By Martins Odeh
Unarguably, the Federal Government changed the name of the Federal Ministry of Communications to Federal Ministry of Communications and Digital Economy in order to be in tune with global trends and reality.
The World Economic Forum (WEF), predicts that by 2022, 60 per cent of the world economy will be digital.
According to WEF, an estimated 60 per cent to 70 per cent of new value created in the economy over the next decade will be based on digitally-enabled platforms.
Companies need to re-imagine how to create, distribute and capture value in this new environment. Closing digital divides is not only conducive to economic growth for all sectors, but also critical for social and political stability in the decade ahead, it added.
The World Bank in a 2019 report noted that Nigeria is uniquely positioned to reap the benefits of a digital economy.
According to the report, Nigeria accounts for 47 per cent of West Africa’s population, and half of the country’s 200 million people are under the age of 30.Nigeria has the largest mobile market in Sub-Saharan Africa, supported by strong mobile broadband infrastructure and improved international connectivity.
The bank says for Nigeria to meet the bold objective of creating 100 million jobs, the country needs to increase investment in infrastructure, create an enabling regulatory environment for digital economy to grow.
When President Muhammadu Buhari unveiled the National Digital Economy Policy, initiated by the Federal Ministry of Communications and Digital Economy, he directed the Ministry to ensure seamless and coordinated implementation of projects, programmes and policies.The aim of the policy is to enable Nigeria maximise the benefits enunciated by the World Bank and WEF from a digital-driven economy.
It is in line with this policy, that the Nigerian Export Processing Zones Authority (NEPZA), is desirous of opening up Nigeria’s free zones to the digital space.
Prof. Adesoji Adesugba, the Managing Director of NEPZA said it was imperative to open up Nigeria’s free zones space to blockchain tech and crypto currency operations.
He spoke recently in Abuja when two blockchain firms visited him to make submissions on their proposals for blockchain operations in Nigerian free zones areas.
Adesugba said the consideration followed requests from local and international players.
He said that his team received multiple presentations on the need for crypto exchanges and hubs within the Nigerian special economic zones to tap into multi-billion dollar revenue streams which currently eluded Nigeria.
“I have also been approached at various international gatherings and events on why Nigeria, in spite her fiscal pressure, is comfortable losing so much in capital gains tax to neighbouring nations.
“We are aware of various reports and studies that indeed confirm operations of blockchain technology in many special economic zones all over the world.
“Our management is, therefore, considering inaugurating policy consultation with sister agencies on the need for a regulating framework on this emerging field.
“It is worrisome that Nigeria is said to be losing billions of dollars annually in capital gains tax paid to other nations even though the crypto transactions took place in Nigeria.’’The NEPZA boss said that statistics on crypto operations pile up more pressure.
“Nigeria is currently the number one in terms of people searching for “Bitcoin” and “Crypto” keywords on Google, with more than 6.3 per cent of the entire population owning at least one type of crypto currency.
“In the Chainalysis 2021 Global Crypto Adoption Index, Nigeria is ranked sixth out of the top 20 countries in terms of crypto currency adoption.
“It is important for us to develop a robust blockchain policy in line with current international trends.
“And we hope to be able to consider interested organisations for capacity and development of blockchain tech within the free zones.
“In policy formulation and implementation, we shall definitely invite all the stakeholders including large crypto exchanges such as Binance, Coinbase, Crypto.com, and other young local operators.’’
Adesugba said that this would bring access to technology and expand the capacity of the sector to employ estimated 250, 000 youths.
“Leaving this vast field unregulated appears to constitute huge economic loss to the nation. We hope to come up with a draft perspective after due consultations,” Adesugba said.
Earlier, the Finlease in its submission sought the endorsement of NEPZA for the establishment of Lekki International Financial Centre at the Lekki Free Zone (LIFCFZ).
The Managing Director of Finlease, Dr Sunday Sijuade, said the planned Lekki International Financial Centre would cover offshore crypto zone to cater for crypto currencies.
