Enelamah: We’ve Reached Point of No Return on Economic Zones Company

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Okechukwu Enelamah

Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, was literally in the eye of the storm, following a mild controversy with members of the National Assembly over the status of the federal government-promoted Nigeria Special Economic Zones Investment Company (NSEZC), a special purpose vehicle designed to build infrastructure and drive industrialisation across the geo-political zones. In this interview, with Ndubuisi Francis, Enelamah says the fog over its ownership has been cleared. He also addresses other pertinent issues. Excerpts:

Having spent about four years in office, what would you consider as some of  your achievements?   

The more I spend time in public service, the more I understand the power of partnership. Partnership, in the sense of different stakeholders coming together, to guarantee harmony. And I say this in the context of public service, to the people that you have come to serve, sometimes it’s humbling you realise that you serve best when you serve a wider team that’s working together for the common good. And if I step back and reflect on the three and half years that we have been here, I have to start by saying that when I was given the opportunity to serve, the first thing was that  I took bearing from the vision of the president. And the vision of the president ,which I think is relevant is the three-point agenda, which is securing the nation, fighting corruption and importantly the economy. What became clear (same point I made about understanding the power of partnership) is that it’s always important to remember that unless you work as a team, you won’t be effective.

So, if you think about the economic agenda, for instance, part of the broader vision on the Economic Recovery and Growth Plan which was developed after the first year when we had something called the Strategic Implementation Plan, which is part of the things you have to get right to stabilise an economy that was already going into recession. Within that context, the plan we have for the  Federal Ministry of Industry, Trade and Investment is situated. I will just to make a couple of comments on the ERGP. One is that, in terms of the objectives, I think it’s right. There are three objectives that remain highly relevant; one is to focus on quality growth, two is investing in our people, I’m very obsessed with the issue of enabling environment, which is one priority of our ministry and I believe that if you sort that out, you will fix Nigeria. Third is trade. This, as you know, deals with your interactions both domestically and internationally. What we focused on was: how do we create a relationship or partnership that will foster trade, both domestic and international trade? How do we recognise favourable trade agreements or relationships? The fourth area we focused on was micro, small and medium enterprises. You will agree with me that if you can champion the course of MSMEs to the point that we will address most of our problems. If every MSME created jobs, then you will be looking at more jobs than we need. The final area is investment, which is why these three pillars  are tied together–industry, trade and investment. The good news is that on each of these things, we have achieved major reports, several initiatives and some still on-going.

I talked about industrialisation, being the pillar of our five-point agenda in  Ministry of Industry, Trade and Investment. Under industrialisation, there are three policies that we are pursuing– that we think will make an impact on industries or industrialisation overtime.

The first one is that we have established an industrial council, something called Nigerian Industrial Policy and Competitiveness Advisory Council, which the membership is made up of leading stakeholders in the private sector and senior members of government, ministers, CBN Governor and it’s chaired by the vice president and I am the vice chair. The whole idea of this industrial council is that we look at the critical issues affecting industry, with a bias for implementation. There are six broad areas we focus on which are critical –infrastructure, financing for industry, policy stability, skills acquisition and vocational training, trade and market access and finally working with the states. From the point of view of basically making sure that the things industrialists and manufacturers want from the state, whether it’s in terms of land, addressing multiple taxation and so on, they are addressed. The second area, which is where this question is focused on is that we also decided that we would do industrial infrastructure. First, we look at all the countries that have been industrialised, in fact, the rapidly industrialised countries in the last 30 years. We saw a common trend; we recognised that when it comes to infrastructure, it’s simply too complex. We also understand that industry is so important that they prioritise infrastructure for industry, and they concentrated their efforts in terms of power, transportation and logistics to make sure those places became very competitive centres of excellence and that does a lot when it comes to rapid industrialisation. Nigeria has talked about it for 30 years, but we have never really added concerted effort to break the back of this problem and doing it. So, one of the things we focus on is doing it. We also focused on sector reforms within industry– what are those sectors or areas within the industry or commodities or products where we have a comparative advantage, where we ought to have specific policies that will help grow those things here and produce them here? And normally, agro-processing— you know Nigeria is very endowed when it comes to agriculture and petrochemicals. In those two areas, we have come up with various policies to address particular commodities or products. So, if you like tomatoes, cassava, oil palm, cashew nuts, cocoa, these are things that we did in the past and the point is that how do we ensure that we produce them in sufficient quantities and quality and also process them?

