The Ibom Pulpit

AKWA IBOM INDUSTRIALIZATION ROADMAP by Chief Senas Ukpanah – Part 2 July 9, 2012

<< continued from Part 1

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Part 2 is the final segment of an interview with Chief Senas Ukpanah, Chairman of the Akwa Ibom Investment Corporation. Series is culled from the IBOM DIARY, May 2012 edition, Uyo, Akwa Ibom State, Nigeria. Click on the link to read the entire AKWA IBOM INDUSTRIALIZATION ROADMAP.

Governor Akpabio has set out to in painstaking details how he intends to make Akwa Ibom an industrialized hub in the Gulf of Guinea. Chief Senas Ukpanah, Special Adviser to the Governor on Investment and Industrialization, in full dress interview takes the reader by hand through the salient points of the state industrialisation plan.

Excerts:

Concrete actions

We have prepared the ground for concrete actions with awareness creation. In addition, there is the policy document, the Roadmap, which I submitted to government; it is our guiding spirit. I have issued a list of industrial projects. Government says one industry per local government, but we found out that some local governments are more endowed than others in terms of availability of natural resources. We have a lot of proposals already from entrepreneurs who are in the state to establish new industries, or who want to expand existing industries. Recently, the governor commissioned two factories in Ikot Ekpene owned by Chief Sony Ibanga, an indigene of the state. He is producing table water and shopping bags. On the same day, the governor also visited Ukponson Nigeria Limited, a paper product company, which has approached us to access the industrial fund to raise more capital for machinery and raw materials.

Government equity participation

As I said before, we have received many proposals for support which we are appraising at the moment. In industrial development, you don’t go to the shop to buy off the shelf. It is a process. If you come with a proposal, we look at it and if we are satisfied that the project will be viable and profitable, we can then enter into negotiation as to how much you are putting down and how much you want government to put down under the public-private partnership model. As we are talking now, government has sent a bill to the House of Assembly to establish a Public Private Partnership Council (PPPC). It is the PPP Council that will regulate relationships between entrepreneurs and government agencies. Yesterday, some Italians came to meet the governor. They want to set up a refinery in the state and said they wanted government to put down 50 per cent of the project cost. We said no, we want to encourage private sector driven economy, industries that are private sector driven; less of government interference, more of private sector initiative.

If we give you land, we can value that land at about 10 per cent and you take control of the business. So, the idea of PPP law is to provide guidelines to regulate the industry in dealing with government agencies and prospective investors. The law is not yet out, so we are still waiting for it.

Industrial fund

Second point, the governor talked about industrial fund during the campaign, and has since directed the Attorney General and Commissioner for Justice to draft the legal framework to establish the industrial fund because, as an investment arm of government, you cannot just give anybody money like that.

There must be a framework to support your action. What we intend to do is that with government approval we will create an account with the Bank of Industry (BOI). To start with, BOI is owned by the federal government. There is a policy by which if the state government deposits money the bank will match the state with the same amount. If we were to deposit N2.5 billion, the bank will bring a matching fund to bring the total amount to N5 billion. We will recommend our entrepreneurs for facilities to the Bank of Industry at low interest rate, compared to what they will get at commercial banks, which can be up to 20 per cent. And it is strangulating!

So, in concrete terms, industry needs money. A lot of our people are not wealthy enough to use their personal funds to support industrialisation. That is where government intervention comes in. There are so many proposals, which we have reviewed from people who want to do business but they need funding. So, we are now waiting for the Attorney General’s Office to send the draft law to the State House of Assembly, and that will now take more than two weeks to create a law on industrial fund, which will empower us to recommend lending to support industrialisation.

