INTRODUCTION
Free Zone may be defined as a geographical area, administratively considered as being outside the Customs territory of a nation and having a variety of fiscal and physical incentives that are intended for enhancing the global competitiveness of industrial, commercial or service oriented enterprises located within it.
The use of tax breaks, duty exemptions and conducive business environment from part of the economic enhancements in a Free Zone. Firms that engage in transnational manufacturing are subject to intense competitive pressures and thus seek for places to operate under cost reduction strategies that seek out possible ways of lowering production costs. While the cost benefit effects of tax incentives concern policy makers, the real politics of the market place, capital investment stimulation programmes which will eventually pay off in terms of employment generation, improved standard of living and poverty alleviation.
Generally, Free Zones are characterized by:
- a simplified business environment, explicitly designed to attract investment by offering clearly defined incentives;
- an enclave in which physical facilities and support services are operated to a high level of efficiency;
- the use of special Customs’ procedures to allow the landing of goods without immediate payment of import and taxes until goods are to be traded in the Customs territory;
- ease of administration of the applicable incentives.
The Livingspring Free Trade Zone project is sited in Osogbo, capital of Osun State in the South-West region of Nigeria. The project is conceptualized in line with the vision of expanding the economic base of the State by promoting rapid industrialization and facilitating commerce, thereby harnessing the vast resources of the State.
The project aims to create a conducive business environment that offers trade opportunities and supports efficient and profitable business operations. The Livingspring Free Trade Zone focuses on international trade, transit trade, bonded storage and export processing; as well as other ancillary businesses.
The Livingspring Free Trade Zone has been established with a regime of special regulatory and administrative incentives which include Tax, Customs, Immigration and other special concessions.
PROJECT SITE
The project sits on an ideal location within the South-West axis of Nigeria regarded as the centre of Yorubaland. Osun State, which houses the Livingspring Free Trade Zone is the foremost repository of Yoruba customs and traditions. The State is reputed to be one of the most peaceful States in Nigeria and can boast of infrastructure and abundant human resources that could act as catalysts for development.
In line with its policy of ensuring the rapid industrialization of Osun State, the State Government has commenced the development of the LivingSpring Free Trade Zone in Osogbo, the State Capital. The Free Trade Zone which is being developed in conjunction with private initiatives occupies a total of 1,607 hectares of land.
The scheme is being designed as an economic tool to attract industrial capital, generate employment, alleviate poverty, attract technical know how and promote the development of small, medium and large scale industrial enterprises.
LOCATION OF LIVINGSPRING FREE TRADE ZONE
The Free Zone site is linked to the Lagos International Airport and Apapa Ports through a double carriage way from Osogbo to Gbongan, 35km, Gbongan-Ibadan expressway, 45km and Ibadan – Lagos Expressway, 120km. There is also an excellent alternative route to Lagos through the Abere – Iwo – Ibadan – Lagos route. The Ido-Osun aerodrome, which adjourns the Free Trade Zone is being developed into a modern International Airport.
In addition, a rail line which is being refurbished links the Zone site to Lagos and the Northern part of the country. The same rail line is expected to be extended to the Eastern part of the Country in future. The implication of this is that evacuation of the Free Zone products by Air, sea and rail is assured in addition to securing raw materials from all parts of Nigeria.
Osogbo, the State Capital, which is about 3 kilometres to the Zone site houses the National grid of the Power Holding Company of Nigeria.(P.H.C.N) The implication of all these is that very little will be required to put most of the infrastructural facilities in place as only an extension and upgrade of facilities would be required.
CONCEPTION
In recent times, Government in Nigeria has recognized the socio- economic importance of the Free Zones’ Scheme as a tool for industrial dispersal and building blocks for the industrialization of States as well as serve as vehicles for poverty alleviation through the Scheme’s unprecedented employment potentials. It is noteworthy that such interests are not misplaced when it is realized that up to 60% of the total Chinese annual exports are from the Free Zones.
Fortunately, the Nigeria Export Processing Zones Act 63 of 1992 allows for the development, management and operations of Free Zones by:
- Public;
- Private and
- A combination of public and private entity.
ADVANTAGES:
There are concrete justifications for the development of the Livingspring Free Trade Zone. The Irish and Malaysian experiences have shown how Free trade Zone can bring about industrial dispersal and succeed, even if not located in the vicinity in the host country’s industrial centre. Indeed, this is the impetus behind the idea of the Living Spring Free Trade Zone.
The key advantage of a Free Zone, as perceived by investors, is the elimination of bureaucracy. It is estimated that there are at present, over 200 Free Zones in over 80 countries around the world.
INCENTIVES IN LIVINGSPRING FREE TRADE ZONE
Incentives provided for the Nigerian Free Trade Zone as enumerated in the Nigeria Export Processing Zones Act 63 of 1992:
- Exemption from Federal, State and Local Government Taxes.
- Non-payment of customs duties and levies.
- Duty free importation of raw materials, machines and spare parts.
- Duty free importation of capital goods, consumer goods, components, machinery and equipment.
- Permission to sell 100% of manufactured/processed goods into the domestic market on payment of applicable duty and taxes.
