Key questions this article answers:
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Asian countries like China and Malaysia have improved exports with Special Economic Zones (SEZs). How do they work?
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In Nigeria, SEZs started in 1992, but why are our exports not diversified and earnings still low?
On Monday, Stears hinted at how Special Economic Zones (SEZs) helped China achieve a diversified export base through Foreign direct investments (FDIs). After creating SEZs in 1984, FDI in China grew by 132x to $171.5 billion in 2008 from $1.3 billion in 1984.
Other success stories with SEZs exist in Asia, Latin America and Africa. But Nigeria has had SEZs since 1992 with the establishment of the Nigeria Export Processing Zones Decree, yet we haven’t recorded much success.
Why is this happening? And what can be done to solve the problem? These are the questions this article will answer.
First, we’ll unpack what SEZs are, then explore the issues with Nigeria’s SEZs and proffer some solutions. These steps are essential considering that exports were a recurrent theme throughout the manifesto of the President-elect, a departure from the import substitution regime under President Buhari.
What are SEZs?
Special Economic Zones (SEZs) are industrial clusters within a country with privileges other industries within the same country do not enjoy. An SEZ will have access to ports, tax incentives, easy licensing of products and so on. The goal is to allow these firms to enjoy economies of scale, ramp up production, and boost exports, improving the country’s economic competitiveness, complexity and overall development.
SEZs, industrial hubs, industrial parks, Free Zones (FZs), Free Trade Zones (FTZs) and Export Processing Zones (EPZs) are similar and used interchangeably. But for the sake of this article, we’ll stick with SEZs, which could be government-owned, public-privately owned (or joint ventures) or privately owned.
Also, each SEZ could be for specific commodities where the country
