NEPZA: COMMEMORATING ONE YEAR IN OFFICE

PROF. ADESOJI ADESUGBA – MD/CEO NIGERIA EXPORT PROCESSING ZONES AUTHORITY

Professor Adesoji Adesugba DBA, FCIArb (UK) was appointed Managing Director/Chief Executive Officer of the Nigeria Export Processing Zones Authority (NEPZA) on the 1st of July 2020. NEPZA, an agency under the Federal Ministry of Industry Trade and Investment (FMITI), established through the NEPZA Act 63 of 1992 the mandate of licensing, regulating, monitoring, and promoting the operations of all zones in Nigeria.

The mandate seeks to provide a conducive investment climate by offering a competitive incentive regime, streamlined administrative procedures and world class infrastructure.

In 2017, His Excellency, Mr. President buttressed the role of Special Economic Zones (SEZ’s) in Nigeria’s industrialization agenda under the Economic Recovery and Growth Plan (ERGP) by using the SEZ model to accelerate implementation of the Nigerian Industrial Revolution Plan (NIRP), a four (4) year road map on industrialization in order to create jobs and promote exports, which in turn will facilitate economic growth

With vast public sector experience in Investment Promotion, Professor Adesugba joined the authority with the determination to boost productivity of the existing Free Zones and in continuation of the President’s agenda, has revised NEPZA’s strategic plan to include “to increase the number of functional and optimal SEZ’s” as one of its key goals.

BRIDGING THE GAP THROUGH SEZ’S

Various gaps were identified in key sectors of the economy leading to plans to bridge these gaps using the SEZ scheme.

The Lekki Deep Sea Port within the Lagos Free Zone is the marquee project in Lagos State which will have huge catalytic impact on the Nigerian economy. It has the capacity to contribute significantly in boosting economic activities and West African competitiveness on the global market.

The project sits on 90 hectares of land and is being promoted by the Tolaram Group based in Singapore, the Nigerian Ports Authority (representing the Federal Government), Lagos State Government and China Harbour Engineering Company (CHEC). 66.62% of the Breakwater and 44.70% of the Quay Wall has been completed. In phase 1 of the project, the capacity of the port will be 1.2 million TEU’s, with a drought of 16.5m. There will also be 2 container berths and 1 dry bulk terminal and expected date of completion is the end of 2022. It is expected that the deep-sea port project will generate over 170, 000 jobs.

Situated within the Lekki Free Zone, the ongoing development of the Dangote Refinery touted to be the world’s biggest single-train facility is a multibillion-dollar project by the Dangote Group aimed at reducing Nigeria’s oil importationand saving Nigeria billions of dollars from importation. It will not only provide over 70,000 direct and indirect jobs, but will remove the stigma of a producing country having to import refined petroleum country for its domestic use. When complete, it will have the capacity to process about 650,000 barrels per day of crude oil, able to satisfy the petroleum needs of the whole country.

Health is another sector requiring intervention and has been further impacted by the COVID-19 pandemic which revealed the huge deficit in both human and material resources. The establishment of a Medical Special Economic Zones (MSEZs) is one of the interventions that is planned to bridge these gaps and will have a multiplier effect on the Nigerian economy. Export of foreign exchange will be reduced, over USD1Billion in medical tourism will be saved, qualified healthcare professionals who have migrated due to better opportunities will be encouraged to come back home, medical and pharmaceutical industries will bring in huge investments and jobs will be created.

Despite a current reduction in the severity of the virus, this is not the time to rest on our oars in the execution of this project. Focus must be maintained and zeal applied to realize the goals that have been set. We must ask ourselves the questions “are we ready for the next phase?” “What happens when a new pandemic rears its head?”. In answering these questions, we realise that it is critical to conclude what we start in order to be adequately prepared. This analogy can be applied to almost every sector of the economy and this is why the NEPZA team is committed to following through on these important projects.

According to the National Bureau of Statistics, the economy of Nigeria advanced 0.51% Year-Over-Year in the Q1 of 2021, slightly faster than a 0.11% rise in the prior period. It is the second consecutive quarterly growth since Nigeria’s economy dipped into recession in the Q3 of 2020, helped by easing Covid-19 restrictions and higher oil prices. Whilst this looks positive on paper, the population is growing at a much higher rate with 2.55% between 2020 and 2021. With an increased younger population, a more substantial economic growth rat e is necessary to reduce youth unemployment, poor skills and miscreant behaviour which are recruitment ground for criminals. This in turn leads to added insecurity in the country which affects productivity.

To address these issues in a sustainable way, NEPZA is using SEZ’s as a monetary and social link to support the industrialization of Nigeria.

ACHIEVEMENTS – ONE YEAR AFTER

Backed by a supportive supervising Minister, NEPZA and the FMITI have developed a system of constant engagement and feedback to ensure there is common messaging regarding the agencies goals and objectives.

