Nigeria: Economic Free Zones May Bring About Aerotropolis, Experts Say

18 June 2021

Aviation experts have said if the federal government properly executes the plan to designate four major airports in the country to economic free zones it may give birth to an aerotropolis in the country.

The experts said with that, international companies would come to the airports and set up businesses and from Nigeria distribute to other countries in West and Central Africa, as DHL is presently doing.

Managing Partner, TMSS Logistics, Alhaji Nuhu Adam, told THISDAY that the economic free zone would open a new vista for aviation logistics, e-commerce, equipment leasing, real estate, warehousing of aircraft spare parts and maintenance facility, if implemented.

Adam said aerotropolis would emerge from the economic zones because international companies, which would otherwise not come to Nigeria would invest at the airports, as Customs are not supposed to have access to the zone as what is produced in the zone is tax free and Nigeria being the biggest market in Africa would become a hub for distribution of goods and services to other countries in the continent.

He said private airlines and charter service providers that build fixed-based operation would find a home in the economic free zones, adding that same would apply for e-commerce where companies like Amazon, Alibaba and Konga will warehouse goods and distribute to Nigeria and other countries.

"You know that an aerotropolis is a metropolitan sub-region whose infrastructure, land use, and economy are centered on an airport. The economic free zone designated at the major airports by the federal government, if well implemented, will serve as booster for economic development.

"It will provide aviation value chain; it will enhance technology transfer and create thousands of jobs. It will also promote e-commerce because companies like Amazon will come and warehouse their goods, as they will not be subjected to Customs scrutiny or pay taxes. From the free zone in Lagos they will supply goods to other parts of Africa," he added.

Adam said the current space at the Lagos airport would not be enough by the time the economic free zone will blossom so government could extend it to Ibadan airport because it would take the whole of Mafuluku area at the airport.

Adam who was former General Manager, Business Development, the Federal Airports Authority of Nigeria (FAAN), however noted that the free zones would only succeed when they are professionally run, just as he recalled the free economic zone at Onne, which experts were invited to develop and today is successful.

"The free zone will witness rapid growth that if not well managed it will be another Apapa, so government will have to extend it to Ibadan airport. The Lagos Airport economic zone will grow faster than the ones in Abuja, Kano and Port Harcourt because it is the commercial hub of the country.

"FAAN revenue will be boosted by the free economic zone and it will also benefit airlines because the zone will house aircraft maintenance facility, aircraft spares and even equipment leasing companies," Adam said.

Speaking in the same vein, the former Managing Director of the Nigerian Handling Company Plc (NAHCO), Mr. Bates Sule, told THISDAY that the economic free zones is a welcome idea because it would boost revenue to the federal government through FAAN.

He recalled that NAHCO established the free zone but was yet to maximise the benefits before he left the company, adding that with government's designation of such zone it would become economic hub in a short time.

"Free economic zone will give rise to airport city. The federal government through FAAN will be the major beneficiary," he said.

He said the zone would enable government to fully utilise the land at the airside of the Lagos airport and also advised that government should also explore the utilization of the spaces at the landside of the airport.

"Government must be able to plan. It should fully utilize the land at the airside and also the ones at the landside. 50 per cent of the spaces at the landside are not yielding revenue; so government should maximise the use of the land," he said.

It is expected that businesses operating within the designated special economic zones of four international airports in Lagos, Kano, Abuja and Port Harcourt would enjoy incentives such as tax cuts, while customers from air passengers to hotel guests could be looking forward to lower prices.

Globally free economic zones; free economic territories or free zones are a class of special economic zone designated by the trade and commerce administrations of various countries. The term is used to designate areas in which companies are taxed very lightly or not at all to encourage economic activity

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