On Tuesday, April 11, 2023, the news broke of President Muhammadu Buhari’s approval of the Free Trade Zone (FTZ) status for the Ekiti Knowledge Zone (EKZ). I heartily congratulate the Ekiti State government and Ekiti people on this momentous occasion. Thisdevelopment is a major milestone in the economic vision for Ekiti that was birthed during the first term of Governor John Kayode Fayemi(JKF1). It is certainly worth celebrating and this development presents an opportunity to acquaint Ekiti people of the EKZ vision and of the further actions necessary for its success.
As we conceived during my tenure as Commissioner for Trade, Investments, and Innovations, EKZ is to be a physical Special Economic Zone that will enable Ekiti transform from a rural, agrarian economy into a global economy. A base for promoting knowledge-based industries to leverage the knowledge assets associated with the state. Having a free trade zone status is key to linking the vision toglobal markets and resources. With a FTZ status, global companies and institutions can operate from the Zone under special terms and conditions and enjoy special privileges not available outside a FTZ.
Ekiti generations to come will be grateful to President Muhammadu Buhari for his support for this far-reaching vision. Also deserving of acknowledgement is HE Otunba Niyi Adebayo who used his office as the Honorable Minister of Trade and Industry to recommend and push the FTZ status. In the same vein, HE John Kayode Fayemi deserves all the credit for believing in the vision, making it a top priority in his second term and for following through to secure this much-neededFTZ status.
One must commend the EKSG teams that have worked from its conception to get this vision to where it is today. Worthy of note is the original EKZ Steering Committee made of illustrious Ekiti sons and daughters, at home and in diaspora, drawn from both academia and industry, led by Dr. Tunji Olowolafe and Prof. Mobolaji Aluko. The Committee deserves kudos for working to hone the vision and drawup the framework for the EKZ starting in 2013 and through to 2014.Their efforts will stand out to all their credit in the annals of history when the EKZ vision is fully actualized.
What does a Free Trade Zone (FTZ) status for the EKZ mean?
With a full FTZ status, the EKZ is empowered to introduce regulations and standards as it deems fit to operate as an international economic zone. It means EKZ can attract domestic and global companies with up to 100% foreign ownership allowed and without limitations on foreign expatriates that can live and work in the zone. As incentives, these companies will not have to pay federal taxes or custom duties on imported goods. Conceptually, the Zone will have its own customs and immigration services. If done right, as an FTZ, EKZ will be able to attract massive foreign direct investments without the inhibitions that usually keep foreign companies from Nigeria. It will operate like a country within another country. The vision is to use EKZ to showcase what is possible in Nigeria when you create an environment with the right vision, manpower, standards, and infrastructures. This use of Special Economic Zones is one of the secrets behind Dubai’s economic success! How this FTZ status is used is critical to the success of EKZ.
What are the other key success factors to realize EKZ vision?
While FTZ status is what makes EKZ more than a mere local economic agenda, there are still major factors to consider in realizingthe dream. It is a well published fact that 99% of Free Trade Zones fail in Nigeria, and even elsewhere! It is therefore imperative to avoid the pitfalls and be ready to learn from the successful 1%, locally and internationally. The non-trivial goal is for EKZ to succeed where 99% fail. While some of these factors may have been addressed or under consideration by the current administration, it is vitally critical that they are revisited and done right. Reflecting on lessons learned from the successful Special Economic Zones we reviewed and visited, let me highlight some of these success factors as follows:
• Comprehensive EKZ Masterplan: We started the masterplan under JKF1 but were not able to mobilize the international consultants before there was a regime change. This is a critical document that must be completed with utmost diligence and critical thinking. It must be functional, operational, and comprehensive. International consultants with a track record of completing similarprojects must be engaged to lead and develop the document. It must inspire the trust and confidence of global players to be attracted to the Zone. The process of constructing the masterplan will elicit all critical issues to consider and ensure clarity of vision and project scope, and aid proper execution. It will address all ramifications of the project and related government actions and policies for success. It will also be a valuable reference document to target development partners and project sponsors. The masterplan should be far more detailed and comprehensive than what was required to obtain the FTZ status. Realizing the reasons for failure of 99% of FTZs in Nigeria makes a comprehensive masterplan constructed by internationally reputed consultants with cognate experience a prerequisite for success!