The Governing Board was also recently reconstituted and is headed by a highly knowledgeable Chairman who is dedicated to ensuring to the success of the SEZ scheme in Nigeria.

With the above structures in place and with a laser focus on actively contributing to Nigeria’s economic development, these are some of the notable achievements by the Professor Adesoji Adesugba led NEPZA management team over the past one year.

1. STAFF DEVELOPMENT

Improved staff motivation

The foundation for success of any organisation is its people and as such emphasis is being laid on the regular engagement with all levels of staff. Routine management and departmental meetings have been introduced for regular reporting of activities, sharing of ideas and learning.

To encourage motivation and respect towards management staff, designations were changed to align with the civil service. Efforts have also been initiated to review remuneration and benefits similar to other government agencies such as BPE and NIPC.

Training and Capacity Building

In order to address victimization and unwarranted delays in the conduct of promotional examinations, the Public Service Institute of Nigeria (PSIN) were engaged for promotional exams, training, and recruitment of staff on behalf of the Authority.

For the future, training will be conducted prior to all promotional exams to cover generic areas of the Public Service rules, Financial Regulations, Procurement, investment promotion, economic development, Free Zones administration, IT and social media management.

In preparation for the establishment of approved SEZ’s a highly intensive capacity building activity on the establishment and operation of SEZ’s has been conducted for two cohorts of trainees in partnership with the International Finance Corporation (IFC). This training will serve as the foundation for a NEPZA training centre to support the zones operations and is also aimed at servicing the Africa Region.

The curriculum will be further expanded to incorporate Investment Promotion and Dispute Resolution, amongst others.

The training centre will also provide capacity building and sensitization to sister agencies like Nigeria Customs Service, Federal Inland Revenue Service, Nigeria Immigration Service, Central Bank of Nigeria, Nigeria Ports Authority, Standards Organisation of Nigeria in order to align their respective roles to NEPZA’s mandate.

• ESTABLISHMENT OF NEW UNITS TO SUPPORT NEW STRATEGIES

The organizational structure of the authority was reviewed to suit the delivery of the revised strategic plan. This included the establishment of two new units focused on ensuring the safety and security of lives and properties in all zones. These are the Health, Safety and Environment (HSE) Unit and the Security Unit. The Anti-Corruption Unit (ACTU) was also reconstituted and officers have been assigned to all Zones. The Unit will develop a whistleblowing system to dissuade corruption and when caught defaulters will be subjected to penalties suited to the crime.

Coincidentally, 270 new recruits were engaged at the end of the previous administration with no clear roles and as such consideration was given to make them redundant. The creation of these new units accommodated a majority of these recruits in the new structure. These staff have undergone induction training on the operations of the authority and scheme as a whole.

• ZONE ADMINISTRATION

New Tariff Structure

The benchmark tariff structure designed to serve as a basic guideline for expected revenue generation for the government within zones has been signed successfully. This is a public document that highlights the governments transparency and commitment to the Ease of Doing Business agenda under the President Muhammadu Buhari administration. This structure gives potential investors full disclosure on the likely costs of doing business under the scheme.  

Review of Legal and Regulatory Framework

An up to date legal and regulatory framework is crucial to support the current SEZ landscape. The current NEPZA Act, established almost thirty (30) years ago does not conform with the realities of modern SEZ regulation and administration both locally and internationally and has created many challenges in zone operations.  The Act does not provide incentives that supports skills acquisition and technological transfer to domestic market, nor for enterprises to drive backward linkages to the customs territory which is the key to economic development. To address this, the MD is driving the process of ensuring a change in the regulatory framework for NEPZA.  Consequently, the Act has been reviewed with input from key stakeholders and a bill has been drafted that seeks to comply to international best practices for the scheme. This draft bill has been submitted to the Honourable Minister FMITI for transmission to the legislature for debate and adoption. Successful passage of this bill into law will position the Authority on the right course to successfully achieve its mandate.

Furthermore, in order to support the upcoming MSEZ, medical services have been included in the gazetted list of activities in the Third Schedule of the Act.

National Operational Licences (OPL)

The FZ scheme is global in nature and requires flexible and seamless set of procedures for the operationalisation and licensing of enterprises within the zones. In this regard, a National Single Registration/Operational Licence regime has been adopted under the National Economic Development Policy which gives potential investors the right to situate and operate their enterprises within any zone of their choice. Renewable on a yearly basis, this is the only documentation required for an enterprise to have the status of a FZE in Nigeria thereby benefitting from all the incentives and concessions within the scheme.