Public-private partnership

Right now, we have a proposal from Senyang limited, which is promoted by an indigene of the state along with technical partners from Spain. Senyang is establishing a transformer factory in Ukana, Essien Udim local government. They have asked AKIIPOC for a facility to continue with their business. We are now discussing how to structure such support in terms of how much will be equity and how much would be loan. As I said earlier, we cannot provide free cash to anybody. We would channel our support through the bank because we do not have recovery mechanism; the bank has. If you give a loan, you have to recover the loan over time. So, we do appraisal of proposals from prospective investors and recommend to the bank to provide the loans, giving its guarantee. The bank will do the lending on behalf of the government, so that all partners have a role to play, but under the law. In order words, we will definitely take equity in some but not all. In some cases, we will provide loans to be recovered by the bank. In some cases, we will take equity.

One industry per local government

You know if government sets up industry, as a government, it will fail: therefore, the policy initiated by in the Akwa Ibom industrial roadmap is that industry must be private sector-led and private sector-driven. We expect promoters who are already producing, or those who had stopped and want to restart production, or want to go into production for the first time. They will do feasibility studies and business plans to determine the viability of the businesses located in the local government areas. Your capital requirement may be a hundred million naira, but you have, say, thirty million naira. You may then seek support from the government for the rest of your financial need which you may get through the bank. Right now, we have a request from a promoter who wants to establish a cassava processing plant in Abak local government area to produce starch. We will support that initiative because it is agro-based and the market is there. He is asking for 50-50 participation. At the end of it, government may take not more than 15 per cent. We are trying to identify land for the project and the value of the land will be government equity for the project.

Another example is Quality Ceramics industries in Itu. The company was set up by the government without private sector participation. There are three groups now that want to take over as core investors in Quality Ceramics. We are looking at their proposals. First of all, government will liquidate all existing liabilities so that they can start on a clean slate. At the end of the day, government may take about 10 [er cent equity since it is a new business.

Ibom Industrial City, Ibaka Deep Seaport

AKIIPOC, as an investment arm of government, is not directly involved in the two projects. But, what I can tell you is that the state government has given land to the Nigerian Ports Authority to collaborate with private sector people to develop the deep seaport at Ibaka. Akpabio has done the right thing by getting the federal government to approve that the NPA should partner with the state government to develop the seaport. A seaport is an expensive enterprise, it has long term gestation. They will need external investors. I believe that government is engaging with external investors right now. The seaport will open the state to the Gulf of Guinea, that means a huge market, which will support support industrial development in the state.

The Ibom Industrial City project is located adjacent to the seaport of Ibaka. It is designed as a free trade zone. The state government has already received federal approval detailing that area as a free trade zone. A free trade zone requires a seaport and an internation airport, both of which are available in the state. The attraction of export free trade zone is freedom from taxation. The essence of a free trade zone is to promote industrialization, skills development and transfer of technology for the growth of the economy.

Work on Industrial City

I think the state government has established a link with a group called OSTIM in the industrial region of Ankara, Turkey. I was part of federal government delegation in October 2011 to Turkey led by the Minister of Niger Delta Affairs, OSTIM is an industrial estate, one of the best in the world. The idea is to facilitate the establish of growth drivers of industrial estate in Ibaka using the experience and technology already proven in Turkey. The position is that the federal Ministry of Niger Delta Affairs, with the approval of the federal government, is trying to look into how to replicate the OSTIM experience in any of the Niger Delta States. We are hoping that they pick Ibaka. That means we are going to provide support infrastructure. The governor has announced that he is going to award contracts, if he had not already awarded for a road from Ibaka to Uyo airport to open up the state from the airport to the seaport.

Ibom Industrial City in the next 3 years

I believe that, given Governor Akpabio’s visionary leadership, and his commitment to transformation, he will move fast to provide infrastructure to support industrial companies to set up factories in the City. It is not just a matter for our entrepreneurs, we need foreign investors to come in. We need a lot of publicity for this.

The deliverables in the next 3 years

You don’t buy industries off the shelf, industries take a process, and that process must be looked at with reality. There is no magic about it. I would say that by the year 2013 we would have some industries in some local government areas of the state. Our milestones have to be realistic because of the gestation period.

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AKWA IBOM STATE ECONOMIC SUMMIT AND INVESTMENT EXPO 2012