The Nigerian federal government has initiated a reform of the country's special economic zones (SEZs) to tighten the regulatory framework and prevent abuse of duty-free concessions. Minister of Industry, Trade and Investment, Jumoke Oduwole, assured legitimate investors that existing incentives will be protected. The reform aims to address weaknesses in the current system without undermining compliant operators.
A drafting retreat was held to translate ongoing consultations into revised legislative and regulatory instruments. Officials from various ministries, agencies, and stakeholders, including the Nigeria Export Processing Zones Authority (NEPZA) and the Nigeria Customs Service (NCS), attended the retreat. Issues raised during a September 17 stakeholder engagement are being considered in the drafting process.
The reform follows recent customs enforcement actions over allegations that goods imported under free zone concessions were diverted into the domestic market. Oduwole emphasized that the government's objective is to address such weaknesses without undermining operators that have complied with existing rules. The minister assured that incentives, such as duty-free importation of capital goods and tax exemption on qualifying export profits, will remain part of the framework.
The proposed reforms expand the framework to accommodate digital businesses, with draft regulations recognizing digital free zones and digital free zone enterprises. Proposed licence categories include innovator and sandbox licences for businesses that may not require a conventional physical presence. This development follows President Bola Tinubu's directive to implement the Digital Free Zones initiative.
A key principle emerging from the consultations is "one authority, one visit, one record" to reduce regulatory friction for businesses operating in the zones. Oduwole described this principle as a useful test for the final implementation framework. The committee is also examining customs coordination, joint inspections, and simplified customs exit procedures.
The reform seeks to reduce multiple regulatory interfaces, with NEPZA and the Oil and Gas Free Zones Authority (OGFZA) retaining coordinating responsibilities within their respective statutory mandates. Issues under consideration include the treatment of existing investments, transition arrangements for current licensees, and the proposed 75/25 export and domestic-sales framework.
Oduwole emphasized that Nigeria's export ambitions should extend beyond physical goods, with the country increasingly exporting technology, financial and professional services, and digitally delivered services. A modern special economic zones regime must be able to attract these businesses as deliberately as it has historically sought to attract manufacturers.
Key points
- The Nigerian government aims to prevent abuse of duty-free concessions in special economic zones while protecting legitimate investors' incentives.
- The reform proposes to expand the framework to accommodate digital businesses with licence categories for innovator and sandbox licences.
- A key principle of the reform is "one authority, one visit, one record" to reduce regulatory friction for businesses operating in the zones.
