FZW talks to Mr Umana Okon Umana about the success of Nigeria’s oil and gas free zones and his vision for future developments.
You took over as the managing director of Nigeria’s Oil and Gas Free Zones Authority (OGFZA) late last year (2016). What was the first order of business when you started the job?
The first order of business was to do a SWOT analysis of what we inherited. The analysis showed an agency that was not well-positioned, was obscure, and was not living up to its mandate. Armed with those findings, the next move was to reposition the agency and create awareness of its existence and crucial role in the economy of the nation. We are repositioning OGFZA and placing it on the path to fulfilling its mandate and vision as the premier agency of government responsible for promoting, securing, and sustaining investments into Nigeria’s oil and gas free zones. We’ve produced a strategic roadmap that plots the way forward for us for the next three years; we have produced a marketing brochure that invites investors to the discover the set of highly competitive incentives and easy registration procedure for businesses; we also have a highly interactive and robust website that basically puts the investor right there with us in the oil and gas free zones in Nigeria: www.ogfza.gov.ng. OGFZA and Nigeria’s oil and gas free zones are ready for business.
How are Nigeria’s free zones adapting and evolving in the face of uncertain market conditions?
The current market uncertainty calls for capacity that matches the dynamism of the marketplace. That is why we are repositioning with regard to our work processes, core values, and execution. We have prioritised the ease of doing business, made our registration procedure more business-friendly, and enhanced incentives to businesses in the free zones. We are thus re-sharpening our marketing edge and taking steps to be more competitive globally. This is evident in the bouquet of incentives that we offer the investor. For instance, businesses in the free zones are exempted from all local, state, and federal taxes. The paperwork with Customs and Immigration has been streamlined to fast-track processes and cut down on turnaround time—and no custom duty is applicable within the free zones. Imports into the free zones enjoy 75% import duty rebate. The full list of incentives for free zone businesses is available on our website.
To what extent do you see free zones as a means of expanding the reach of Nigeria’s local content and local labour force in the oil and gas sector?
The oil and gas free zones in Nigeria exist principally to attract foreign direct investments. There are incentives, as stated earlier, that we have put in place for them to come and take advantage of, such as 100% ownership of businesses and repatriation of capital and profit. But all the incentives and the special business environment operate within the context of Nigerian laws. One of the laws that govern investments in Nigeria, including investments in the oil and gas free zones, is the Nigerian Local Content Act 2010. The Nigerian Content Development and Monitoring Board, which is a creation of the Act, has the responsibility for monitoring and ensuring compliance with the law by the International Oil Companies (IOCs) and other businesses in the free zones. The level of compliance at the moment is good, but there is much room for improvement. We want to see more value addition through training and staff development, more local fabrication, and a greater degree of other engineering processes carried out locally.
The free zones are important employers of labour. From inception, they have created more than 200,000 direct and indirect jobs. At one point Onne Oil and Gas Free Zone, which is Nigeria’s biggest oil and gas free zone, had more than 200 companies from 45 countries of the world doing business and employing hundreds of thousands of Nigerians.
Why do you think Nigeria has been fairly unique among oil-producing countries in its adoption of sector-specific free zones?
Nigeria was the first country to introduce the Oil and Gas Free Zone model to address the specific challenges of the oil and gas sector. The law that created the first oil and gas free zone in Onne, Rivers State in South South Nigeria, and established the OGFZA as the regulator of the free zones, was promulgated in 1996. At that time the free zone business model was an omnibus concept for a general business and investment hub with no special acknowledgment of and attention to sector-specific needs. Since then other countries have come to realise that there is a need for a special model that can meet the sophistication, the need for speed, and the dynamism of the oil and gas sector, and they have set up special economic zones to manage their oil and gas investments and trade. The drive for specialisation has even gone beyond oil and gas into aviation, ICT, etc.
What would your message be to foreign investors, oil majors and SMEs alike, about doing business in Nigeria’s oil and gas free zones?
My message to them is that Oil and Gas Free Zones in Nigeria are ready for business. We offer a very competitive regime of incentives; and we operate the one-stop-shop concept as a key pillar of the Federal Government policy on the ease of doing business. This means all government documentation requirements on free zone businesses are easily met in one location where the relevant offices are warehoused, to cut down on turnaround time for business registration and other procedures.
I would further tell them that we have the fastest growing and best oil and gas free zones in Africa, and let them know that all the IOCs have a vibrant presence in our free zones. I would also let them know that the biggest fertiliser maker in the world, Indorama, is in our free zone in Onne, and that one of the biggest pipe technology companies in the world, Tenaris, is also represented in Onne.
I would like the market to know also that the success of Onne Oil and Gas Free Zone as a Public-Private Partnership (PPP) has spawned other well-performing PPPs in the industry such as Lagos Deep Offshore Logistics (LADOL) and Snake Island Oil and Gas Free Zone, both of which are in Lagos. More spinoffs of the Onne success story are on the way.
Nigeria’s oil and gas free zones are home to some of the best and biggest oil and gas related companies in the world. Other companies in the oil and gas sector anywhere in the world therefore have no reason not to be part of the Nigerian oil and gas free zone experience. Besides, we are developing new oil and gas free zones in Brass, Bayelsa State; Ikot Abasi in Akwa Ibom State; and Warri North in Delta State. The new free zones represent untapped opportunities in a wide range of areas for prospective investors. I would like them to come and take advantage of these opportunities.