(Êsôn Eta Eleme)

Nnô B’Eta ElemeNnô b’ta ElemeNyime Eta r bai

Afiamuru bî nmasên Eleme

Oku nsênwinneBârâ oku Ekpo so, soo…Naî mr dal’Eleme ebo.

Refrain

Dãmô Eleme chuîNne mpio, suêi ntito

Chui ajuri ad Namai ntito Obari

Obari KaneeNyime ta Eleme

Afia, mûrû bîNmasê ElemeObari Kanee

Nyime ta ElemeAfia, mûrû bîNmasê Eleme

Welcome to 2012 Convention of

OFALARU ELEME USA

in Arlington Virginia,United States of America,

13th – 15th July, 2012.

THE IMPACT OF OIL AND GAS FREE ZONE ON ELEME

COMMUNITY.

A Presentation on

ByBy Eld. John Abbey (HOD, Marketing Eld. John Abbey (HOD, Marketing & Media)& Media)

I n t r o d u c t i o nFree Zone ConceptOGFZA Role and Achievements Variation of Free ZoneFactors Influencing Success or FailureFree Zone as a Catalyst for Economic GrowthOil and Gas Free Zone as a Panacea for

Nigeria Immediate Problem.Vision/The Way ForwardConclusion

By definition, Free Zone is described as a designated enclave or a

geographical territory within a country which is administratively deemed to be

outside the custom area, within which national regulations related to trade, finance and other economic activities may not be applicable or

partially applicable.

Formation of Oil and Gas Free Zone and Oil and Gas Free Zone Authority

Established by Act No. 8 of March 29, 1996, establishing OGFZ and OGFZA at Onne/Ikpokiri (Rivers State).

Responsible for all Oil and Gas functions as they relate to free zone (section 5(2) OGFZA Act).

“The Authority shall have power to take over and perform such other functions being hitherto performed by NEPZA as they relate to the export of oil and gas from any of the NEPZA established Free Trade Zones by the NEPZ Act 1992”

Government Objective for Government Objective for OGFZOGFZ

Attracting Foreign Direct Investment (FDI)Capital GrowthEmployment OpportunitySkill AcquisitionRevenue Generation Increase ExportTrade Facilitation and Support Industry Diversification (Primary Industry,

attracts secondary industries which supports its operations).

Promote Foreign Exchange EarningsActs as hub for sub-Saharan African Region

Ingredients of the Free Ingredients of the Free ZoneZone

Incentive

Use of Area of Comparative Advantage

Strong Infrastructural Base

Consistency of Policy/Strong Legal Framework

Clear and unambiguous Government Intentions.

INCENTIVES

Tax Breaks.100% repatriation of capital investment.100% remittance of profits & dividends.No import or export licenses required.100% of free zone goods can be sold in Nigeria.100% foreign ownership of business allowed.Duty free stock (equipment, spare parts, pipes).Immigration incentives75% duty rebate etc.

Use of Area of Comparative Advantage

A country’s assets best represents their area of comparative advantage.

Most countries globally have capitalised on using their areas of comparative advantage in setting up zones.

Examples include Nigeria focusing on oil and gas, South Africa, Mauritius and Kenya with free zones focusing on Textiles – a primary agricultural product: Kenya additionally has free zones focus on tourism etc.

Several counries including India, Ireland, Malaysia etc have applied the Free Zone Concept to initiatives that take advantage of an available, quality labour force.

Setting up any successful free zone initiative is a well thought out and strategic process stating objectives and plan on how to achieve these objectives.

PowerTelecommunicationsRoadsEtc.

Consistency of Policy/Strong Legal

Frame Work. Investor confidence is paramount in

the attraction of FDI, therefore consistency in policy is important.

Strong legal framework is a prerequisite for consistency in policy.

Therefore the role of legislation can not be overemphasized.

Clear and unambiguous government intention.

OGFZA RoleOGFZA Role Free Zone Management role in Free Zone

growtho Promotion/Marketing Investment Drive- Indentifying relevant industries/businesses in line with

the Free Zone objectives.- Opening negotiation in a bid to have them located at

specified Free Zone.o Administration- Ensure Free Zone advantage/priviledges reach each

client in the zone.o Interface between Free Zone clients and other

government agencieso Securityo Resolution of disputeso Liaison between investors and community.

