Throwing light on a modern market square
A review of ‘Nigeria’s Free Trade Zone Scheme’ Authors: Chidi Nzerem, Oche Obe Publishers: Kachifo Limited, Lagos Reviewer: Nats Onoja Agbo
When the federal military government established the Export Processing Zones Authority, NEPZA, in Nigeria, November 19, 1992, it was hoped that it would accelerate the pace of economic growth in the country. Clayfooted from the onset, it took another nine years before the Calabar Export Processing Zone was commissioned in 2001. On March 29, 1996, the federal government also established the Oil and Gas Free Zone at Onne. Despite the potential gains of the free trade zone scheme, very little is known about the operations of NEPZA and OGFZA.
More than 23 years after the programme was introduced in the country, however, there is no literature to guide stakeholders, prospective investors, policy makers and implementers on the viability or otherwise of the scheme. The book, A Review of Nigeria’s Free Trade Zone Scheme by Chidi Nzerem and Oche Obe is undoubtedly the first step in bridging the gap between the programme and stakeholders. The six-chapter book highlights the potential benefits of the free trade zone scheme and reviews the various efforts made by the federal government and other agencies to reform it. While Chapters two and three are on the review of concepts and issues and and experiences of six other countries respectively, chapter four evaluates Nigeria’s Free Trade Zones scheme, just as chapter five has the authors’ views and recommendations on how to re-position the program for greater efficiency.
Has the free trade zone scheme achieved its targets in Nigeria? The ultimate aim was for the free trade zone scheme to attract foreign direct investment, generate employment, enhance trade and industrialization, promote exports, enhance foreign exchange earnings, encourage transfer of technical know-how to Nigerians and contribute to the economic growth and development of Nigeria. In their analysis of key data on the impact of Nigeria’s Free Trade Zone Scheme covering 1996 to 2012, the authors discovered that the overall performance fell below expectations.
On FDI, for instance, the book highlights conflicting figures: whereas the Ministerial Committee for the Reform of Free Trade/Export Processing Zones claims an annual average of $200 million FDI inflow into the country, the International Labour Organization, ILO, claims that only $1.2 million trickled into the country in 2007. The authors also showed that domestic involvement in the scheme has been disappointing and as they found out, eleven out of the 27 free trade zones already licensed are still inactive. On the stated objective of promoting exports, the authors concluded that “the free trade zone programme is presently not contributing in any significant way to exports from the country”. The authors also showed that the free trade zone earned a paltry $8.3 million in foreign exchange and contributed only N58.4 million annually to government coffers through fees charged by the Free Export Zones and the Nigeria Immigration Service. In the same vein, the authors also noted that the free trade zones accounted for only 40, 000 out of the 148, 363 jobs created in 2012, just as only 250 companies, at the rate of ten in each zone, were operational in the free trade zones.
The story is not all about underperformance. Despite the dearth of relevant data, the authors established the “existence of a substantial number of Nigerians in top management positions in FZDs, FZMs and FZEs”, just as host communities are tapping into the positive sides of the programme. The salutary elevation of Onne, host community of the Oil and Gas Free Zone, from a sleepy fishing village to a semiurban center is one of the success stories highlighted in the book. Chapter Five, which contains the authors’ views or recommendations “on some of the theory, the necessary conditions, and the current issues in free trade zone industry” should stimulate further discussions and more literature on the free trade zone programme in Nigeria. Among other recommendations for streamlining the free trade zones to stimulate the economy is the establishment of a commission, which the authors believe will be in a position to “supervise a large number of free trade zone enclaves”.
The authors anchored the entire work on the conviction that the free trade zones scheme will “enhance the economic growth and development (of Nigeria) through the creation of jobs and …benefit from other spillovers of the scheme”.
Chidi Nzerem and Oche Obe who have been active participants in the review of the free trade zones programme in Nigeria used their deep knowledge of the system to craft the book in a clear and entertaining language, free from confusing economic jargon. Civil servants, politicians, staff of regulatory and stakeholder government agencies, trade zone developers and private sector stakeholders among others would find the book of immense value for their respective roles in the free trade zones scheme programme.