Value Addition Policy in Nigeria’s Export Processing Zones: Lessons from the Asian Economies

Abstract

The study examined the value addition in the Nigeria’s export processing zones, comparing it with the experiences from Asian economies. Upon the recommendation of the United Nations Industrial Development Organization (UNIDO), Nigeria adopted the EPZ scheme via Decree No 63 of 1992 to accelerate industrialization through increasing manufacturing for exports, among others. The Calabar Free Trade Zone was established as the pioneer zone in the country. The objective of this research work is to determine the extent of Value Addition at the zones in Nigeria. As at 2008, 25 zones have registered with NEPZA, the regulatory authority in the country. Out of the 25 registered zones, 11are operational, 9 under construction and 5 merely declared. Four (4) zones, namely, Calabar, Oil and Gas and Snake Island Integrated Free Trade Zones and Alscon Export Processing zone, were systematically selected from the 11 operational zones for the study. Two hundred and ninety copies of questionnaire were administered on 290 respondents drawn from 54 firms and 4 zonal management boards. Out of the 290 copies of questionnaire 242 copies were properly filled and returned. The 242 copies of questionnaire returned served as the primary source of data, while textbooks, journals, fasimiles, etc served as the secondary sources of data. The paper argued that for EPZs to help in the industrialization of a nation value addition and production segmentation must be made central to the manufacturing/ production processes; because the higher the level of value addition the greater the impact/contribution of EPZs to socio-economic development. The study revealed that the level of value addition in the Nigerian zones is very low, only labour element of value addition is visible, technology and material elements were absent. Hence, the paper recommends that value addition should be made compulsory in the production processes at the zones and emphasis should be on the technology and material elements. This, it is believed would enhance backward linkages with the domestic economy.