Nigeria's free trade zones have attracted significant investment, with over $200bn in foreign direct investment and over N900bn in domestic investment. These zones have also generated more than 100,000 direct jobs and over 500,000 jobs across supply chains, logistics networks, and host communities. This information was disclosed by Dr. Jumoke Oduwole, the Minister of Industry, Trade and Investment, at a virtual meeting of Special Economic Zones stakeholders in September.
The Nigerian government is revising the regulatory framework governing the free trade zones to make it more responsive to changing business needs and investment trends. The revised framework will recognise Digital Free Zones and Digital Special Economic Zones, supporting technology-enabled and non-physical operations. The goal is to modernise the scheme, strengthen dispute-resolution mechanisms, and build on the investments and jobs already created by the zones.
The government's regulatory reforms aim to address weaknesses that have affected the integrity and competitiveness of the scheme. The reforms follow extensive consultations with government agencies, lawmakers, and private-sector stakeholders. The goal is to preserve Nigeria's attractiveness as an investment destination while strengthening fiscal accountability. One major concern addressed by the reforms is the diversion of goods produced in free zones into the Nigerian Customs Territory while retaining fiscal incentives intended for export-oriented activities.
The revised framework will restore the export orientation of the scheme by clarifying the 75 per cent export and 25 per cent domestic-sales structure and aligning domestic sales with applicable Nigerian tax laws. The responsibilities of agencies overseeing the zones, taxation, and customs will be clarified, with NEPZA and the Oil and Gas Free Zones Authority retaining responsibility for licensing and operational oversight.
The modernised framework will also accommodate businesses that do not require conventional physical zones, particularly technology-driven enterprises. The Revised NEPZA Regulations and Operational Guidelines create, for the first time in Nigeria, Digital Free Zones and Digital Special Economic Zones – zones that operate on a platform rather than a perimeter, with no requirement of physical presence.
Stakeholders have welcomed the reforms but expressed concerns about protecting businesses that have already invested under the existing regulatory regime. The Executive Secretary of NEPZA, Toyin Elegbede, said operators want a competitive free zones ecosystem that will attract more investment, protect legitimate businesses, and increase production and exports. The Chairman of NEPZA, Hadi Mutallab, emphasised the need to ensure that the transition to the new framework does not undermine existing investments.
The government's objective remains to position the zones as engines of non-oil export growth and support President Bola Tinubu's target of building a $1tn economy by 2030. The Minister of Industry, Trade and Investment, Dr. Jumoke Oduwole, assured that the government will continue to support lawful incentives that serve the purpose of the zones while demanding compliance from operators.
Key points
- Nigeria's free trade zones have attracted over $200bn in foreign investment and created more than 500,000 jobs.
- The government is revising the regulatory framework to make it more responsive to changing business needs and investment trends.
- The modernised framework will accommodate businesses that do not require conventional physical zones, particularly technology-driven enterprises.
