By Nnamdi Odumody
As part of the reforms aimed at opening up the Chinese economy, a free trade port is being established at the Shanghai Free Trade Zone. A Free Trade Port is a port that capital, goods and people can enter and exit freely within a national territory and is exempt from custom duties and taxes.
In the Free Trade Port, Offshore Trade will be implemented. Unlike Entrepot trade, the latter does not need the goods transportation pass system from the port of transshipment. The companies operating offshore trade could do business without the limitation of a transshipment port. Offshore trade will decrease the cost of international trade operators.
October of this year, the 19th National Congress of the Communist Party of China (“CPC”) was held in Beijing. The General Secretary of the CPC, Mr. Xi Jinping, announced a very ambitious development plan for China for the coming thirty years. He declared that China will stick to the “reform and open-up” policy. Hence, the government will give more reform power to the pilot free trade zone, and will explore the possibility of establishing a free trade port in China.
On November 10th, Mr. Wang Yang, a member of the Politburo Standing Committee of the CPC and the Vice Premier of the State Council, published an article in the People’s Daily (an official newspaper of the CPC). Mr. Yang defined the free trade port as a special area that is located within the national territory and outside of the customs; goods/capital/people can enter and exit freely.
In addition, most goods are exempted from duties and taxes. This area is a special economic function area at the highest level for an open process. It means that China will use more international and professional standards to establish the free trade port soon.
Offshore Finance is also expected to be part of the operations carried out in the free trade port. The offshore finance policies will include relevant measures to improve convenient procedures for capital flow, optimize cross border capital service for renminbi and other foreign currencies, enhance the innovation on cross border renminbi finance products, and facilitate the new out border finance model.
Nigeria Needs More Ports
The Lagos Ports are over congested causing the nation economic losses in billions of naira daily. Eastern Ports could provide a viable alternative by redesigning them as Free Trade Ports.
The Onitsha River Port which was built in 1983 by the President Shehu Shagari administration is a 1.2 million TEU port of destination that can clear goods from any part of the world, but the River will need to be dredged to allow smaller vessels come to the port from Lagos and Port Harcourt ports.
Oseakwa in Ihiala Local Government Area of Anambra State and Osemoto in Imo State are the deepest natural harbors in Nigeria and can be developed to become free trade ports of destination for goods from around the world. Osemoto has one of the potentially deepest seaports and lies only 18 nautical miles to the Atlantic Ocean. If pursued and completed as Public Private Partnerships by private investors and the South Eastern region governors, Osemoto seaport has the potential capacity of handling over 30 percent of marine traffic in Nigeria. At Obuaku, Azumini, Abia State, a free trade seaport can also be established there since it’s just a few miles to the Atlantic Ocean also.
The Ibaka Deep Seaport and Bakassi Deep Seaport projects promoted by the Akwa Ibom and Cross River State governments, respectively, can also be developed to become free trade ports since they are close to the Southeastern states, whose traders will utilize them to import and export goods, at affordable rates, rather than undergoing the stress of Lagos ports.
It is a very strategic thing for Nigeria to do urgently. Yes, the nation has to build ports in the South East and the South South to ensure the paralyses in Lagos ports are managed. There is no other better way to grow the economy of Nigeria than by building more ports across the nation. As we write, Lome Port has overtaken Apapa port on container volume. Part of the reason is that Apapa port is underperforming because of traffic. Nigeria can help reduce that stress by building functioning ports in South East and South South regions.