According to him, it is to become an offshore destination for crypto exchanges, digital assets and virtual assets.
According to Sijuade, the proposal is in line with international trends across global special economic zones.He cited examples of Chinese Financial fr ee zones in Shanghai and the United Arab Emirates’ International Finance Centre where such innovation had been introduced into the free zones.
Adesugba, when he paid a courtesy visit on Mr Mohammed Nami, the Executive Chairman, Federal Revenue Inland Services (FIRS) reiterated the need to deploy novel digital technology to open up the Free Trade Zones ( FTZs) space for operators of the multi-trillion-dollar block-chain technology businesses.
He re-emphasised the readiness of NEPZA to open the country’s free trade zones’ corridor for genuine global competitiveness.
According to him, the African Continental Free Trade Zones Area (AfCFTA) has given leverage to all countries in the continent to diverse their business catchments.
“As we speak, free trade zones are springing up everywhere in Africa. Nigeria must be concerned about competitions from Egypt; South Africa; Kenya; Benin Republic; Ghana; and Togo where huge investments have been committed to free trade zones development.
“For us, we are doing well with about 500 enterprises operating in 42 zones across the country, but we must expand the investment corridor to magnet operators of the blockchain technology which remains the future of global economy.
“The time to join the train is now, else we shall be counting our losses in a few years time. We are delighted that the Federal Government through the Central Bank of Nigeria (CBN) recently approved and deployed the e-naira.’’
Adesugba said that Nigeria must key into the technology as more than 90 per cent of European and US banks were researching blockchain options. He said that multinational organisations like JP Morgan, MTN, KFC, Tesla and many others have entered the crypto currency and metaverse digital blockchain sector with MTN said to have purchased 114 metaverse properties recently.
He said that NEPZA was aware on how the technology could revolutionalise government, finance, insurance and personal identity security, adding that trillions of naira could accrue to the Federal Government as revenue from this ecosystem.The NEPZA chief executive also said that the decision to fully promote the blockchain technology hinged on its fast rate of revenue turnovers and the unlimited job space the technology had for the teeming youths.
He explained that the country’s tax net would be exponentially enlarged if the investment came alive, as according to him, Nigeria is currently rated as the 6th largest player in the world in the crypto and blockchain trade, especially amongst the youths.
” I, therefore, see no reason why we should not open up the space and attract the much needed capital into the country, while government benefits from taxes , or management fees amounting to billions of naira as is done in countries like Canada and South Africa.
Adesugba also said that NEPZA was ready to deepen collaboration with relevant government agencies in order to fast track the country’s industrialization.
He explained that the visit to the FIRS was to prepare grounds for signing of a Memorandum of Understanding (MoU) aimed at ending indiscriminate tax regime that had stunted the full development of the free trade zone scheme.
He said that the scheme was a global business policy that exempt operators of zones from all forms of taxes and duties, adding, however, that when goods and services from the zones were taken to the customs area, they then will be required to pay the required duty which is not necessary when exported elsewhere.
“You can see that the country is not losing any revenue, as most of the goods and services from the zones are now imported to the customs areas.
“FIRS and the Custom Services must wait until items from the zones are brought to the customs area before they can be taxed,’’ he said.
Adesugba also explained that it was imperative that the key agencies partnering with the NEPZA to drive the development of the scheme understand the dynamics of the scheme.
Undoubtedly, with zeal exhibited by Adesugba since his appointment, the Authority, established via NEPZA Act 63 of 1992, will deliver on its mandate.
The mandate includes: licensing, regulating, monitoring and promoting the operations of all zones in Nigeria.It also seeks to provide a conducive investment climate by offering a competitive incentive regime, streamlined administrative procedures and world class infrastructure.The current efforts of NEPZA are all geared towards delivering on the mandate of the Authority. Odeh is the Head Corporate Communications, NEPZA.