3,000 new jobs from the various enterprises located in the zones while new Foreign Direct Investments (FDI) attracted was to the tune of US$664 million in which ALSCON EPZ topped the highest having invested the sum of US$ 83 million for expansion of its aluminium smelter facility. This is followed by LADOL and Ogun Guangdong Free Trade Zones respectively.
The Managing Director also stated that Nigeria’s Free Zones exported goods and services valued at US$ 664 million while local exports which is local sales into the customs territory realised the sum of N29 billion.
Addressing council members further, Mr. Kuye mentioned that eleven (11) fresh applications for free zone status have been received and are at various stages for consideration. He noted that one of the major factors attributed in the delay for the grant of free zone status is the inability of most zone promoters to meet relevant requirements, an example of which is the provision of resettlement plan of current dwellers/inhabitants of the proposed free zone. This is a pre-requisite condition that must be fulfilled in order to avoid unforeseen challenges that may hamper the future progress of the zone.
Meanwhile, a fundamental challenge is besetting free zone development in terms of providing infrastructural facilities of world class standard. Budgetary provision in recent years has been on the decline. The MD however noted that efforts are on ground to tackle this challenge by seeking alternative sources of funding such as adopting the PPP model as well as seeking assistance from international development partners.
Honourable Minister of Industry, Trade & Investment Unveils New Industrial Revolution Plan
The Federal Government has launched a new Industrial Revolution Plan that will position the manufacturing sector as the key driver of economic growth through job creation.
The Honourable Minister of Industry, Trade & Investment, Dr. Olusegun Aganga disclosed this at the just concluded National Council on Industry, Trade & Investment held at Ibadan Oyo state from 22nd to 26th April 2013. According to the Minister, the plan would be based on areas where Nigeria has comparative and competitive advantage listing target sectors such as Textiles, Agriculture, Metals & Solid Minerals, Fertilizer & Petrochemicals, Oil & Gas, Food Processing and Automobiles.
He added that the government had embarked on far-reaching reforms aimed at improving the business climate and making Nigeria the preferred investment destination in Africa. “Africa’s share of the global trade in only 3 percent, this is because Africa has been exporting raw materials rather than finished products. For us as a country manufacturing is very important because it solves the problem of GDP growth, unemployment and balance of payment”, he noted.
Aganga further stated that “if we are going to move from a poor nation to a rich country, industrialization holds the key because it has the potential for unlocking the wealth of our country”.
According to the Minister, the plan stipulates the creation of five (5) Industrial Cities with Free Zone status similar to what obtains in Saudi Arabia, UAE and China. Industrial Cities cover large expanse of land ranging from twenty (20) square killometers and above for mix-use development providing one-stop destination with all amenities to live, work and play. Each of the Industrial Cities will have innovation centres where innovation and technology will play the leading role in driving the industrialization process. He listed the cities as: Delta Industrial City, Eko Atlantic City - Lagos State, Akwa-Ibom Industrial City, Kano Industrial City and Adamawa Industrial City.
Already, the Ministry is partnering with key government agencies like the Ministry of Power, Ministry of Petroleum Resources and others to tackle major infrastructure challenges aimed at reducing the cost of doing business.
The Free Zone scheme is seen as a catalyst to industrialization efforts and many countries have adopted the use of Free Economic Zones to drive this process.
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