IMPACT OF EXPORT PROCESSING ZONE ON ECONOMIC INTEGRATION OF WEST AFRICAN COUNTRIES

ABSTRACT

In this research project Export Processing Zone (EPZ) is defined as zone designed and designated by the Government of a nation, to attract local foreign investment towards industrial development of export purposes. EPZ enterprises and developers enjoy a liberal operating environment with range of incentive provided by the EPZ Act (such as long period of tax holiday, high quality infrastructural at the zone etc) which enterprises outside the zone do not enjoy at the same rate.

Enterprises and projects to be operated within EZP are usually assessed based on the job creation, non-traditional export product development, technology transfer and training of workers, incremental productive investment and backward linkage with the nation economy. EZP Calabar is used in this project as a case study to appraise the impact of EZP in economic integration of West African countries.

The dissertation has focused on making theoretical and practical contribution to the impact of EZP not only in the West African sub region but generally in countries of the world, this study has been designed to weigh the costs relative to benefits of an EZP as a tool for economic development.

Various relevant literature, on ideas, studies and write-ups were used for this research topic, they were all blended together under different headings in the study to shed light on the impact of export: processing zones towards the economic development of a nation.

Specific; issues were dealt with such as re-statement of the research questions, the research design, characteristics of the study population, population and sampling, techniques of data collection, questionnaire assumption, questionnaire administration concept of reliability and procedure for processing and analyzing data.

Special analysis of the quest were made and the responses obtained in view of the need to answer the research questions were developed in chapter one of this study using percentage calculation as mat tools hr. analysis.

Various findings, suggestions and recommendations of immense benefits were revealed in the last chapter of this dissertation.

This study is a worthwhile exercise, knowledge impact, having theoretical and practical significance, which has provided insight on the Calabar EZP as a tool in fostering economic integration among countries of West African sub-region.

CHAPTER ONE

INTRODUCTION

1.0     BACKGROUND TO THE STUDY

This study is aimed at showing the impact of export processing zones on the economic integration of West African Countries.

Export Processing Zones have been given various terminologies, as perceived and understood by various countries and institutions all over the world (but with the same trade idea in mind). The traditional term since nineteenth century is ‘Free Trade Zone’. UNCTAD, USAID, and United Arab Emirates call it Free Zone’. Harvard University World Export Processing, Zone Association (WEPZA) and the World Bank call it Export Processing Zone’. The Organization for Economic Co-operation and Development (OECD) calls it Free Export Processing Zone.

Since the 1980s, EPZs have been promoted as a way of industrializing through export processing EPZ countries (of which Nigeria is one) are usually those with many people employed in agriculture, exporting low value agricultural goods, with high unemployment, local production for local markets, low levels of foreign investment and economic stagnation.

Embracing EPZ idea signal that a country is replacing in inward-looking development strategy based on import substitution with an outward oriented development path. The World Bank see EPZs as a first step towards greater economic liberalization, to integrate protected countries into world markets EPZs are thus one part of a broader program of liberalizing economies to global competition and free trade.

In 1970, about 50000 workers were employed in EPZs worldwide. By 1990, their number was estimated to be up to 3.5 million (ILOIUNCT AD Geneva 1988, SATUCC/TARSC, 1996). Differing figures are a result of different EPZ definitions. Some consider only fenced off EPZs and others such as that of the World Export Processing Zone Association (WEPZA) include “all government authorized areas such as tree ports, free trade zones, customs free zones, industrial free zones and foreign trade zones”.

Generally speaking, an Export Processing Zone is a trade zone designed and designated by the government of a nation, to attract local and foreign investment towards industrial development for export purposes. EPZ enterprises and developers enjoy a liberal operating environment with range- of incentives provided by the EPZ Act (such as long period of tax holiday, high quality infrastructure at the zone, etc) which an enterprise outside the zone does not enjoy at the same rate.

Enterprises and projects to be operated within the EPZ are usually assessed based on job creation, non-traditional export product development, technology transfer and training of workers, incremental productive investment and backward linkage with the nation’s economy.

In view of the above background, this study is designed to use the EPZ Calabar to measure the extent of’ economic integration and development of West African countries as a result of the zone.

1.1     HISTORICAL BACKGROUND OF CALABAR EPZ

The implementation of Nigerian Export Zone Programme with the enactment of the law, the Nigerian Export Processing Decree in 1991. The provision of the regulatory and administrative framework permitted the prompt commencement of the: construction of physical facilities at the site of Nigeria first export processing zone, Calabar EPZ in River State in the South-East of Nigeria.

