IMPACT OF EXPORT PROCESSING ZONE ON ECONOMIC INTEGRATION OF WEST AFRICAN COUNTRIES .
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IMPACT OF EXPORT PROCESSING ZONE ON ECONOMIC INTEGRATION OF WEST AFRICAN COUNTRIES .
Chapter one
INTRODUCTION
1.0 Background of the Study
This study aims to demonstrate the impact of export processing zones on West African countries’ economic integration.
Export Processing Zones have been given a variety of names, depending on how they are viewed and interpreted by different governments and institutions around the world.
Since the nineteenth century, the customary phrase has been ‘Free Trade Zone’. UNCTAD, USAID, and the United Arab Emirates refer to it as a “free zone.”
The Harvard University World Export Processing Zone Association (WEPZA) and the World Bank refer to it as a “Export Processing Zone”. The Organisation for Economic Cooperation and Development (OECD) refers to it as a Free Export Processing Zone.
Since the 1980s, EPZs have been promoted as a means of industrialising through export processing. EPZ countries (including Nigeria) are typically those with a large agricultural workforce, exporting low-value agricultural goods, high unemployment, local production for local markets, low levels of foreign investment, and economic stagnation.
Embracing the EPZ concept indicates that a country is replacing its inward-looking development strategy based on import substitution with an outward-oriented development route.
The World Bank sees EPZs as a first step towards further economic liberalisation, integrating protected countries into global markets. EPZs are thus one component of a larger programme of opening up economies to global competition and free trade.
In 1970, over 50000 workers were working in EPZs worldwide. By 1990, their number was anticipated to be up to 3.5 million (ILOIUNCT AD Geneva 1988, SATUCC/TARSC 1996).
Different EPZ definitions lead to different figures. Some include only fenced-off EPZs, but others, such as the World Export Processing Zone Association (WEPZA), include “all government authorised areas such as tree ports, free trade zones, customs free zones, industrial free zones, and foreign trade zones”.
In general, an Export Processing Zone is a trade zone created and recognised by a country’s government to attract domestic and foreign investment in industrial growth for export.
EPZ firms and developers benefit from a flexible operating environment and a variety of incentives offered by the EPZ Act (such as a long period of tax relief, high-quality infrastructure in the zone, and so on), which an enterprise outside the zone does not receive at the same rate.
Enterprises and projects to be operated within the EPZ are often appraised based on job creation, non-traditional export product development, technology transfer and worker training, incremental productive investment, and backward connectivity to the national economy.
In light of the foregoing, this study will use the EPZ Calabar to assess the amount of economic integration and development in West African countries as a result of the zone.
1.1 Historical Background of Calabar EPZ
The Nigerian Export Zone Programme began with the passing of the Nigerian Export Processing Decree in 1991. The supply of the regulatory and administrative framework allowed for the fast start of physical facility building at the location of Nigeria’s first export processing zone, Calabar EPZ, in River State in Nigeria’s south-east.
The Nigeria Export Processing Zones Authority (NEPZA) is legally responsible for administering the Nigeria EPZ programme. NEPZA is legally entitled to give all necessary permissions and clearances for operators in the zones, to the exclusion of other government organisations and entities. The Nigeria EPZ’s regulatory structure is liberal, creating a favourable climate for lucrative enterprises.
The incentives given to operators in Nigeria EPZs are competitive with the best in the world and in the region. They include 100% foreign ownership of investments, “one stop” approvals, no imports or licences, duty-free imports of raw materials, unlimited remittance of capital earnings and dividends, tax breaks, and no strikes.
1.2 EPZ’s Selection of Calabar as the Site of Nigeria’s Pioneer
Calabar, the site of Nigeria’s pioneer Export Processing Zone (EPZ), is an ancient and historic city with an illustrious history, having served as the capital of Nigeria’s southern protectorate in 1914.
This quiet but lovely city functioned as the Royal Niger Company’s operational headquarters during the oil palm trading era, as well as an age-old centre of study. Calabar is the capital of Cross River State in south-east Nigeria and is affectionately known as the “Canaan City” – “the biblical land of flowing with milk and honey.”
While one is unlikely to find milk and honey flowing on the streets of this enchanting and alluring city, one will undoubtedly discover the warmth and hospitality of the Calabar people in abundance.
There are other factors that make Calabar a good choice for the site of Nigeria’s first EPZ. The city has good transportation connectivity to other areas of the country and is traversed by the Trans-African Highway, which serves as a significant gateway to Cameroon and Central African countries.
Its modern harbour adjacent to the EPZ is a distinct benefit, resulting in significant savings for zone investors on shipping and haulage services. Calabar EPZ is located less than twenty minutes away from the city’s national airport.
Calabar and its surrounding areas contain a reservoir of qualified and trainable workers with extensive industry experience. Calabar’s current industrial activity is primarily focused on natural resource businesses such as oil palm, wood, limestone, rubber, cocoa, and coffee. However, oil and gas activities in the surrounding areas had an impact on industrial activity in the city.
Calabar is an ideal tourist destination due to its friendly people, rich history and culture, and numerous natural features. Attractions in Calabar and its surrounding towns in Cross River State include the Agbokim Water Falls, Qua Falls, the Gorilla Sanctuary in Kanyang National Park, the Obudu Ranch, and the Calabar Museum, which is situated in the historic Old Residency.
The well-maintained Calabar Golf Course is of utmost importance to avoid golfers. Efik cuisine and everything that it includes are a must-see for everyone who enjoys rich and tasty meals.
Calabar has been called as the “Calabar of delight,” and the Calabar EPZ promises to make Calabar even more delightful and profitable, particularly for zone investors.
1.3 Statement of Research Problem
The Calabar EPZ, like every other EPZ, has its own motivations for being established. Some of the challenges that this study is aiming to address include:
· Does the Calabar EPZ contribute to the anticipated volume of exports and foreign exchange?
· Does the Calabar EPZ attract projected industrial development?
1.4. PURPOSES OF THE STUDY
Thus, the study’s goal is:
· Describe recent free zone development patterns.
· Examine the possibilities of free trade zones to boost economic growth and development.
· Evaluate the compatibility of free trade zones and multilateral trade agreements.
· Establish a correlation between the presence of an EPZ and the host nation’s economic growth.
1.5. Relevant Research Questions
To meet the goal of this study, the following research questions will be answered:
· How much does Calabar EPZ contribute to Nigeria’s overall non-oil exports?
· How much trade between West African countries has Calabar EPZ facilitated since its inception?
· How much industrial development has occurred in the Calabar EPZ since its inception?
· How does Calabar EPZ contribute to the country’s overall industrialization?
1.6. Significance of the Study
A study of this nature is intended to offer theoretical and practical contributions to the impact of EPZs in countries around the world. The study will serve as a foundation for evaluating the costs and benefits of using an EPZ as an economic development instrument.
The study is also expected to help investors understand the overall operations of EFZs around the world. This study would also be beneficial to the government, organisations, and individuals involved in the formulation, design, and implementation of EFZ policies.
1.7 Scope and Limitations of the Study
The primary concept of this study is that EPZs have the potential to link with economic growth within the national economy as well as the integration of economic activity across borders.
This study will focus on all facets of EPZ. The investigation will be limited to EPZ Calabar. Information will be sourced through the Nigerian Export Processing Zone Authority’s Lagos office. This is owing to time and budget constraints in visiting all of the enterprises operating within the EPZ Calabar one by one.
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