- 100% of foreign ownership of investment.
- 100% repatriation of capital, profits and dividends.
- Absence of import or export licences for companies operating in the Zones
- Absence of bureaucracy and one-shop for all transactions.
In general terms, therefore, it can be seen that, from the view point of the investors, a well established Free Zone can offer a standard of excellence in areas of critical importance to success in export-related manufacturing.
DOING BUSINESS IN OSUN STATE
Osun State, like other parts of Nigeria, is an agrarian state and produces varieties of agricultural crops, both for export and local consumption. Most of the exports are in form of primary commodities without significant value addition. Educated and skilled human resources are abundant and facilities are in good supply for sustainable training and retraining programmes. Despite the availability of these resources, industrial developments to tap these available resources are limited.
OBJECTIVES:
The major objective of establishing the Living Spring Free Trade Zone in Osun State is to establish an industrial “haven” as a “centre of excellence” in business development. A centre which is capable of attracting industrial, commercial and service companies into one safe and secure location with appropriate investment incentives to enable Osun state capture its own share of the people in the State and increase Nigeria’s capability in increasing its local content in manufacturing, both for domestic consumption and export. Since the succession of the Free Trade Zone is determined by the level of effectives and efficiency of the services provided, the Living Spring Free Trade Zone serves as a One-Stop Centre where all the relevant business facilitating Agencies shall act under one roof” This will ensure that all procedures are completed and provided within a single servicing centre.
The secondary objective is to create a base where the skill, capabilities and capacity of Nigerians could be enhanced through employment and learning on the job for skill, industrial and technical enhancement and adaptation. In addition, the Livingspring Free Zone in Osun State has been designed to act as major driver and catalyst to drive up business interests in the area; thus ensuring that the State is rapidly developed to stand on the same pedestal in industrial and commercial activities as in the advanced world. The trickle-down effect of the scheme could be magnificent, as Osun State will ultimately present another alternative to Lagos which has assumed a status of one of the most congested settlements in the world, as a result of rural urban migration, which occurs mainly because of job opportunities.
In summary, the Living Spring Free Trade Zone, Osun State, has been established to drive and create employment, drive export opportunities and expansion into the manufacturing and commercial sectors in Nigeria.
Industries to be attracted into the Free Zone are mainly products whose local raw materials availability have been proved by surveys conducted by officials of Osun State Government and these are:
- Cocoa Processing Factories from the abundant cocoa beans available in the country
- Industrial starch Production and other Cassava Products: Nigeria is one of the leading Cassava production Country
- Cashew and Coffee Processing
- Garments and Textiles
- Specialized International Hospital
- Pharmaceuticals
- Vehicle Assembly
- Solid minerals, gold, bauxites, diamonds, jewelry etc.
- Refinery
- Petrochemicals
- Shoes and leather product
TOURIST ATTRACTION
Apart from the other tourist centres in Nigeria, Ile-Ife, the cradle of the Yoruba nation is only 30 minutes drive from the Free Zone site. Osun State is a major repository of Yoruba culture. Therefore, investors who intend to relax have opportunities of visiting the renowned Oranmiyan staff and the Ife Museum. Other places of tourist interest include, the Osun Osogbo Shrine, venue of the Internationally recognized Osun Osogbo festival, the Olumirin Waterfalls, Erin-Ijesha, the Mbari – Mbayo Heritage, Idi-Baba Cultural Centre and Adunni Susan Wenger’s art works in Osogbo.
POTENTIALS FOR THE DEVELOPMENT OF FREE ZONE IN OSUN STATE
Osun State operates a free market economy which allows the government to be a business facilitator and provider of business- friendly environment. The current administration is also business friendly.
Osun state is a typical State in Nigeria, possesses a wealth of human and natural resources and given the right environment, the potential for growth and investment is significant. This environment would however require the proper economic structures which would function positively to create the proper climate for success. This climate could easily be achieved in Osun State within the context of a multi-purpose Free Trade Zone, which would reduce the effect of the hurdles listed above.
In order to improve the lack luster performance of the State in industrial growth and to diversify its economy base, the present administration has embarked on aggressive industrialization programme which is being spearheaded by the development of a world class Free Zone. The Zone, as a “Centre of Excellence” will reduce the cost of doing business.This is in addition to other industrial estates planned for development in phases in future.
EMPLOYMENT GENERATION
It is estimated that 2457 standard industrial plots will be accommodated within the 1608 hectares of the Livingspring Free Trade Zone. It is also assumed that Low and Medium Scale Industries with high capacity for employment generation shall be attracted. Given an average of between 150 to 200 employees per factory, it is expected that 300,000 t0 400,000 people will benefit from direct employment of the factories in the Zone. These factories will create market for major primary commodities like cocoa, timber, cassava, pineapple, oranges etc. already identified as potentials for industrial opportunities.
The demand for these primary commodities will create a demand pull on producers of these commodities to expand their production. To every one job created in the Zone, the demand pull on raw materials, services and other items will create triple the number employed in factories in the Zone. This will significantly assist in reducing the current unemployment in Osun State and indeed, Nigeria.
