Tony Ejinkeonye is the president of Abuja Chamber of Commerce and Industry and national vice-president of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA). In this interview with BusinessDay’s HARRISON EDEH, the business leader gives his thought on viable economic models that can support Nigeria’s industrialisation and revenue diversification.
The federal government has initiated steps to ensure that special economic zones (SEZs) come make visible economic impacts. What level of impact do you think these zones can have on the economy?
The objective of the creation of the special economic zones (SEZs) is to identify opportunities on how foreign investments in these six zones can provide the maximum possible benefits both for investing countries such as China, and for the host country, in terms of leveraging the combined expertise, experience and resources of investing countries. As expected the zones will definitely face some common challenges, in the areas of the legal and institutional framework, resettlement, infrastructure, environment, zone management & operational know-how, and host government ownership. From these challenges, it seems clear that the issues of infrastructure, such as the reliability of power supply, transport, and logistics could be properly planned, supported and managed. The SEZs have strong commercial appeal and could, therefore, attract funding and investors. If the challenges are efficiently tackled, there would be the much-desired influx of foreign direct investment accompanied by a host of other benefits like an increase in employment of citizens which would in turn reduce poverty, increase income per capita due to increased productivity, raise real output and non-oil export and spur economic development.
What model should SEZs adopt to make more impact?
The Special Economic Zones (SEZs) should adopt both a direct and an indirect approach to promoting industrial development, namely, sector identification based on the national comparative advantage and cross cutting interventions that address the competitiveness of the entire manufacturing sector. Implementation should be based on public-private-partnership (PPP) structure. SEZs strategy should integrate other national development plans such as the Economic Transformation Agenda (Vision 20:20:20), National Trade Policy, Nigerian Industrial Revolution Plan, National Micro, Small, and Medium Companies policy, National Economic Recovery and Growth plan, 2017. Hence there should be concentrated infrastructure in identified locations for industrial and commercial purposes, enhanced innovation, and inter-firm technology transfers process to boost Nigeria’s industrial programme.
Can you share an experience from any country?
The China’s SEZs experience or model is outstanding in this context. The model is notable for attracting foreign direct investment, promoting export-oriented industrialisation, and catalysing market-wide reforms. With the establishment of four SEZs in the south-eastern coastal region of the country in the 1980s, the nation now boasts hundred zones of various kinds and they have become one of the key drivers of China’s rapid economic development. Chinese SEZs accounted for more than 22 percent of GDP and 50 percent of FDI in 2007.
What is the best model to spur Nigeria’s trade and industrialisation?
The Nigerian government must support the production of goods that are currently being imported, that can be easily produced locally. In addition, support structures must be built across productive sectors to unleash productivity by removing the bottlenecks across board and incentivising indigenous producers. Several action-oriented reforms targeting key areas such as infrastructure, financing, skills development, technology & innovation and quality assurance are also crucial to sustaining economic activities in the medium term.
Many European countries are already looking towards cleaner energy as an alternative for petroleum. Some have set dates for stoppage of hydrocarbon cars. Nigeria still depends almost completely on petroleum for its foreign exchange. What would be your key suggestions to the government in addressing this concern?
Nigeria depends on petroleum resources for foreign exchange, which is because oil and mineral resources dominate our export. This fact is important because it forms the base of the narrative. I will answer this question with some historical overview. Before oil was discovered, there was coal which played significant roles in Industrial revolution and industrialisation across the world. The burning of coal to generate electricity started in the 1880s and has not ended till date. Despite the torrent of attacks against coal, it still contributes a significant proportion of energy supplies in China, US, and South Africa. Having established this fact, I believe the planned embargo on the usage of hydrocarbon vehicles should not arouse panic for Nigeria. The United Kingdom or even entire Europe is not the only continent that uses hydrocarbon in the world. In fact, Europe is neither the most populated region nor the fastest growing. The world population is projected to reach 10 billion by 2050 with more people in emerging and developing economies. This portends increased energy demand and I can assure you that hydrocarbon will continue to be a major contribution to the global energy mix. Nevertheless, we must begin to localise our industrial strategies and efforts. We need to develop the downstream segment of the oil and gas sector. This will enable us to optimise the full benefits of the petroleum resources being a net exporter of finished products. We can saturate Africa with our finished petroleum products and earn foreign exchange. Africa is making efforts to industrialise, and the expanding population will continue to increase demand for both manufactured private goods as well as public goods.
What should Nigeria do to have an economy that is less dependent on oil?
If Nigeria must evolve as an economy that is less dependent on oil, we must look inward. We cannot build a solid economy without first developing a formidable productive base. In doing this, we must localise our technology by building manufacturing capability that is suitable to our peculiarities. Made-in-Nigeria is the way out. A major opportunity that emanates from the recent economic situation is the prospect of repositioning the Nigerian economy to be properly diversified, especially in terms of government revenue. Diversification should, however, be on regional comparative and competitive advantages, that is, areas of regional advantage in the exploitation and processing of Nigeria’s abundant natural resources and non-oil primary products for economic benefits. Three key sectors, namely, agriculture & agro processing, manufacturing and mining offer great advantages for revenue generation, employment creation, foreign exchange earnings and sustainable economic growth through activities such as agro processing, mining of solid minerals and oil refining and petrochemicals.