ACHIEVEMNTS SO FAROGFZ has placed Nigeria as a leading player in oil and

gas activities in the whole of sub-Saharan Africa.From inception to date, the Free Zone has attracted

more than 150 companies into Nigeria with investment portfolio of more than $5billion.

It is on records that investment inflow into the free zones represents about 60% of total investment into Nigeria within the last 9 years.

The financial times of London Magazine on FDI regards the OGFZ Onne as one of the most successful zones in Africa

The OGFZ at Onne has attracted all major oil companies in the area and are now using the free zone as a hub for their activities covering the whole Gulf of Guinea up to Angola and Southern Africa.

ACHIEVEMNTS SO FAR (cont.)

The attraction of these investment into the country has created over 30,000 direct or indirect jobs.

There has been transfer of technology to Nigerians, though manpower training, particularly due to specialised nature of their operations. For example Tenaris which is the largest pipe producing company in the world has trained over seventy Nigerians overseas on pipe technology and many more companies do similar.

The presence of the Free Zones has increased economic activities in the area as the Onne Port is second highest port in Nigeria after Apapa.

As a result of the Free Zone at Onne, there has been an increase in government revenue earning particularly for Customs, Port Authority and Federal Inland Revenue Service.

Specific Impacts of the Free Zone on Eleme Community. Employment Generation (both direct and indirect,

Skilled and Unskilled). Wealth Creation via Contract Services/Supplies Corporate Social Responsibility of Companies to

Host Community via Provision of Roads, Water, Light and Environmental Friendly Activities.

Creation of social and economic relationship with nationals of other Countries of the world in a global village effect.

Although there are no verifiable statistics on employment and wealth creation but it is an established fact that the creation of Oil and Gas Free Zone Onne has impacted more positively on the economy and general life style of not only the people of Eleme but other surrounding communities in Rivers State in particular and Nigeria at large.

Free Ports.Special Economic Zones.Export Processing Zones.Single Factory Export Processing Zones.Free Trade Zones.Specialised Zones.

Government use any of the various schemes listed

above/precisely or mix of them, to attain the objectives for economic growth and

development (considering the country’s area of comparative advantage).

Variation of Free Zones

Leverage on the comparative advantage a nation possesses within the global economy when setting up any free zone initiative.

Policy and legal frameworko a strong, sound legal and regulatory frame work

is crucial.o Consistency in policy required for investor

confidence as Free Zone projects are typically long term.

FACTORS INFLUENCING SUCCESS OR

FAILURE OF FREE TRADE CONCEPT

Government support for the project.

Host Community Stability

Ease of doing business

Availability of quality infrastructure.

FACTORS INFLUENCING SUCCESS OR

FAILURE OF FREE TRADE CONCEPT (cont)

Free Zone as a Catalyst for Free Zone as a Catalyst for Economic Growth and Economic Growth and

DevelopmentDevelopment

Investments provide jobs and contribute significantly to economic growth and development.

Provides a needed platform for industrialisation Technology transfer, skill acquisition, capital

growth, use of local raw materials. Government meeting all your demands for job

opportunities is a myth. Every Nation need investments to grow and

prosper. The most developed Nations are always in

competition to ensure inward investment flow.

Republic of Ireland

Singapore

Turkey

UAE (Dubai)

Malaysia

China

India

Nations that have employed Free Nations that have employed Free Zone Concepts for Economic Zone Concepts for Economic

GrowthGrowth

Republic of IrelandRepublic of Ireland

Population - 4,460,000

GDP 2008 - $226 billion

GDP per capita - $51,128

Total Land Area - 27,133 sqkm.

SingaporeSingapore Economic GrowthEconomic Growth

India: India: Economic GrowthEconomic Growth

Trillion dollar economy Stable currency – Rupee becoming stronger 9.4 % GDP growth Per capita Income Rs. 29382 Life expectancy - 65 years Foreign exchange reserves – over $ 200 billion Literacy rate - > 67% 25% growth on IT Sector exports Potential R & D hub Fastest growing outsourcing Industry

Malaysia: Malaysia:

Economic GrowthEconomic GrowthIndependenceIndependence - - 19571957Natural resourcesNatural resources – oil, gas, tin, timber, – oil, gas, tin, timber, rubber, palm oil.rubber, palm oil.

