How not to reform Nigeria’s free zones





Ongoing controversy within the Nigeria special economic zones is an uncharitable distraction occassioned by failure of those in authority to place national interest above selfish agenda of a few. Reading all the news and after interactions with local and international stakeholders, it is crystal clear the ministerial committee converted itself into a tool for an hatchet job to dismantle and destroy the thriving Nigerian Free zones worthy over 30 billion US$.
Nigeria has always had plans to reform its free zones despite the status quo being considered one of the best in Africa. Yet, striving for perfection is a great aspiration. And in the free zone sector, two contending trends manifest for the past two decades. The first is the agitation for a single free zone authority for Nigeria under the Nigeria Export Processing Zones Authority (NEPZA). This is in tandem with international best practice and this position has been upheld and projected by successive federal government reports and white papers. There is the second trend, the push by a group to get son to supplant the father by having an Onne oil and gas free zone to take over the responsibility of NEPZA, which presently manages about 45 zones in the country.


The crux of the matter prior to now is about legality and best practice. Onne zone (OGFZA) is by law restricted to its locality and mandate but a private cabal has been pushing without legal backing to illegally expand its coverage. Relying on induced government reports and without amendment to its enabling legislation, Onne zone, a public private partnership body, has historically embarked on territory grabbing, changing its name outside its Act and even issuing orders that resulted in ongoing litigations. Stakeholders had resisted the push by Onne zone all along and a bill is pending within the legislature to ensure a single free zone authority for Nigeria under NEPZA.


That was the genesis of ongoing assault on private sector investment in Nigerian Free Trade Zones at a time Nigeria is struggling to expand dwindling foreign direct investment. It all started last year when the cabal relaunched its drive to subvert the free zones deploying the minister of trade and investment as a willing tool. Apprently, the minister appears not to be acting alone; it seems the cabal has the backing of the board and managing director of NEPZA itself. A ministerial report has unilaterally without consultation recommended that Onne Zone takes over NEPZA mandate against the laws, interests of investors in the zone, the drive to reduce cost of governance, Nigeria’s readiness for AFCFTA regime and international best practice.
The report though a draft has elicited strong reactions from various quarters. There are even reports that the trade minister backed out in a backlash. A business group in Kano called Arewa Business Forum was the first to raise alarm over alleged plots to destroy Kano Free Trade Zone and other upcoming zones in the North by some forces within the Federal Ministry of Industry Trade and Investment. In a statement by its Secretary, Babayako Abdulahi, the forum alleged of a plot to stop the upgrade of the Kano Free Trade zone while a directive has reportedly been issued to stop issuance of licences for the proposed new free zones in Katsina, Jigawa, Kebbi, Kwara and Taraba states. The forum alleged that a cabal within the Federal Ministry of Trade has engineered plots to weaken efforts of the North to industrialise in her areas of strengths by transferring the free zone agency from Abuja to the South-south in addition to reviewing all ongoing activities in northern free zones.


The statement titled “A Plot Against the North’” said: ‘’We have discovered a grand plot to hide under current national crisis to deprive the North of her rights especially in the area of domestic industrialisation within the agricultural value chains. From late last year to date, Arewa has embraced the concept of free zones to address issues of job creation within the North. Suddenly, we heard story that a South-south group is plotting to stop these advances by the North. We first did not take it serious until it was revealed that the Federal Ministry of Trade is putting together a report to hand over control of free zone to a South-south body based in Cross River state. The national body based in Abuja which has supported the North in its drive for domestic industrialisation is proposed for scrapping while the South-south body is to take over the national assignment. In pursuance of that agenda, the ministry stopped issuance of free zone licences especially the more than five that northern state governments and private sector people have applied for. Till now, the ministry has not allowed the issuance of the said licences. This is a serious plot to decapitate the North at a time her leaders are struggling to attend to issue of job creation to tame insecurity”.Soon after the Arewa statement, investors in the free zones also responded, threatening to commence divestment from the zones and calling on the board of NEPZA to summon a stakeholders’ meeting. In a statement on behalf of the Investors signed by Yusufu Abdullahi, Director, Snake Island Integrated Free Zone Lagos, the proposed reform was described as “a ploy to destroy multi-million naira private investment in the free zones”.


The staff union took the matter to another level when it petitioned President Muhammadu Buhari, accusing the minister of trade and investment, the board chairman and managing director of free zone authority of desperate attempt to destabilise the free trade zones. In a petition signed by Alade Bashir Lawal, its Secretary-General, ASCSN said it “forward to you the memorandum on the “Desperate Attempt by the Honourable Minister of Industry, Trade and Investment, Otunba Niyi Adebayo to subvert the activities of the Free Zones Scheme in Nigeria.
The union further Accused the NEPZA Board and the Managing Director of the agency of complicity: “We are very suspicious of the role of the Chairman of the Board, AlhajiAdamu Fanda since he is a close political associate of the minister, and the managing director, Prof. Adesoji Adesugba. In all these, according to the Union,”It appears they were brought to NEPZA as “Undertakers” that is, to supervise the dismembering of the authority as a body. Few days after their resumption, they, with their cohorts in the ministry made attempts to transfer some zones to  OGFZA. The attempt failed woefully.”


The minister may have realised the extent and implications of the report when another news surfaced that the minister has rejected the recommendation of the committee on the proposed transfer of NEPZA mandate to OGFZA. The minister reportedly rejected the committee report over emerging reports linking former Vice President Atiku Abubakar to the reform proposals as well as bribery allegations rocking the committee. 
Responding to the allegation, NEPZA MD stated that “It is important for us to realise that NEPZA was set up by an Act of the National Assembly. The reformation of NEPZA is definitely not within the competence of NEPZA’s management. However, NEPZA is aware that there had been discussions on the remodeling of government and government agencies for efficiency from the time of the Oransaye’s panel recommendations”. 
But how should the free zone sector be reformed. Here, certain basic national interest must be considered. First, Onne zone is a PPP body which by law is restricted to Onne oil and gas zone. Two, investors’ deals in the free zones were made under NEPZA and cannot be transferred to a body not legally empowered. Three, investors’ confidence in Nigeria is shaking by that anti-business unilateral decision despite ongoing litigation on the subject. Four, the committee report failed on logic and facts as it relied on incomplete, doctored data on NEPZA and the 42 free zones. Fifth, Nigeria’s preparedness for AfCFTA is threatened as divestment from the free zones is now a real possibility. And more strategically, the ministerial committee move threw spanners in the ongoing reforms within NEPZA under its new management.
To effectively reform the free zone, my advice to the trade minister is to engage stakeholders, that is those who trust Nigeria as to invest their monies in the zones. Adebayo should engage and consult investors to prove that Nigeria is ready and open for business. The job is made easy for him as the stakeholders are reachable and supportive of Nigeria’s efforts to strengthen her manufacturing capacity. More importantly, the bill in the National Assembly proffers a path that both satisfies the national interest and investment interest of stakeholders.


The Ministerial Technical Working Group report should be dedicated to where it belongs – the dustbin.

Ibrahim writes from Kano via [email protected].

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