And we have done a number of things. You then come back to the question of industrial clusters and special economic zones. When the president went to China in 2016, I went with him. He visited a number of special economic zones in China and it was an eye-opener. While there, we met one of the top advisers, who is a chief economist at the World Bank, who is now in the business of advising other countries on what they did. We invited him—he came and shared their experience with us. When we came back, we now decided to launch project made in Nigeria for exports. This is because if you can produce to the point where you are competitive enough to export, then you will be competitive enough theoretically as well and addressing problem of basically import. And in order to do that, you come back to industrial infrastructure, and knowing that we can’t afford the resources, the know-how or capacity to do it all alone, we decided to pursue a strategy of public and private partnership with other players who are interested. We targeted raising $500 million in the first instance to just build this industrial infrastructure, but in a way that will be done to world class standards, using world class governance, management and policies and operations. We called that initiative Nigeria Special Economic Zones Investment Company. I’m sure you have heard the talk about a private company, the so-called private company uses private-public partnership which the president supervised a signing ceremony with these other investors on February 8. It was a high point of more than one year of work. So,  trying to dismiss that effort as the main effort of one man is mind-boggling. It’s just one of those surprises which you have to deal with operating in Nigeria because it raises the question of what more could you have done. If the president of a country sits over a ceremony where investors come in, we are talking about the likes of Afrexim Bank, AfDB, African Finance Corporation , Bank of Industry and Nigerian Sovereign Investment Authority… Now, these five players with the federal government owning 25 per cent through the Ministry of Finance Incorporated were those that came together; two of them came as observers, two signed the agreement. Afrexim Bank and Bank of Industry and one signed an MoU to complete their work–Nigerian Sovereign Investment Authority. And all that work has progressed since then. The reason that is important is because you’re targeting raising $500 million with the federal government providing 25 per cent and we have been working on that, and we are looking to establish world-class modern industrial parks across the country. We are also looking to revamp two existing industrial parks that the government owns—Calabar industrial park and the one in Kano. And all that is on-going because we have gotten approval. What we are doing now is attempt to establish three more as a module. We have one in Lekki where we are trying to do one for export of textile, garments and another one in Abia State and it’s a huge site— about 9,000 hectares and another one in Katsina for cotton and all these things have received approval and we are now going through the budget process, which has been a subject of media attention in the last several weeks.

The whole idea is that this will continue for the next 10 years. What do we want to achieve with these? We believe that if we do this right, we will be able to generate over $30 billion of exports. And this could become an annual stuff once it reaches maturity. The research also showed that we will create 1.5 million direct jobs, and for each direct job we create, you create six or more indirect jobs. So, we are basically looking at 10 million jobs. We also want to move manufacturing industry from 10 per cent of GDP to 20 per cent. This is an extremely important initiative of the government and it is important it’s reported right so that people can understand and support it. 

First, we have worked with the senate on this. They actually helped to select some places where we are doing the feasibility studies and expansion. So, if you go to 2017/2018 budget, you will see it. What happened was I believe that some mischief makers went to the senate and told them to watch it; that it looks like a private thing. That made them raise the question that, how come we are trying to establish Nigeria Special Economic Zones Company, whereas for example, Nigeria Export Processing Zones Authority (NEPZA) can do it? And if you are partnering the private sector you can’t tell them to come and buy shares, they cannot buy shares, it’s an agency. So, telling NEPZA to do it is ill-advised unless NEPZA will register the company. And we are working with NEPZA; we have a steering committee where we included them. However, mind you, it’s not necessarily a bad thing that questions are being asked. The important thing is those questions need to be addressed and we need to stay focused and achieve the result. And my recommendation to the government will be that the engagement must continue and also the investment must continue. We have passed the point of no return; the president has supervised the signing agreement and they are legal agreement. Work is ongoing and I believe we will implement them the right way. 

When you say budget, I told you that the target we are trying to raise is $500 million, so 25 per cent is obviously $125 million.

Will $500 million be enough to set up three special economic zones and provide facilities for them?

These things have a multiplier effect. If you look at my previous background, I was in the equity business. $500 million is the equity. This means that any company capitalising $500 million, first of all, can raise multiples of that effect. The reason they are interested is not just because they will contribute the equity, but also because they will provide the infrastructural financing, the project financing. In fact organisations like African Finance Corporation told us that their main interest is infrastructure, inside and outside– infrastructure as project finance. But obviously, we are saying come together as a club first, own this umbrella company that will supervise and provide management and goodwill. It also gives us an opportunity to work with the rest of the government, so the special economic zones will be included in our plan. It will be the focal point in terms of making sure that the projects actually receive attention and are properly implemented to world class standards. 

You said attracting investments is one of your major focuses. Will you be able to put a number to how much you have been able to achieve in this regard?

Investments can be looked at in different forms, there’s foreign and domestic investment, there’s portfolio investment and then there’s direct investment. Let me focus on direct investment. If you look at foreign direct investment for instance, when we came in, it had declined because of the oil price and pressures on the currency. What we did was to strengthen the Nigerian Investment Promotion Commission. We also re-launched the Export Expansion Grant. We are now starting monitoring and all those things were to engage businesses and various stakeholders. The first sign that you monitor is the commitment people make; the investments people have announced. I will give you another example: when the president was in China last year for the Forum on China—Africa Cooperation( FOCAC) as it is called, we met with the Ruyi Group, one of the largest and most successful Chinese international textile garment companies. They committed to invest $2 billion in Nigeria. If we go ahead with our industrial infrastructure now; if you look at the investments that were announced just for last year, the commitment people announced at the state level and federal, which is by Nigeria Investment Promotion Commission (NIPC), it’s over $90 billion, the year before it was over $70 billion, the year before that it was over $60 billion. Now, the challenge for us as a country and as a ministry is how much of this do we convert. And we must convert more. The conversion rate of this commitment people have shown is the key. And that’s why we know that Nigeria has the potential. I do believe that we are well on our way but we must go back to that enabling environment because what they need is the right environment so that when they put in their investment, they will suffer loss.