• Marketing and Promotion of EKZ: In places where Special Economic Zone projects have succeeded around the world, it involved appropriate packaging and promotion among target partners and stakeholders. EKZ will require a high-powered and strategically selected team, led by the Governor as the Chief Promoter, to seek the input and endorsement of critical companies and institutions, some of which will be targeted to consider presencein EKZ and/or make strategic investments in the project. The viability of the EKZ requires mega investments from private-sector institutions and development partners. For global reach, it is important to obtain global visibility and endorsements.
• Private Sector Drive: EKZ was envisioned as a government-led but private-sector driven project. The strategy to propel the growth and development of EKZ vision through the private sector requires adequate attention. A lot can be learnt from Dubai in this regard.EKZ was conceived to be funded by the private sector, knowing fully well that Ekiti does not have internal resources to embark on a project of this magnitude. It cannot be driven by government staff or political appointees.
• EKZ Authority (EKZA): While I understand that some work has been done on this, there is need to revisit the issue. There is the need to create and empower, by law, an Ekiti Knowledge Zone Authority, an autonomous, self-sustaining, entity with authority to supervise and regulate the EKZ. EKZA must be insulated from governmentbureaucracy and vagaries of conflicting policies of successive regimes. EKZ is a long-term project which must be insulated from shifting priorities of governments.
• Functional Airport: Global patronage of EKZ requires a functional local airport. This was why an airport was part of the integrated economic vision contemplated for Ekiti. The location of the airport informed the location of EKZ. Continued reliance on Akure airport to support EKZ vision will jeopardize the realization of the economic vision and leave the control of a critical infrastructure in the hands of another political jurisdiction. A functional airport will allow EKZ to draw business away from Abuja and Lagos. It will bring Ekiti as close to Lagos as Ogun state. This was all documented in the working documents for EKZ.
• Focus on Knowledge-based industries: It is crucial that EKZ maintains its focus for proper appeal, branding, and international credibility. The “Knowledge” in EKZ name is intentional to communicate that the Zone is intended to promote and commercialize knowledge. It is to house industries where knowledge, creativity and innovation are the most critical components. It is to harness the potential of intellectualism of Ekitias a unique selling point. Knowledge-based industries create massive wealth with minimal capital investments. They offer the opportunity for Ekiti to quickly demonstrate superior competitive advantage given its access to significant knowledge assets scattered around the world in Healthcare, Education, ICT, Financial Services, Legal studies, to name a few sectors. It is not just about an IT hub or educational institutions. Locating manufacturing or resource-based industries within a knowledge-based FTZ, like EKZ, will lead to confusion and damage the chances of attracting the right kind of companies to operate in the Zone. Imagine having manufacturing outfits within Knowledge Village in Dubai or within Cyberjaya in Malaysia! These are themed zones. For example, EKZ can immediately pursue to become home for the first International Arbitration Center in Africa. Also, if done properly, many financial services providers in Nigeria will recognize EKZ as a choice location to operate from given the FTZ status and the superior infrastructure. Ekiti government can create other theme parks for manufacturing and other business activities but such parks must be ready to compete with other states better reputed for such activities. Furthermore, the infrastructure implications for resource-based industries are far more capital intensive than for knowledge-based industries.
• An intentional manpower development drive: A comprehensive masterplan would help the EKZA/EKSG to contemplate the manpower profile of EKZ in a few years. This would call formanpower development strategies to make sure that Ekiti youths and residents take full advantage of EKZ vision. Tens of thousands of quality direct jobs are to be created through EKZ. It is expected that most of these workers will be people of Ekiti, but they will have to meet requirements for the jobs that will be created in the Zone. Since EKZ is to be driven by the private sector, workers will requirecompetitive skills and credentials; but given the current situation in Ekiti our youths will not qualify if we do not have intentional programs to train, re-train and develop them. Otherwise, EKZ will exist solely to benefit people from other states. With foresight manpower development policy in EKZ can set requirements that ensure that expatriates in the Zone are made to train and equip Ekiti workers.
Once again, I congratulate the incumbent governor of Ekiti, HE Biodun Oyebanji, for this development and I pray that God will guide him to advance towards the realization of the economic potentials presented by the FTZ status of EKZ. It is indeed a great opportunity to transform lives for Ekiti people and to attract manpower from around the world to make that vision a reality.
Debo Ranti Ajayi, M. Math, FSA, FCIA, MAAA
Pioneer Commissioner for Budget and Economic Planning, Ekiti State
Former Commissioner for Trade, Investments and Innovations, Ekiti State