The Nigerian government has expressed concern over the increasing diversion of goods produced within Free Zones into the Nigerian Customs Territory, while still enjoying fiscal incentives designed primarily for export-oriented activities. This development has created an uneven competitive environment for manufacturers operating within the Customs Territory. The government has begun a major regulatory overhaul of Nigeria's Special Economic Zones (SEZs) to restore their original export-oriented purpose and provide greater certainty for investors.
The Minister for Industry, Trade and Investment, Dr. Jumoke Oduwole, stated that the reforms were the product of a "whole-of-Ministry" process and were being implemented through a whole-of-government approach involving relevant agencies and stakeholders. Oduwole recalled that during the Third Special Economic Zones Annual Meeting in February 2025, she made a commitment to work towards aligning fiscal, monetary, and trade policy to make Nigeria's zones globally competitive.
The reforms aim to bring greater clarity to the legal and fiscal framework governing free zones without undermining the incentives that make the zones attractive to investors. Three key regulatory instruments are at the center of the reform: the Nigeria Export Processing Zones Authority Regulations and Operational Guidelines for Free Zones in Nigeria, 2025; the Nigeria Export Processing Zones (Domestic Sales, Fiscal Alignment and Customs Treatment) Regulations, 2026; and the Oil and Gas Export Free Zones (Domestic Sales, Fiscal Alignment and Customs Treatment) Regulations, 2026.
The minister noted that public discussion around free zones had increasingly centered on taxation, arguing that such a focus did not fully reflect the contribution of enterprises operating within the zones to Nigeria's economy. Recent investments include Health Textiles Nigeria FZE, which began production at the Lagos Free Zone in August 2026, producing dual active-ingredient insecticide-treated mosquito nets. The facility is expected to produce about 10 million nets annually and employ more than 600 Nigerians.
The Lagos Free Zone has attracted institutional capital, with the International Finance Corporation taking an equity position of up to $50 million in Nigeria's first deep-sea-port-based private special economic zone. Across the wider free-zone scheme, the authorities record more than $200 billion in foreign investment and over N900 billion in domestic investment, alongside more than 100,000 direct jobs and an estimated 500,000 jobs when supply chains, logistics networks, and host communities are included.
The reforms will address concerns from domestic manufacturers who import similar inputs, employ Nigerian workers, and pay applicable duties and taxes while competing with goods entering the Nigerian market under concessional arrangements associated with the free-zone regime. One major objective is to reinforce the export orientation of the scheme through a clearer 75 percent export and 25 percent domestic-sales framework, while ensuring that domestic sales receive tax treatment consistent with applicable Nigerian law.
The minister reaffirmed the government's commitment to protecting free-zone investments, warning operators against practices that could undermine the integrity of the scheme, including diversion of goods, mispricing of related-party transactions, and understating domestic sales. The reforms also seek to clarify how goods moving from free zones into the Nigerian Customs Territory are treated, including the applicable customs framework and the valuation of finished goods.
Key points
- The Nigerian government has introduced new regulations for its Special Economic Zones (SEZs) to restore their original export-oriented purpose.
- The reforms aim to bring greater clarity to the legal and fiscal framework governing free zones without undermining the incentives that make the zones attractive to investors.
- The government has recorded more than $200 billion in foreign investment and over N900 billion in domestic investment across the wider free-zone scheme.
