by NM Partners
From Dr. Akinwumi Adesina CON; President of the African Development Bank Group, to Ngozi Okonjo-Iweala GCON; Director General of the World Trade Organisation, to Hon. Dr. Doris UzokaAnite MD, CFA; Nigerian Minister of Industry, Trade, and Investment, to Sergio Pimenta; Regional Vice President for Africa at the International Finance Corporation, the message is clear: an industrial revolution is crucial for Nigeria’s overall transformation.
Our national focus on economic development has become imperative, and industrialisation is emerging as a compelling strategy for sustainable growth and inclusive fiscal prosperity.
This is reinforced by our country’s abundant endowment of a labour surplus, scarce raw materials, growing consumer markets, and an economy in dire need of diversification.
With industrialisation as the desired outcome, prominent among effective approaches is the establishment of Free Zones.
A Free Zone (FZ), also referred to as a Special Economic Zone (SEZ), Foreign or Free Trade Zone (FTZ), Enterprise Zone (EZ), Industrial Development Zone (IDZ), or Export Processing Zone (EPZ), is a geographically defined area offering differentiated legal and regulatory framework compared to the rest of the nation, specifically designed to enhance investment attractiveness. By addressing weaknesses in the broader business environment, FZs aim to compensate for potential risks and create a more conducive climate for foreign direct investment (FDI).
Policy goals of FZs include export promotion by providing a duty-free platform for calculated importation of raw materials and machinery, as well as tax breaks for the export of finished products. They also target import substitution by increasing domestic production to reduce attendant reliance, and job creation, through attraction of businesses that generate employment opportunities within the zone. In addition, FZs facilitate foreign direct investment to leverage capital and technology transfer.
The Nigerian Export Processing Zone Authority (NEPZA) lists permissible activities in FZs as construction and light manufacturing; solid minerals & metals; oil & gas; and agribusiness & agro-allied, covering various industries: from electronics to textile, to plastics, to cosmetics, pharmaceutical products, food processing, and more.
Building and maintaining the highest quality infrastructure within Free Zones demands substantial investment in logistics networks, operations and maintenance utilities, warehousing and distribution facilities, as well as communication technology. Businesses need a clear and predictable regulatory environment, accordingly, streamlined bureaucratic processes and consistent implementation of regulations are crucial. Perhaps the most pressing challenge lies in equipping its workforce with skillsets needed to thrive in these dynamic zones. Investing in technical and vocational education programs will be essential to ensure a talent pool that can meet the required demands.
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