GDP growthGDP growth – 5.8% – 5.8%

Export of manufactured goodsExport of manufactured goods – 76.7% of – 76.7% of total exports total exports

Adopted a New Economic Policy utilizing Free Adopted a New Economic Policy utilizing Free Zone concept in 1982.Zone concept in 1982.Aspiring to be First World Nation by 2020.Aspiring to be First World Nation by 2020.

China China Economic GrowthEconomic Growth

The growth of customs-supervised zones in China is the significant part of China’s economic development.

In 2006, the total import & export values accomplished by free zones, export processing zones and bonded logistics zones in China amounted to US$205.26 billion, with per area import & export volumes touched US$2.57 billion. There are 724,800 personnel being employed. They have grown to be the most active areas in terms of foreign trade.

One of the most successful SEZ – Shenzhen of China (1980s) has developed from a small village into a city with a population of over 10 million within 20 years.

GDP annual growth rate exceeding 10%. In 2006, China’s GDP ranked the fourth in the world, and the import & export values reaching US$1760 billion, ranking the third globally.

United Arab Emirates United Arab Emirates (Dubai): Economic Growth(Dubai): Economic Growth

According to the International Monetary Fund (IMF) and the Bank for International Settlements: ◦ the UAE economy now ranks the second largest economy in the Arab region,

larger than that of either Egypt or Algeria. ◦ Only the gross domestic product (GDP) of Saudi Arabia outweighs that of the

UAE. Diversified economy to diminish reliance on oil revenue. Has developed into region’s Premier International Business Centre. Serves as the biggest re-exporting exporting centre in the Middle East. Third largest export & re-export centre after Hong Kong & Singapore. Three highly successful, specialized Free Zones of international distinction. Success of Jabel Ali Free Zone (hosts largest man-made port) allowed the city to

replicate its model to develop clusters of new Free Zones. In more recent years, they have become a major venue for a number of growing,

profitable industries & activities such as meetings, conferences, exhibitions, tourism, banking, finance, Industrial Consultation, information & communication technology, light & medium manufacturing.

GDP 2006: USD 46 billion Economy built on the back of oil & gas but currently oil & gas accounts for less

than 3% of the Emirates revenue. Increasingly developing as a hub for service industries such as IT & Finance with

the establishment of a new Dubai International Financial Centre (DIFC). Government has set up industry specific free zones throughout the city including

Electronic Commerce & Media Free Zone Authority which houses IT firms such as Oracle Corporation, Microsoft, IBM & Media firms such as CNN, Reuters, MBC.

Oil and Gas Free Zones as a Panacea for Some of Nigeria’s Challenges.

A visit to Oil and Gas Free Zone in Onne will convince skeptics that the Free Zone can help resolve some of our immediate problems.

Over 150 companies currently do business in Free Zone.

Over 30,000 people are employed directly and indirectly by the activities of these companies.

It is the only Free Zone fully dedicated to oil and gas industry.

Combine the effectiveness of private sector with support of the Federal Government.

It is designed to maximize the comparative advantage of Nigeria to attract FDI in the oil and gas sector

It is also a launching pad for growth in other sectors of the Economy.

Continued It is today recognised as key incubator of the

Nigerian content policy. It is therefore a solution to some of the most

pressing problems of Nigeria today. As a country of over 150million with

institutions graduating over 200,000 youths annually who are thrown into job market it is important that measures are taken to create jobs for these teaming youths.

The Free Zone concept as applied to oil and gas one of these measures.

Ikpokiri Island as a Giant Industrial CityThe State new industrial base.A one-stop-shop location comprising

industrial and factories, offices, conference location/submit centres.

Providing linkages from Oil and Gas to other sectors of industry.

Support the thriving of small and medium sized enterprises.

Hotel services.

Residential Facilities

Sports Centre

Shopping Malls

Offshore Banking

THE WAY THE WAY FORWARDFORWARD

Ikpokiri Island

(Êsôn Eta Eleme)

Nnô b’ta ElemeNyime Eta r bai

Afiamuru bî nmasên Eleme

Oku nsênwinneBârâ oku Ekpo so, soo…Naî mr dal’Eleme ebo.

Dãmô Eleme chuîNne mpio, suêi

ntitoChui ajuri ad

Namai ntito Obari

Obari KaneeNyime ta Eleme

Afia, mûrû bîNmasê ElemeObari Kanee

Nyime ta ElemeAfia, mûrû bîNmasê Eleme