Offshore Banking

For many years, access to foreign exchange has posed a major challenge to operators and businesses in the Zones which cumulated in the setup of an intra-agency committee between NEPZA and the Central Bank of Nigeria (CBN) to agree on a global offshore banking license for zone operators. The policy document produced by the committee is yet to be released by CBN for implementation. Through the intervention of the MD, there is now a more directed and active engagement with key stakeholders to ensure the CBN implements the regulation of offshore banking in the Zones before the end of 2021. The Senate Committee on Trade and Investment just recently, after rounding off their oversight tour of Free Zones in Lagos has promised to work with the Authority and other relevant stakeholders to ensure this is achieved.

• RESOLUTION OF CHALLENGES WITHIN ZONES

Infrastructure Deficit

Basic infrastructure within zones is critical for investors to conducts effective operations so as to yield return on their investments within a reasonable time frame. Previously, inadequate funding for provision of basic amenities such as power, water, roads (internal and external), and fast internet service within zones have plagued the scheme to date.

In line with Professor Adesugba’s vision of establishing “plug and play” technologically driven zones, this is being addressed through cordial engagements with the FMITI, Federal Ministry of Finance, and Federal Ministry of Budget and National Planning and has resulted in an increase of N20 billion in capital allocation from N1.5 billion to N21.5 billion for NEPZA.

This engagement also attracted N35.4bn in budgetary allocation for the upgrade of power generation and supply to Kano Free Trade Zones (KFTZ) and Calabar Free Trade Zone (CFTZ).

An additional N18.1bn approval by the Federal Executive Council (FEC) was also received for development of infrastructure within Zones. This includes the access road infrastructure for the proposed MSEZ.

Imposition of levies and taxes within zones

Following disruption of activities within the Lagos Free Zone Lekki, due to the dispute regarding concessions on custom duties imposed on the enterprises within zones by the Nigeria Customs Service (NCS), the agency collaborated with the affected zone, the Federal Ministry of Finance and National Planning (FMFNP) and the FMITI to resolve the issues but clarifying the exemptions due to companies under the scheme. This resolution has been achieved in favour of NEPZA where custom duties on all goods on the zones be calculated at cost of raw materials as at of introduction within the zone.

• IMPROVED STAKEHOLDER ENGAGEMENT AND COLLABORATION

Collaboration with sister agencies

The services of several government agencies such as the Nigeria Immigration Service (NIS), Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) are key to successful implementation of the Free Zone Scheme so a synergy between these agencies and NEPZA is important. However, most of them were working at variance with the concept by imposing fiscal and non-fiscal restrictions only applicable in the domestic territory within the Free Zones.

Following courtesy visits and meetings with various zones management and sister agencies of government, the need for increased and improved stakeholder engagement in zone operations was made clear. Several identified conflicts were as a result of poor communication and a lack of understanding which in most instances created disputes related to mandates which affected zone operations and productivity.

The strategy of regular sensitization, advocacy, and engagement, NEPZA is gradually resulting in a better understanding of the scheme leading to a more beneficial relationship for all. One successful outcome of this is the upcoming signing of an MoU between NEPZA and the FIRS that will detail the modalities for the implementation of the 2020 Finance Act in the Free Zone.

To further address these issues, several initiatives encouraging discourse and collaborations have been developed.

The NEPZA Alternative Dispute Resolution Centre (ADRC)

Structured by the Institute of Chartered Mediators and Conciliators (ICMC), the NEPZA DRC will provides an avenue and facility for access to justice where Free Zone Management Companies, Enterprise and personnel will enjoy the benefits of resolving their disputes without the usual delays experienced in litigation in courts. Pre-dispute relationship is preserved or improved upon between disputants. The Centre will be located outside of NEPZA for independence and sustainability, and senior management personnel will be trained in Alternative Dispute Resolution and Dispute resolution shall be a condition for licensing.

Nigeria Economic Zones Association (NEZ Association)

Founded in September 2020, the concept was birthed following several consultations with free zone operators, enterprises, the current NEPZA management and other stakeholders, where a consensus was reached on the need for a common platform and voice through which all matters relating to effective zone operations are handled.

Consisting of stakeholders in charge of development, management and promotion of economic zones in Nigeria, the association seeks to speak with one voice towards the protection of investments whilst deepening the understanding of the free zone concept in the development of Nigeria. This in line with the Federal Government’s vision of ensuring industries within the free zones are competitive and profitable for foreign direct investment, job creation and technology transfer.

The association will be driven by a strong sense of purpose to fill the unmet needs of all stakeholders within the special economic zone space in Nigeria with the view of ensuring optimal operations in all zones.

Implementation of an revised social media strategy

To ensure regular up to date information on zone operations an aggressive social media campaign has been introduced to encourage sharing of information on progress and challenges to encourage feedback for learning and improvement within the scheme. A dedicated and trained communications team are responsible for the management of the various platforms                                      

• APPROVAL FOR NEW SPECIAL ECONOMIC ZONES (SEZ’S)

Four key thematic areas have been identified for development namely; Medical & Pharmaceutical, Mining & Mineral, Agriculture & Allied Industries and Information and Technology Parks.

