JOINT VENTURE FUNDING OF INVESTMENTS
Apart from the absence of local manufacture of equipment and inadequate services, another major problem that has seriously affected the growth of the industry is insufficient financial resources. The industry is a capital intensive one and the banks in the country appear no to have strong financial muscle to handle massive investment in the sector. The industry has not also attracted individuals’ cooperative initiative probably as a result of the low level of income per capita in the economy. Hence joint venture partnership between foreign investors and Nigerians will be a veritable source of investment capital for the sector. At present, there is no joint venture enterprise in the sector.
INVESTMENT PROCEDURES WITHIN THE NIGERIA EXPORT PROCESSING ZONES (EPZ)
- i) Any company, person or group of persons wishing to carry out approved activity within a zone shell apply to the Nigerian Export Processing Zones Authority (NEPZA) using the prescribed forms and shall submit such documents and information in support of the applications. The forms shall specify the application fees and such other details as the Authority may stipulate from time to time. A feasibility study in respect of the investment project which the applicant wishes to undertake in the zone shall be attached as an annex to the application and shall contain the following among others: project description; market survey; funding proposals; financial projections; environmental impact statement and control measures.
- ii) Application to undertake approved activity in the zone duly received, shall be considered by the Authority within 30 days of receipt and the Authority shall notify the applicant in writing of its decisions to grant the said approval or otherwise. The approval shall be subject to such terms and conditions as may be imposed by the Authority.
iii) If the application is approved, the investor may proceed to carry out the following:
(a) Apply for company registration
(b) If outright purchase of factory building is desired –
– Payment of 10% deposit of the selling price of the standard factory building within 3 months of approval;
– Payment of the balance 90%, 5 months after;
(c) Renting of factory building – Down payment of one year rent required not exceeding 3 months after signing the rental contract. Thereafter, rental charges shall be paid in the first quarter of every year.
(d) Leasing the standard factory
– Payment of 40% lease value on approval
– Payment of 30% at the end of the 5th year
– Payment of 30% balance at the end of the 10th year.
(e) Leasing of serviced plots
– Down payment of 40% on completion of factory building
– 30% at the end of the 5th year
– 30% at the end of the 10th year
Construction must be completed within a period of one year which can be extended for another 6 months.
A plan of the building shall be submitted to the Authority for approval. The land lease contract shall be signed within 2 months after allocation of land. The area occupied by such building shall be between 60%-70% of the leased land and construction shall start within 3 months after signing the lease contract.
- iv) With condition(s) in (iii) fulfilled, the investor may proceed to carry out the following:
Remittance of Investment Capital through banks in the zone and notify the Authority on arrival.
- v) When the factory building is ready, investor(s) may bring in machinery for installation and workers employed. Therefore, the Authority shall be required to carry out pre-inspection, and if found satisfactory, a certificate to commence production will be issued.
- vi) Companies intending to sell the permitted 25% of their total production in the domestic market, will be required to notify the Authority for necessary documentation and payment of appropriate levies and charges as applicable.
vii) The company shall apply to the Authority for assessment of invested capital for later repatriation purposes. This is applicable to companies which are 100% foreign owned and those with part foreign equity participation only.
- Industries must be guaranteed to be environmentally friendly.
- At least 75% of total products to be exported.
- Maximum of 25% of products can be exported to the customs territory on payment of appropriate levies and duties.
- Minimum investment capital outlay is 500,000 US Dollars or its Naira equivalent.TYPES OF INDUSTRIES PERMISSABLE IN NIGERIA EXPORT PROCESSING ZONES
– Electrical and Electronic Products
– Leather Products
– Plastic Products
– Petroleum Products
– Rubber Products
– Chemical Products
– Metal Products
– Educational Materials and Equipment
– Communication Equipment and Materials
– Sports Equipment and Materials
– Optical Instruments and Appliances
– Medical Kits and Instruments
– Biscuits and Confectionaries
– Printed Materials, Office Equipment and Appliances
– Paper Materials
– Food processing
– Pharmaceutical Products.