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FG woos investors to revamp Calabar, Kano Free Trade Zones

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By Henry Uche, Lagos

As part of its efforts to revitalise the economy, the Federal Government of Nigeria through The National Council on Privatisation (NCP) via its Secretariat, Bureau of Public Enterprises (BPE) in conjunction with the Federal Ministry of Industry, Trade and Investment and the Nigeria Export Processing Zones Authority (NEPZA) has declared open the opportunity for the concession of the Calabar and Kano Free Trade Zones in a bid to make them world-class standard, functional and globally competitive.

The Minister of Industry, Trade & Investment (FMITI) Adeniyi Adebayo Otunba, who made this known in Lagos decried the cumulative investment earnings of about $20bn from the Calabar and Kano Free Trade Zones when compared vis a viz what other African countries particularly have earned from their Trade Zones.

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The minister while declaring open the roadshow for the concession of the aforementioned Trade Zones (formerly Special Economic Zones (SEZs) in Nigeria, said the concession was encapsulated in the Economic Recovery and Growth Plan (2017-2020) and the current National Development Plan is to accelerate the implementation of the Nigeria Industrial Revolution Plan (NIRP) through the use of Free Trade Zones (FTZs) in order to create jobs, promote exports and boost growth and development.

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While Speaking on behalf of the NCP, the FMITI and the Bureau of Public Enterprises (BPE), he stressed that it is the desire of the Federal Government to accelerate the pace of economic growth and development of Nigeria.

“The ultimate aim of the free trade zone scheme is to attract foreign direct investments, generate employment, enhance trade and industrialization, promote exports, enhance foreign exchange earnings, and encourage the transfer of technical know-how.

“Other countries have leveraged FTZs, which are designated areas for promoting trade openness and investment facilitation, as a dynamic instrument for growth and development. Sadly, efforts to replicate the success of the FTZ model in Nigeria have not recorded the same success,”

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He confirmed that the two FGN-owned SEZs in their current state cannot significantly improve the country’s competitiveness nor help the drive to effect structural change/ economic diversification due to poor infrastructure, reliance on treasury to finance capital expenditure, no link between the industrialization strategy of Government and the zones, limited skills etc.

“30 years after the FTZs scheme was adopted in Nigeria, cumulative investment has only stood at about $20 billion, whereas in about 30 years when the first free zone was established in Jebel Ali area in Dubai (i.e. Jebel Ali Free Zone – JAFZA) in 1985, the UAE has emerged the destination of choice for global trade and investment,”

He added that the advent of the African Continental Free Trade Area (AfCFTA) has also made it imperative that the two zones (owned by the Federal Government) are revived, reformed and transformed into a world-class standard to make them functional and globally competitive.

He maintained that a 25-year concession done under the Build-Rehabilitate-Operate and Transfer (BROT) model was adopted to ensure that private sector investors with the requisite technical competence and financial capability that would emerge from a competitive transparent process are allowed to invest, operate and manage the facilities for a certain number of years while the ownership remains with the Federal Government.

It’s a demonstration of the Federal Government’s commitment, desire and implicit confidence in the ability of the private sector not to only reinvigorate Calabar and Kano FTZs, but to make them functional, competitive, explore the huge potential of AfCFTA to enable the country to achieve rapid, inclusive and sustainable industrialization, create jobs, and diversify her export earnings.

“The reform of the two Zones is a pathway to accelerating the country’s industrialization drive and economic development, we are therefore looking forward to an interactive engagement with all the prospective investors and be assured that the entire concession process will be transparently implemented to ensure that only the best emerge for each of the zones,” he added

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On his part, the Director-General of BPE, Alex Okoh, reiterated that the Federal Government’s policy was geared towards unlocking the potentialities of the two of its assets through the injection of a private sector capital, as well as the deployment of technical expertise.

According to the DG, the policy vested the BPE with the mandate to superintend all Public-Private Partnership (PPP) infrastructure project procurements in Nigeria, in collaboration with the Ministries, Departments & Agencies (MDAs) who are the owners of the assets and Infrastructure Concession Regulatory Commission (ICRC), the regulator of concessions in Nigeria.

“The Bureau is desirous of showcasing two government free trade zones that require private sector investment as well as the innovative capacity to unlock their full potential that has hitherto been sub-optimally utilised. The enterprises are the Calabar Free Trade Zone (CFTZ) and the Kano Free Trade Zone (KFTZ), and today marks a critical day in the Tender Phase of the transactions.”

Okoh revealed that the advert for the Requests for Qualifications (RfQs) was published on April 13, 2022, and interested parties can download the RfQs from the BPE website, meanwhile the deadline for the submission of responses to the RfQs is May 25, 2022.

“Today provides an opportunity to not only showcase the two zones but also to interact with potential investors, receive some feedback and provide some clarifications as regards the transactions.

“Following the submission of the responses, an evaluation will be carried out and the list of qualified bidders for the next stage will be announced. We anticipate that these transactions will attain Commercial Close (that is, signing of the concession agreements) by December of this year. The detailed timeline for the conclusion of the transaction is provided by the Transaction Advisers Ernst & Young Consortium.”

He assured all stakeholders that all activities leading to the successful conclusion of these transactions would be carried out in line with best global practices, as well as the stipulated ICRC Guidelines.

“The expectation of the Federal Government in undertaking the concession of the FTZs is that it should be able to catalyse business in the West African sub-region, through strategic production of goods and services that optimise the vast potential of the industrial axis of Cross River and the Kano States, respectively. Similarly, it is the Government’s expectation that the FTZs must move beyond the disjointed clusters of business premises to world-class special economic zones comparable to their counterparts globally. The level of interest by prospective investors had been quite strong,” he added.

Similarly, Managing Director, NEPZA, Prof. Adesoji Adesugba, who was represented by Director, Zones, Muazu Hadi Ruma, who highlighted the significance of investing in the two FTZs, revealed that free duty, tax exemptions and import substitution drive, among others as some of the incentives and benefits of investing in the zones. He assured prospective concessioners of a safe environment.

More so, the transaction advisers of the FTZs, Ernst and Young, represented by Damilola Aloba, said the two-tier concession structure which involves a property holding company and the concessionaire would be adopted for the purpose of the transaction.

On key considerations and expected outcomes from the concession, he listed funding, rehabilitation, operations, technical know-how, managerial and administrative prowess and maintenance of the FTZs.

He said it has to do with remittances to the Federal Government over the concession period and the development of host communities.

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