News Analysis: As expectations rise on Special Economic Zones

News Analysis: As expectations rise on Special Economic Zones

Friday, June 28, 2019 8:00 am

At the meeting with Vice President Osinbajo were representatives of the investment partners

Dan Abidoye


With the promise of boosting manufacturing’s share of Nigeria’s Gross Domestic Product to 20 percent, generating $30billion in annual export earnings and creating 1.5 million new jobs in an export-oriented manufacturing value chain, among others, the development of special economic zones by the Nigeria SEZ Investment Company Limited (NSEZCO) is likely to be a game changer.


But with the variables involved, it takes dedication, all-out commitment and continuity to make changes of that scale.

Project MINE, the Presidential Priority Intervention project, is using special economic zones to boost manufacturing and exports; and NSEZCO is the special purpose vehicle set up by the Federal Government to facilitate Public-Private Partnerships with development finance institutions and other investors, to develop special economic zones across the country.


Since its establishment, the Government has repeatedly stated its commitment to the project and even flaunted it in advertisements during the last presidential elections.


In a recent example, when the strategic investment partners investors and advisers felt threatened by wild allegations that spurred investigation, the Federal Government intervened to reassure them of its commitment to the project.


It is now time to deliver and, of course, the expectations are high. Sources say that until he spoke at the meeting of Vice President Yemi Osinbajo and the strategic investors, nobody knew how Mr. Gbenga Oyebode really felt that afternoon.

Weeks before the meeting, there had been reports in some newspapers that Oyebode had been invited by the police in an ongoing investigation over his role in the registration of NSEZCO. In claims of authenticity, some of the reports even displayed copies of the invitation letter.


Although his voice didn’t betray emotions when he spoke, Oyebode was clear about the need to protect a reputation built over years of hard work, a source said.


Mallam Abubakar Malami, the then Attorney-General of the Federation, who was at the meeting, explained to the investors that the investigation into the affairs of the company was to establish the integrity of the Federal Government and the propriety of its actions in the light of the negative perceptions created in the media.


He also reiterated that the Federal Government had no intention to frustrate investment in the company and its smooth take-off.

A source described how in a direct response to the mood at the meeting, the host, Vice President Osinbajo, who spoke earlier, avoided a prepared speech to speak directly to the situation.

He condemned the misrepresentations that had been created about NSEZCO in certain sections of the media and regretted the embarrassment this may have caused the investors. He reaffirmed FG’s endorsement of the strategies and plans put in place for the actualization of the Special Economic Zones (SEZs).


The Vice President also assured the investors of the readiness of the Buhari administration to offer all the support required to complete their investments in the company.


Restating the government’s commitment to Project MINE, he said it is the vision and plan of the Buhari administration to be the pre-eminent manufacturing hub in Sub-Saharan Africa and a major exporter of manufactured products.

According to him, “the project is fundamental for us as industrialization is a major pillar of our Economy Recovery and Growth Plan”.


On February 8, this year, the Federal Government, at a ceremony presided over by President Muhammadu Buhari, signed investment agreements with three Development Finance Institutions; Afreximbank, Bank of Industry and the Nigeria Sovereign Investment Authority (NSIA) for the development of special economic zones in the country. Other investment partners expected to join the three are African Development Bank (AfDB) and Africa Finance Corporation (AFC).


At the meeting with the Vice President were representatives of the investment partners, including the African Export-Import Bank, Bank of Industry, Nigerian Sovereign Investment Authority, Africa Finance Corporation and the African Development Bank and the legal advisers, Aluko and Oyebode.


Mr. Olukayode Pitan, Managing Director, Bank of Industry and Mr. Abdoulaye Kone, Regional Chief Operating Officer – Anglophone West Africa, African Export-Import Bank, who spoke on behalf of the investors and Mr. Oyebode on behalf of the advisers, thanked the Federal Government for the assurances given to them and confirmed their commitment to the project.


Earlier, Dr. Okechukwu Enelamah, then Minister of Industry, Trade & Investment thanked the Vice President, the Attorney General of the Federation and the investors for their support.The ministry is charged with the implementation of the Presidential initiative, which has become of its key achievements.


Enelamah said from all indications, NSEZCO remains on course to raise $500million for investment in Special Economic Zones in Nigeria.

With the dust long settled and the strategic partners of NSEZCO reassured of the commitment of the Buhari administration, it is expected that all the talk translates into action to be seen and felt in Funtua, Enyimba, Lekki, and other locations.


The early stage projects in the first phase of NSEZCO’s operations include:


Enyimba Economic City, Abia State: A 9,500+hectare multi-township economic city at the heart of the South-East and South-South geopolitical areas of Nigeria. Pre-development work has been completed and three major anchor investors have been secured. Construction expected to commence in the second quarter of 2019:


Lekki-Epe Model Industrial Park, Lagos State: A 1,000-hectare multi-cluster model industrial park in the North East quadrant of the Lekki Free Zone area. Pre-development work is currently ongoing and two major anchor investors have been secured;


Funtua Cotton Cluster, Katsina State: Aggregating cotton grown by over 800,000 farmers in Northern Nigeria into a world-class vertically integrated ginning, spinning, weaving and garment-making cluster in the traditional centre of cotton ginning in Nigeria, that will also supply yarn and cloth to other textile clusters around the country.


It is also expected that with the clarifications made at the Vice President’s meeting with the strategic investors, they will not have to worry about any more dust from government circles. Investment decisions, taken by boards of companies, are sensitive to uncertainty and crisis.


Sources say that with the expected changes in government, they may also need assurance on continuity of the Project MINE, which promises to be a flagship project of the Federal Government in manufacturing, job creation and export promotion.


It looks like there is no opportunity to climb back on this project or slow it down.


Already, the Shandong Ruyi Group, the leading integrated textile and garment group in China and one of the largest worldwide, had in 2018 announced an investment commitment of $2bn to the Cotton, Textile and Garment industry in Nigeria by way of anchor investments in manufacturing facilities in Enyimba Economic City, Abia State, Kano and Lekki Model Industrial Park.


More recently on the 28th of March 2019, CCCG Industrial Investment Holding Company (CIHC), a subsidiary of China Communications Construction Group ranked 91st in the Fortune 500 companies and the 3rd largest international contractor globally, signed a Letter of Intent to invest in the Lekki Model Industrial Park Project as a Developer and to be the Lead Investor in a package of external infrastructure projects to serve the entire Lekki Free Zone Area, including, power, water, access roads and bridges.


In addition to its potential to generate revenue and reduce unemployment, Project MINE seeks to:

  • Create local models of global best practice in the provision of world class infrastructure at competitive costs connecting SEZs to international and regional markets with transport links, uninterrupted power, ICT, water, sewage and other services to ensure smooth and efficient operation of SEZ businesses.
  • Promote the “cluster” effect to be gained by locating similar export-oriented manufacturing businesses within the same locality.
  • Attract world class investors with strong positions in global supply chains and investors with potential to increase the scale of operations rapidly to set up operations in SEZs.
  • Create an enabling environment for SEZ businesses by instituting best in class legal and regulatory frameworks, using technology and streamlined processes to facilitate movement of people, goods and capital and easy access to government services, approvals and permits.

Join The Conversation

What do you think?

This site uses Akismet to reduce spam. Learn how your comment data is processed.