NIGERIA EXPORT PROCESSING ZONE
The Future Role of Financial Players
A Paper presented By
Mr. Emmanuel Jegede
At the 3rd Free Trade Zone Conference & Exhibition
April 5th 2010
OUTLINE
Preamble
Authority Vested in NEPZ
Business Dynamics/Investment Procedure
Benefits To Licencees
Major Players within the Free Zones
Advantages of Free Zones
The Required Infrastructures
Incentives to Financial Institutions
Future Role of Financial Players (Banks & Insurance)
Challenges To Free Trade Zone
PREAMBLE
Nigeria is a country of about 160million (current
statistics) with enviable deposit of natural and highly
resourceful stock of human capital.
Nigeria has been trumpeted to be amongst the
Leading Industrial Nations in 2020 and one of the
drivers and instruments that will unleash this
economic quantum leap is through the mechanism of
Export Processing Zone.
Great nations in the world today, especially the
preeminent G7 were shot up to the olympian
economic height through their superior Gross
Domestic Products (GDP) and other siblings of human
development indexes.
PREAMBLE (Contd).
Our GDP in 2009 by CBN figures stood at
US35.885billion and can only have a quantum leap
through the mechanism of Free Zone to make our
products competitive in the international arena.
The Instruments of an Export Processing Zone can
also be used as a tool to drive volumes of Foreign
Direct Investment (FDI) into our economic fabric.
Nations like the new bride, DUBAI, Singapore, China
to mention but a few are now tourist destinations
earning massive foreign exchange because of their
productive advantage.
THE AUTHORITY VESTED IN NIGERIA EXPORT
PROCESSING ZONE
The Licensing, Monitoring and regulation of all
Free Zones in Nigeria is vested in the Authority by
the Nigeria Processing Zones’ Act 63 of 1992.
The Management of Federal Government Free
Zones is vested in the Authority while those of
States and Private entities is vested in the
licensees.
BUSINESS DYNAMICS/INVESTMENT PROCEDURES
An Enterprise within a Free Zone must be given
approval by the Authority for permit to commence
operations.
An approved Enterprise is expected to commence
operations within six months of the date of execution
of the lease agreement.
The Investment of an Approved Enterprise within
the free Zone is expected to be at least
US$500,000,00
BENEFITS TO LICENCEES
Legislative provisions pertaining to taxes, levies duties
and foreign exchange regulations shall not apply within
the free zones.
Remittance of profits and dividends earned by foreign
investors in the zones.
No import or export license shall be required.
Up to 100% of production may be sold in the customs
territory against a valid permit, and no payment of
appropriate duties.
Rent free land at construction stage, thereafter rent
shall be as determined by the Authority or Zone
Management.
Up to 100% foreign ownership of business in the zones
allowable.
MAJOR PLAYERS WITHIN THE FREE ZONE
The Licencees
The Banks
THE NIGERIA EXPORT PROCESSING ZONES AUTHORITY
(THE REGULATOR)
Insurance Companies
The Nigeria Customs
service
The Nigeria Immigration
service
ADVANTAGES OF FREE ZONES
Diversifications of the revenue base of the
economy.
Employment Generation
Encourages export through local production.
THE REQUIRED INFRASTRUCTURE GRID
Large expanse of industrial land with good access to
international airports and sea ports
Fenced wall around the Zones with good security network
Trained Free zone customs/immigration roles as obtained in
the Free Zones world wide
Police post to provide security for the Zone
Pre built zone warehouses for ware-housing and storage of
raw material and products
Efficient Telecommunications facilities
Uninterrupted Electricity and Water Supply
Good Internal/external Road Network
Central Transit warehousing facilities at major ports for
efficient handling of free zone goods.
INCENTIVES TO FINANCIAL INSTITUTIONS
WITHIN THE FREE ZONE
A Bank operating in Nigeria’s FTZs enjoys the following
incentives:
(1)Freedom to move funds in and out of the Zone
(2)Exemption of all documents from stamp duties.
(3)Exemption from withholding tax requirement on
interest payable on deposit, dividends and royalties.
(4)Exemption from Corporate tax.
(5)Interest rates on loans and deposits are free from
domestic monetary controls.
(6)Exemption from payment of duties on imports of
furniture, office equipment and other facilities
necessary for its operations.
FUTURE ROLE OF FINANCIAL INSTITUTIONSTHE BANKS PERSPECTIVES
Providing international
relationship.
correspondence
banking
Identification of export products , services and
foreign and domestic markets.
Provision of consultancy and advisory services on
incentives, regulation and documentations required
with the free zones
Introduction
of
innovative
trade
warehousing and collateral instruments.
financing,
Financing of infrastructure, warehouses,
provision of required working capitals.
and
FUTURE ROLE OF FINANCIAL INSTITUTIONTHE BANKS PERSPECTIVES
Collection and management of Export proceed and
payment on import by the players.
Promotion of exports at local and international
trade exhibitions and trade fairs.
To enhance profitability of transaction, the
financial institutions also provide trade and market
information and advice on export-import markets,
products, pricing etc based on enquiries received.
Financing of all facets within the value chain from
production,
packages,
storage
handling
,
transportation and ultimate delivery to both local
and international markets
FUTURE ROLE OF FINANCIAL INSTITUTIONALTHE INSURANCE PERSPECTIVE
Insurance is an ever ready risk mitigating financial instruments that
provides indemnity to the Licencees whenever unexpected risk
mitigating loss intervene in their business or Assets.
Employees employed within the Free zone and their families are also
protected from financial loss as a result of death of a bread winner.
Some of the financial instruments of indemnity are:
Building & Construction Insurance
Group life
Motor
 Mortgage Protection
 Bond
 Money Insurance
CHALLENGES to NIGERIA FREE TRADE
ZONE
Unstable and inconsistent in government
policies.
Poor Execution of the scheme leading to
undesired deliverables
High
Cost
of
goods
resulting
International non competiveness.
in
Undeveloped infrastructure like Power,
good road, Rail etc
Adequate funding through low interest
loan to firms within the zone is still a
mirage.
THANK YOU FOR LISTENING
4/13/2015
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