THE Delta State Governor, Rt. Hon. Elder Sheriff Oborevwori, by his recent ground-breaking ceremony of Kwale Free Trade Zone, KFTZ has once again re-enacted his determination to launch the state into the privileged class of economic hubs in Nigeria. This feat is remarkable in many respects. It is coming on the heels of his administration’s efforts at opening up the entire area to investors around the world with good access roads, bridges and flyovers at notable commercial centres like Agbor, Warri and Ugheli in addition to the recent entrepreneurship-inspiring approval of N8.3 billion to offset all debts owed to the Delta State Oil Producing area Development Agency(DESOPADEC) contractors.
A free trade zone entails the designation of a given geographical area within a country as an area where goods can be imported, exported, stored, or manufactured without the usual customs duties and taxes. Many economy analysts have come to agree that this is a step in the right direction, given its various incentives aimed at attracting investors. The World Bank defines it as; “small, fenced-in, duty-free areas, offering warehousing, storage, and distribution facilities for trade, transshipment, and re-export operations”.
One of the reasons for applauding the decision of the governor to choose Kwale as a Free Trade zone remains the fact that the area meets the primary requirements for the location of such an economic hub such as availability of enterprises, proximity to a sea port and good developmental stage of a chosen area.
The kwale axis already has a cluster of foreign oil exploration firms. And the electricity distribution power station at Okpai readily stands as an advantage to prospective investors in the area. Additionally, the River Ethiope and River Niger are assets to the chosen area. And most importantly, since one of the ideas behind the establishment of free Trade Zones is their ability to attract economic developments to developing countries, the choice of Kwale alongside Enugu, Calabar, Onne, and others in the south-south and south East of Nigeria is set to bring an even economic development to Nigeria since areas like Kano and Lagos are already enjoying the benefits.
The rewards to accrue to investing enterprises include; tax breaks and simplified regulations, corporations operating within the area equally enjoy incentives like the ability to import parts duty-free, retain foreign exchange earnings, and receive tax exemptions.
These incentives aim to attract investment and generate employment, thus contributing to the overall economic development of the region. Multinational corporations frequently utilize free trade zones to establish factories for manufacturing goods like clothing, shoes, and electronics aswell as oil mining and refining.
Equally, the benefits of Free Trade Zones to its location cannot be overemphasized. It helps in the increased generation of foreign exchange earnings, thereby encouraging the export of non-traditional products. FTZs can boost export earnings, positively influencing the exchange rate. This can lead to greater imports at a given favourable exchange rate or imports at reduced costs for domestic consumers.
Free Trade Zones, if well managed can inspire Job creation and income generation just as it holds the potentials to Increase foreign direct investment, FDI. This experience comes from tax exemptions, relaxed regulations and creation of business-friendly environment that enhances a country’s appeal to foreign investors. When foreign investors bring capital into an FTZ, it boosts the local economy, fostering growth and development.
Increased technological and knowledge transfer are other aspects of innovations that can be attracted by a Free Trade Zone arrangement. The presence of foreign companies in FTZs can lead to technological advancements and knowledge transfers. This is a benefit to local companies as they are required to adopt global production and quality standards. To achieve this, local workers, staff, and management are compelled to undergo skill development programs around the world.
Statistics show that in 1997, 93 countries of the world had set up Export Processing Zones, EPZs employing about 22.5 million people, and five years later, in 2003, they, in 116 countries employed about 43 million people. This geometric progression is an indication that countries like Nigeria can also enjoy the kinds of benefits so far attracted to India and other countries that have migrated from developing to developed countries within a short space of time through economic strategies such as EPZs and Free Trade Zones, FTZs
However, the government must not lose sight of the fact that more need to be done for the Kwale Free Trade Zone to end with the kind of success stories often associated with Delta State, that is; ‘Delta no dey carry last’’. For example, all the sea ports around the Kwale Free Trade Zone like that of Onitsha, Onne and Warri are not in the best of shapes to accommodate the envisaged business traffic. Additionally, the Ethiope River has never been used as a sea port. These ports and other rivers that can be used as sea ports must begin to wear new looks through dredging.
It is also necessary for the state government to liaise with appropriate federal agencies to ensure that all roads linking Kwale to commercial cities such as Onitsha, Aba, Benin-city and Warri are properly rehabilitated while new ones are being constructed in addition to linking the to a rail facility.
It will not be enough to expect foreign investors to be attracted to the zone only for them to rely on their home countries for the needed employees of the companies operating in the oil rich area. Communities must therefore continue to encourage their indigenes to embrace quality skill acquisitions in their choice of study courses in higher institutions of learning.
In the same vein, government’s approach to education must shift from mere certificate acquisition to “sabiticate” as an evidence of gained knowledge. The country, especially Free Trade Zones of Nigeria must put behind, the era of producing unemployable graduates from higher schools due to factors such as strikes by lecturers and examination malpractices at all levels of education.
Government must properly identify the owners of the acquired lands for this purpose and pay required compensations that are appropriate in order to forestall land disputes in the future. And some positions in some multi-national companies must be reserved for the indigenes of the area where businesses are sited.
In all, this is another mile stone accomplishment by Governor Oborevwori. His vision in this direction must not be truncated by lip-serving government officials.