The credit goes to NIPC primarily; what they did was to basically look at what should be pioneer industries and because we need investment, we have chosen to be brothers, none of any industries here in Nigeria that has not achieved maturity. When you want to invest, you should consider it a pioneer industry. 

The issue of African Continental Free Trade Agreement (AfCFTA) comes to mind. Nigeria is yet to sign. What is your take on that?

I will answer that question in two parts, the first part is that, the African Union summit, which is the highest decision-making body for heads of government and state, made the decision rightly that they need to improve intra African trade. If you look at every other region in the world, the African trade hovers around 15 per cent; that is trade within. So we are way behind. The AU summit is right on a lot of things: why don’t we enter an agreement that will create the rules and basis right by recommending collaboration?.  But having 12 to 18 months for a country framework agreement, most people decided to get the agreement signed by the heads of state and then go, engage your people, get into the details of the agreement, terms of the agreement. Then have to do what programmes as I call it. This is where you spell out in detail what you’re going to do. So, right now, when it became clear, that was re-inforcing the framework agreement in Nigeria, which was a different pattern, I think, probably the beginning of it.  For most of our stakeholders, understanding the prowess of this agreement said, you know that you need to understand what’s in it. The president considered that and he wisely decided that he will hold up, let’s do those stakeholders’ engagement. You don’t know what the consequences are, you may end up compromising something or making it a dumping ground. So on the basis of that, they decided to not sign it, not to sign immediately. That work took over a year to be completed. Now, having finished that work, the president now asked for impact assessment, the pros and cons. So he set up a committee chaired by myself and the chief of staff to the president, basically to oversee a technical group. I am hopeful that the president will sign the agreement which includes remedies and plan of action and how we will engage and make the most of it. The point is let’s do it well and I think Nigeria has such strategic importance. By doing it well, we can provide leadership.

I expected you and your team to take a more vigorous campaign of encouraging Nigerians to patronise made-in-Nigeria goods. What is your take, sir?

Yes to an extent, it is the duty of the government plus plus.  I said plus plus because first government has a duty to make it viable to produce here, the enabling environment so that people can produce here. Secondly, government has a duty to lead by example. But we have put some measures in place and those are landmark measures. Look at Executive Order number three, government has committed itself and said 40 per cent of whatever it buys will be made in Nigeria and of course that directive has gone out to all our ministries, departments and agencies. Government also put up an Executive Order number 5 saying that where services (it could be technical services) can be provided by Nigerians, please use them first. Now, what are we doing to market, to promote or advertise? That’s the part that is collective, because those that are producing goods will advertise their products and government will do an umbrella advertisement. Made in Nigeria is good; we took to cabinet, a comprehensive proposal with the Ministry of Information and Culture about made in Nigeria which was approved and of course the implementation. Like you said, I wish it’s more vigorous. We have to be ahead of ourselves. That’s why I said the goods have to be there. We have to help them to increase that local value. Rome wasn’t built in a day.

On export promotion, your policy on ease of doing business is being hamstrung by the problems you have at the seaports. For instance, about two months ago, some exporters were lamenting that cashew nuts billed for export were held up at the seaport for about eight months. How do you juxtapose that with your export promotion mantra?

If you are not careful, you forget that you can’t actually work alone. The ports, which as we know is all about Customs, talking about technology right, must cooperate with us. If not, our efforts will be a struggle. There are at least three that we are doing, but we need to speed it up. We need technology for clearing goods at the ports, we need infrastructure to evacuate goods at the ports, and that infrastructure includes distributing the ports. As you know, the other day, government approved another port in Warri and it’s a multi-billion dollar project. There’s an ongoing effort to build ports around the South-south and the final thing I will say is that you need better collaboration and policies, for people bringing their goods, whether in terms of standards, someone trying to do inspection. Government has a policy that they are trying to make sure that the particular arm of government that will enforce that will respect that policy and enforce it. So there is a lot of work being done to create better synergy and collaboration.

 

Why is it difficult to open up the ports?

Your question is a good one. To establish a port is very capital intensive and you have to see it through. If you don’t see it through, you have an abandoned project. That’s why you need continuity and the arms of government working together. Look at the Lekki seaport, which they have been working on. They have to raise the funds to $2 billion, as it turns out, they only have the equity part. It’s taking them two years. That’s why it’s important that this one we are doing now, where the government has said we will lead the efforts with Chinese. Now on SMEs and ease of exports, I will say a couple of things. One is that there’s an agency that is focused singularly on exports and that’s Nigeria Export Promotion Council and they are one of the agencies under my ministry and they are very proactive. Also, the Presidential Enabling Business Environment Council and its secretariat are focused on ease of doing business and it’s focused on making life easier. Thirdly, various trade associations… that’s why for each of these products there’s an association. They are there to promote exports. Just people need to plug the eyebrows and I do believe that when people plug it, they will get information.