Administration of the Nigeria EPZ program is vested by law in the Nigeria Export Processing Zones Authority (NEPZA). NEPZA is empowered by law to grant all requisite permits and approvals for operators in the zones to the exclusion of another government agencies and bodies. The Nigeria EPZs regulatory framework is liberal and provides a conducive environment for profitable operations.

The incentives available to operators in Nigeria EPZ’s compare favorably with the most attractive in the world and are the best in region. They include 100% foreign ownership of investments, “one stop” approvals, no import or licenses, duty free import of raw materials, unrestricted remittance of capital profits and dividends, tax holidays and no strikes.

1.2     EPZ CHOICE OF CALABAR AS THE SITE OF NIGERIA’S PIONEER

Calabar, the site of Nigeria’s pioneer Export Processing Zone (EPZ) is an ancient and historic city with an enviable past, having served as the capital of the southern protectorate of Nigerian and southern protectorate in 1914.

This quite but beautiful city served as the centre of operations for the Royal Niger Company during the days of the oil palm trade as well as being an age long- centre of learning.  Calabar presently the capital of the Cross River State in the south-east Nigeria and is fondly referred to as the “Canaan City” – “the biblical land of flowing with milk and honey” although one is not likely to actually find milk and honey flowing on the streets of this enchanting and alluring city, one will definitely discover the warmth and hospitality of the people of Calabar in abundance.

There are other attributes, which make the choice of Calabar as the site of Nigerian pioneer of EPZ as excellent one. The city has good road links with other parts of the country and us traversed by the Trans-African Highway and major gateway to Cameroun and the countries of central Africa. It modem seaport adjoining the EPZ is of special advantage and will result in significant saving for shipping and haulage services for investors in the zone. The city’s national airport is less than twenty minutes from the site of Calabar EPZ.

Calabar and its environs have a pool of skilled and trainable manpower with significant industrial experience. Most significant industrial activity in Calabar is currently in natural resources-based industries such as oil palm, wood, limestone, rubber, cocoa and coffee. However, the oil and the gas activities in nearby areas also had some impact on industrial activity in the city.

The disposition of its people its rich history, culture and several natural attractions make Calabar an ideal tourist location. Attractions in calabar and within surrounding towns in Cross River State include the Agbokim Water Falls, Qua Falls, the Gorilla Sanctuary in the Kanyang National Park, the Obudu Ranch and the Calabar Museum which is housed in the famous Old Residency. Of paramount interest to avoid golfer is the well aid out Calabar Golf Course. For those with a keen interest in culinary delights, Efik cuisine and all that it entails is a must for all lovers of rich and delicious food.

Calabar has described as Calabar of delight, the Calabar EPZ promises to make Calabar more delightful and profitable especially for investors in the zone.

1.3     STATEMENT OF RESEARCH PROBLEM

The Calabar EPZ, like any other EPZs has its own reasons for being set (Some of the issues that this study is designed to addressed are as follows:

·        Whether the Calabar EPZ is contributing the much anticipation volume of export and foreign exchange.

·        Whether the Calabar EPZ is attracting the much anticipated industrial development in the zone.

1.4.    PURPOSE OF THE STUDY

The purpose of the study therefore is;

To describe recent trends in the development of free zones

· To analyze the potentials of free trade zones for enhancing economic growth and development.

·  To assess the compatibility between the free trade zones system and international multilateral trade agreements.

·        To draw linkages between the existence of an EPZ and the economic growth of the host nation.

1.5.    RELEVANT RESEARCH QUESTIONS

In order to achieve the purpose of this study, the following research questions shall be answered:

· What is the extent of the contribution of Calabar EPZ to the overall non­-oil export in Nigeria? ‘

·  How much of trade exchanges between the West African countries has Calabar EPZ facilitated since inception?

·  What is the extent of industrial development in the Calabar EPZ since inception?

· What linkage has Calabar EPZ with the general level of industrialization I in the country?

1.6.    SIGNIFICANCE OF THE STUDY

A study of this kind is expected to make theoretical and “practical contributions to the impact of EPZs in countries of the world. The study will provide a basis to assess the costs and benefits of an EPZ as a tool for economic development.

The study is also expected to guide investors regarding the general operations at EFZs worldwide. Also the government, organizations and individuals concerned with formulating, designing and implementing policies regarding EFZs would benefit from this study.

1.7     SCOPE AND LIMITATION OF THE STUDY

The basic premise upon which this study will be based is that EPZs are pose to have linkages with economic growth within national economy and integration of economic activities between countries.

This study will concentrate on all aspects of EPZ. The study will be limited to EPZ Calabar. Information sourcing shall be routed through the Nigerian Export Processing Zone Authority Lagos office. This is due to time and financial constraint for visiting all the companies operating within the EPZ Calabar one by one.

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