Maximising FG’s Delineation of Free Trade Zones at Airports

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By Chinedu Eze

Recently the federal government announced the designation of five international airports as free trade zones to support the implementation of both the African Continental Free Trade Area (AfCFTA) and Single African Air Transport Market (SAATM) agreements.

These airports include the Murtala Muhammed International Airport (MMIA), Lagos; Nnamdi Azikiwe International Airport (NAIA), Abuja; Mallam Aminu Kano International Airport (MAKIA), Kano; Port Harcourt International (PHIA), Omagwa, and Akanu Ibiam International Airport, Enugu.

The Minister of Aviation, Senator Hadi Sirika said that the facilities at these airports would be upgraded to meet international standards so that they would compete effectively with the best facilities in Africa.

Industry observers said that the major challenge would be how to maximise the benefits of these free trade zones, noting that such facilities should provide a platform industrial development, boost in export and impetus to manufacturing.

THISDAY spoke with a specialist in this area who is the Managing Partner, TMSS Logistics and former General Manager, Business Development, Federal Airports Authority of Nigeria (FAAN), Alhaji Nuhu Adam who pointed out the invaluable gains of a free trade zone, noting that if entrepreneurs and foreigners who wish to invest in the country, explore the offer given by the federal government, the free trade zones would become a game changer in business enterprises around these airports.

Alhaji Adam noted that of the five airports, Port – Harcourt airport has the advantage of a complimentary existing Onne Oil and Gas Free Zone, stating that the logistics hub of this zone should take advantage and set the ball rolling immediately to sustain the gains for Oil and Gas cargo, while building capacity at the airport for agro allied export and others, using the aviation logistics hub.

“Practice in developed and developing countries indicates the existence of numerous and heterogeneous free zones as well as the different role which they have in the economic development of countries that have implemented them.

Different industry-specific economic zones can be created to fill certain business needs with the ultimate goal of empowering the economic potentials of the countries in which they are situated. It is along this premise that we make bold to say the free trade zone would offer a huge potential for continental aviation given the potential of Nigeria’s dominant market in the West and Central Africa,” he said.

Adam said the Nigeria aviation logistics hub is about to experience a game changer if the Free Trade zone is well coordinated and implemented and private sector driven.

“Aside the increase in the dynamics of economic activities, it will also encourage the advancement of Foreign Direct Investments (FDI) in aviation value chain, including the establishment of Original Equipment Manufacturers (OEM) supply chain, Fixed Based Operators (FBO), capacity building and generation of new entrepreneurial opportunities in e – commerce fulfilment; this is in addition to the likely changes in the real estate market in the airport and its environs among other services,” he also said.

Adam identified the benefits accruable to the establishment of a free trade zone and observed that there are loads of advantages available to a company operating within a Free Zone including, but not limited, to the following depending on the model approved for the airport free trade zone.

“No pre-shipment inspection and issuance of Bank Form M required prior to shipment of material from the country of origin. Customers with Bank Bonds executed with the Customs can take their goods into the Nigerian territory after examination and within a very short time.

“While importing cargo the traditional way, you’re subject to clear your material and equipment and pay Customs Duty within 30 days. In the Free zone you are enjoying unlimited time to custom clear your consignment,” he disclosed.

Adam explained that this makes for increased shipments and cargo movements, enhances better cash flow management in terns of Customs Duty Scheduling System and with a Bank Bond/Guarantee in place, “you will be able to obtain Customs release of cargo required in the Customs territory.”

He said that payment of duty/perfection of Customs entries is then scheduled to be completed within 14 days after delivery – thus deferring Customs Duty payment and obtaining a better cash flow.

“This further translates into increased revenue and earnings in the associated private sector (airlines, clearing/forwarding agencies, banking/finance, services and supplies), increased government revenue and earnings (for Nigerian Customs, Nigerian Civil Aviation Authority, Federal Airports Authority of Nigeria, Cargo Handling Companies, Federal Inland Revenue Service, among others),” he said.

The free trade zone, he said, would enhance the creation of job opportunities and entrepreneurial development of budding investors, technology transfer and enhancement of local content participation in the nation’s Aviation industry, no VAT and withholding tax chargeable on Free Zone storage facilities, services and activities and no corporate and personal income tax payable.

“There will be easy facilitation of expatriate employees working in the Free Zone. No expatriate quota and residence permit are required for the expatriate staff working and domiciled within the area delineated as the Free Zone territory,” Adam also said.