In order to promote privatization in the country, the Federal government of Nigeria have signed a Memorandum of Understanding (MoU) with Ernst & Young (EY) – a multinational professional services firm, to facilitate transactions for the planned concessionning of the Calabar and Kano Special Economic Zones (SEZs).
The Calabar and Kano Special Economic Zones (SEZs) are the only federal government owned SEZs, of the 34 SEZs currently located in the country, with the rest either privately owned or joint ventures between the private sector and state governments. However, the Calabar and Kano SEZs have been plagued by constraints which has impeded its profitability and effective contribution to economic growth. Some challenges faced by the SEZs includes inadequate and outdated infrastructure including unreliable public power supply and expensive cost of generating power through other sources, lack of deliberate or strategic plan to attracts investors and create clusters, Reliance on Treasury to finance capital expenditure and running costs, and the absence of a clear link between the industrialization strategy of government and the Free Trade Zones. This has necessitated the Federal government’s plans to concession the establishments to private investors in order to introduce innovative ideas to the management and operational framework of the Zones for improved employment generation, Foreign Direct Investment (FDI) and export promotion.
Ernst & Young, the transaction adviser was selected through a competitive tendering process to guide the reform process of the SEZs which is in line with the National Council on Privatisation (NCP) approved process for economic reforms. A total of nine firms were shortlisted from the national database to compete for the provision of transaction advisory services for the reform of the two SEZs. Of the nine shortlisted firms, only 5 firms – Cordos Capital Limited, Ernst and Young, KPMG, PWC and Zenith Capital – submitted the Request for Proposals (RfPs) while 4 firms – Chapel Hill Denham, Coronation Merchant Bank, Stanbic IBTC and Vetiva Capital – did not respond.
Special economic zones (SEZs) are geographically delimited areas within which governments facilitate industrial activity through fiscal and regulatory incentives and infrastructure support is an area in which the business and trade laws are different from the rest of the country. SEZs are located within a country’s national borders, and their aims include increased trade balance, employment, increased investment, job creation and effective administration.
The plans by the Federal government to concession the Calabar and Kano SEZs are key as this has been projected to benefit jobs creation, support import substitution, facilitate export and economy diversification; thus, catalyzing economic growth and contributing tremendously to the sustainable economic development of the country.