Ashtavinayak Hydrocarbon Limited, a State-of-the-art Gas Processing Plant in Kwale, Ndokwa West Local Government Area of Delta State with a Capacity to process 125 mmscfd of Natural Gas, received its FZ operating licence in August 2020. Commercial production commenced in October 2020 and the plant is currently operating at 60% Production Capacity.

NEPZA has successfully received land allocations with Certificate of Occupancy from Lagos, Ebonyi, Kwara and Katsina states for the SEZ projects. Project Teams for implementation have already been set up and have commenced preliminary planning.

Lagos, Kwara and Katsina States have been selected as the pilot locations for the siting of the MSEZ projects and it’s supporting ancillary industries.

CHECKLIST FOR SETTING UP A FREE ZONE IN NIGERIA

• Application letter indicating interest to establish a Free Zone, and its location in the country.
• Payment of US$1,000.00 or its Naira equivalent to NEPZA as application fee.
• Submit your application letter, indicating interest to establish a zone and its location, and relevant documents.
• Inspection of proposed site by NEPZA Officials.
• Recommendation for approval will be passed to the Minister of Industry, Trade and Investment by NEPZA.
• Recommendation will be passed to the President by Minister for final approval.
• Approval or comments from Presidency will be communicated back to the investor by NEPZA.

  SUBMISSION OF THE FOLLOWING DOCUMENTS

• Acquisition and issuance of Certificate of Occupancy for the proposed site.
• Perimeter and topographic survey of the site.
• Survey plan for the site with beacon numbers.
• Master-plan for the proposed site (4 copies).
• Environmental Impact Assessment report (EIA, 4 copies).
• Federal Ministry of Environment develop and regulate checklist for implementation and compliance.
• Detailed feasibility study (4 copies)- study guideline.
• A brief description of the project clearly defining the scope of business and the objective for the establishment of the zone.
• Name and resume of the promoter and detained definition of the zone management structure.
• Location and size of the zone as well as evidence of unencumbered title ie compensation plan/evidence of payment for compensation for existing inhabitants and farm lands and other economic value already present on the land.
• Location of the site.
• Proximity of the proposed zone to existing infrastructure/facilities. (e.g. Airport, Road, Rail, Seaport, Power, and settlements around etc) if any. Alternatively, plans for the provision and development of support infrastructure that would attract and sustain investment in the zone.
• Inventory of existing infrastructural facilities on the proposed yard for the zone, if any.
• Economic viability.
• A clear analysis of the economic costs and benefits of the project into its financial cost and benefits.
• Availability of raw materials
• Linkages between the FTZ industrial activities and domestic economy. The likely impact on domestic economy.
• Specific output. The output of the proposed project needs to be specified, i.e the likely number of enterprises that will be located in the zone and nature of their products in line with the expectations of the zone.
• Employment generation.
• Condition of service should be clearly spelt out.
• The projected number of employees that may be required (local and foreign) and the grade of labour needed.
• Projected profitability of investment.
• Risk Assessment of Project.
• Implementation strategy for the project.
• Details of Developmental pattern/Phasing of the proposed internal & external infrastructure facilities including land use distribution pattern supported with timelines of work schedule.
• Details of EPC (Engineering, Procurement and Construction) work packages, i.e. site preparation EPC, Process plant EPC etc.
• Health, Safety and Environmental (H.S.E) compliance program of proposed Zone.
• Evidence of Companies, if any, which have indicated interest in locating in the proposed Zone and future targeted prospective companies or clients that would be admitted in the Zone.
• Any other information such as Agreements, MoU and Concessions that will assist the consideration of the proposal.

Please note that upon receipt and study of the aforementioned documents, the Authority will    commence project due diligence to evaluate the legitimacy of the venture within the ambit of the Free Trade Zone regulations and laws and any other legislations as may be applicable, consider proposed site enabling issues as well as socio-economic matters relating to the zone.

•         Inspection of the proposed site by NEPZA officials.

•         Upon review and approval of the project, the following fees shall apply:

•         Licensing fees of USD $400,000-Free Zone status declaration Fee.

•         Licensing fee of USD $500,000-Industrial City/Park status declaration Fee.

•         USD $100,000 Operation Licence (OPL) Fee to be paid along with declaration fee in the first instance and thereafter as annual renewal fee.

•         The amount stated above is subject to review by the Authority.

 Vision

To establish Industrial Zones of the highest quality that meet the needs of investors and ensure a diversified economy.

Mission

To establish, licence, regulate and operate highly efficient Free Zones by providing Highly competitive Incentive schemes, Excellent support Services for the purpose of creating an enabling environment for export, manufacturing and other commercial activities.